Aboitiz Equity Ventures

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ABOITIZ EQUITY Ventures, Inc. (AEV) was one of the most actively traded stocks last week following its buyback program and the death of its chairman.

AEV was the seventh most traded stock in terms of value turnover last week. A total of P1.83 billion worth of 34.92 million shares exchanged hands on the trading floor from Dec.3 to Dec.7, data from the Philippine Stock Exchange showed.

Shares closed at P50.30 apiece on Friday, down P2.45 or 4.64% from the previous day. It was also lower by 3.64% than its closing price on Nov. 29. For the year, AEV shares shed 32.48%.

“I believe the main factor why it was among the actively traded stocks [last] week was due to the passing of Chairman Jon Ramon Aboitiz last Nov. 30, 2018,” said Unicapital Securities, Inc. (Unicap) certified securities representative Cristopher Adrian T. San Pedro.

“According to empirical studies, investors in recent years normally react sharply to unexpected deaths of its long-term company leaders therefore creating a volume spike,” he added.

For his part, Regina Capital Development Corp. Managing Director Luis A. Limlingan said: “Some crosses were made by brokers worth several hundred million pesos, which drove value turnover.”

“Also there was an announcement of a buy back which got funds interested,” he added.

In a disclosure to the stock exchange, AEV said that its chairman, Jon Ramon M. Aboitiz, passed away on Nov. 30 due to a “lingering illness.” Mr. Aboitiz was also the chairman of Aboitiz & Co., Inc. and chairman and chief executive officer of Ramon Aboitiz Foundation, Inc.

AEV said in a Nov. 23 disclosure that its board of directors renewed its share buyback program, which will use internally generated excess cash.

The Board also renewed the firm’s authority to purchase additional shares on Aboitiz Power Corp. (AP) and Union Bank of the Philippines (UnionBank).

AEV’s disclosure last Nov. 29 provided information on the total amount appropriated for the buy-back program.

“No specific limit has been imposed, although the amount used for any repurchase (i) must be within the delegated financial authority limits of the Chief Executive Officer and the Chief Financial Officer and (ii) has to be from the Company’s internally generated excess cash,” the disclosure read.

Also last week, Apo Agua Infrastructura, Inc., the listed company’s subsidiary, said it tapped a consortium of lender banks for a P9 billion loan to finance its bulk waterproject and 2.5-MW hydro-electric power plant.

“Expansion wise, the 2.5-MW (megawatt) [hydro-electric] plant will add to AP’s renewable energy portfolio. Financing wise, the P9 billion will be added to their almost P295.6 billion parent-level debt,” said King A. de Mesa research analyst at Unicapital Securities, Inc.

“Cash-flows wise, I think they can service their debt given their cash-generating ability (coming and will be coming from AP mostly since their major plant additions will be up and running in the next 2-3 years),” Mr. De Mesa added.

Meanwhile, the company’s consolidated net income grew 38.51% to P10.41 billion in the third quarter. Net income attributable to the equity holders of the parent company stood at P7.23 billion, up 28.36% from the P5.63 billion posted a year ago.

For the first nine months of the year, net income attributable to equity holders of the parent reached P17.318 billion, up 8.89% year on year.

For this year, Unicap’s Mr. De Mesa said AboitizPower and UnionBank would drive the company’s performance this year.

On the other hand, Mr. Limlingan said the company could take in P22.4 billion in net income.

“Since most of AEV is tied to AP, the changes in power rates or the outlook in the energy industry could affect this. The second biggest contributor, UnionBank, will also be influenced by the rate hikes, which in turn will affect the loan growth and trading,” Mr. Limlingan said.

He pegged the stock’s support and resistance at P48.50 and P53.00, respectively.

Meanwhile, Unicap’s Mr. San Pedro gave the stock support and resistance prices at P49.50 and P56.75. — Christine Joyce S. Castañeda