By Bernadette Therese M. Gadon, Researcher
INVESTORS bought DMCI Holdings, Inc. last week then sold on stellar earnings report, but the market is turning bullish on the company amid surging commodity prices.
A total of 86.80 million DMCI shares worth P807.86 million were traded from March 7 to 11, data from the Philippine Stock Exchange (PSE) showed.
Shares went down by 2.8% week on week, finishing at P8.94 apiece on Friday from its P9.20 closing on March 4. For the year, the stock has gained 13%.
In an e-mail interview, PNB Securities, Inc. President Manuel Antonio G. Lisbona touted the stock’s price movement last week as a move of “buy the rumor, sell the news,” wherein investors bought on DMCI based on its stellar earnings.
“Based on the price charts, DMCI was consolidating between P8.10 and P8.70 before rallying to as high as P9.85 on March 8, the day [it] announced [its] results. Currently, the stock is trading below P9.00, as investors sold on news,” he said.
Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in a separate e-mail that investors anticipated the upbeat earnings, buying on the stock, and reaping the reward as it followed through.
“While prices started to cool down toward the latter half of the week, it looks like the market is turning more bullish on DMCI given the continued spike in commodity prices — which will be beneficial for SCC,” she said, referring to the ticker symbol of its coal and power unit Semirara Mining and Power Corp. (SMPC).
In a disclosure on March 8, DMCI reported its net income surge more than three times to P18.396 billion last year amid stronger-than-expected coal, power, and nickel markets as well as higher construction accomplishments.
Its core net income last year grew almost threefold to record P17.365 billion.
In the fourth quarter alone, its bottom line more than doubled to P4.921 billion amid record high coal prices, strong demand for electricity and real estate.
In 2021, the Philippines slowly recovered from the effects of the coronavirus disease 2019 pandemic in the economy as it slowly opened borders locally, and the reopening of business from relaxed quarantine status because of the vaccination rollout across the country. This allowed operations to pick up for DMCI’s subsidiaries.
SMPC contributed the most to the group’s bottom line last year with P9.234 billion, followed by DMCI Project Developers, Inc. or DMCI Homes (P4.397 billion), DMCI Mining Corp. (P1.206 billion), and DMCI Power Corp. (P580 million).
PNB Research Equity Research Analyst Jose Rafael Mendoza expects DMCI to net P28.6 billion this year, to be driven mainly by SMPC (41.8% share), then followed by DMCI Homes (32.7%), D.M. Consunji, Inc. (11.8%), DMCI Mining (7%), Maynilad Water Services, Inc. (4%), and DMCI Power (2.7%).
Mr. Mendoza said aside from the volatility that is expected to affect the market as a whole, the firm is raising its target price for DMCI by 5% to P10.00 from P9.50 per share.
Ms. Agravio said that given that there are still a lot of unknowns surrounding the Russia-Ukraine crisis, investors are becoming extremely cautious.
“DMCI’s share price volatility is significantly high at this point, so market players will likely continue to take advantage of [its] attractive trading range,” she said.
Ms. Agravio estimated the stock’s first quarter earnings around P4.6-P5.75 billion, and its full-year net income around P20-P25 billion, based on their bullish standpoint, given that improvement in activities continues this year.
She placed her support and resistance levels at P8.50, and P9.90, respectively.
For Mr. Lisbona, resistance at P9.85, while support at P8.75, mostly affected by the movement of coal and nickel prices in the short term.
“Since the Russia-Ukraine conflict is a developing story, it’s hard to say how the DMCI stock will perform. It has outperformed the index so far, but no one knows whether that will be the case until the end of the year,” Ms. Agravio said.
