Outlier

AFTER Dito Telecommunity Corp. (formerly known as the Mislatel consortium) received its operating license last week, major shareholder Chelsea Logistics and Infrastructure Holdings Corp. was one of the most actively traded stocks last week.

A total of P687.2 million worth of 83.3 million shares exchanged hands on the trading floor from July 8-12, data from the Philippine Stock Exchange showed.

Chelsea shares closed at P7.87 apiece on Friday, down 0.76% from the previous day and 8.38% week on week. However, the stock is up 22.4% year to date.

“The value turnover of Chelsea… soared last week. Last Monday, the market reacted on news that the Mislatel consortium received its permit to operate as the country’s third telecommunication player,” A&A Securities, Inc. trader Jeng T. Calma said in a phone interview.

Dito Telecommunity was formerly known as the Mislatel consortium, which is composed of China Telecommunications Corp., Udenna Corp. and Chelsea. It received a certificate of public convenience and necessity (CPCN) after complying with the P25.7-billion performance bond for their commitments as the new major telco player, Chelsea confirmed in a disclosure last Tuesday.

Through this CPCN, the National Telecommunications Commission assigned the radio frequency bands of 700 megahertz (MHz), 850 MHz, 2100 MHz, 2010 MHz, 2.5 GHz, 3.3 GHz, 3.5 GHz, and 10.5 GHz to Dito Telecommunity. This will make the group an official competitor to industry incumbents PLDT, Inc. and Globe Telecom, Inc.

A&A Securities’ Ms. Calma noted that Chelsea shares’ price reached a 30-day high of P9.36 apiece on Tuesday, but immediately pulled back midweek.

“Investors were fast to take profits on the stock, bringing its price to [last week’s] lowest at P7.20 per share on Thursday,” Ms. Calma said.

“Every time Chelsea’s stock price reaches a high, it usually corrects immediately, as investors would quickly sell, bringing its price lower. Meanwhile, every time the stock’s price drops, it becomes an opportunity to buy as investors prepare for the official onboarding of subscribers of Mislatel in the fourth quarter,” she added.

AP Securities, Inc. research analyst Roberto Miguel B. Ong said most investors were just waiting for the Mislatel consortium to comply with the required performance bond.

For Unicapital Securities, Inc. technical analyst Cristopher Adrian T. San Pedro: “[The] [m]arket is always forward-looking, and the investors already anticipated the awarding of the CPCN last month. Therefore, the result was a sell-on-news scenario which happened the day after the awarding of the permit to operate to the Mislatel consortium,” he said in a separate e-mail.

“The volume was unusually high due to the fact that some investors and short-term traders who accumulated last month below P7 per share decided it’s time to take profits.”

Commercial launch of Dito Telecommunity is scheduled in the second quarter of 2020.

The consortium committed to render a minimum broadband speed of 27 Megabits per second (Mbps) in its first year of operations and 55 Mbps in the succeeding years. It also committed to having a 37.03% coverage of the national population within its first year and 84.01% cumulative coverage in five years.

If it fails, the government must recall the CPCN and frequencies awarded to Dito Telecommunity and will keep its performance bond of P25.7 billion.

AP Securities’ Mr. Ong noted that for the year, Chelsea’s fundamentals remain strong although it is mostly driven by its shipping and logistics businesses as its telco unit is expected to start generating income next year.

“As a whole, the company’s structure is diverse. Earnings wise, its logistics and infrastructure segments could generate more revenues but are capital-intensive, and would greatly impact its balance sheet,” he said.

The listed firm led by Davao-based businessman Dennis A. Uy reported a net income of P139 million in the first quarter, up 21% from the same period last year with a bulk of its revenues coming from its shipping business.

In another development, Unicapital’s Mr. San Pedro noted a “bounce play” on the stock’s price during the latter part of last week brought partially by Chelsea’s latest shipping business expansion.

Last Friday, Chelsea disclosed the launching of the M/V Trans-Asia 20, a bed/seat “ro-ro” (roll-on, roll-off) type passenger ferry held at Kegoya Dock Co., Ltd.’s Japan shipyard on July 5. The ferry is a 98-meter vessel that can carry a total of 740 passengers, 22 buses and 6 trucks. M/V Trans-Asia 20 is scheduled to be delivered in October this year.

Next week, analysts expect Chelsea’s stock to continue its price action.

“The stock will probably continue its movement depending on further news and development on Mislatel,” A&A Securities’ Ms. Calma said.

She pegged the stock’s support at P7.5 apiece and resistance at P9.35 apiece.

For Unicapital’s Mr. San Pedro, “I expect the stock to consolidate between P7.20 [per share] support and P8.04 [per share] resistance in the short term. A bullish scenario is for the stock to test P8.28 [per share] and P8.54 [per share] resistance levels if it stays above P7.70 [per share]. The stock can also test the next support levels at P6.95 [per share] and P6.70 [per share] if it falls below P7.20 [per share] to confirm a dead cat bounce scenario (or a short-term rebound in the price of a declining stock).”

In a separate phone interview, a technical analyst from AP Securities said Chelsea’s stock price will continue to consolidate before another run-up following last week’s sharp decline with the company’s telco license through Mislatel remaining a catalyst for investors.

The technical analyst placed the stock’s support and resistance at P6.85-P7.2 per share and P8.05-P8.4 per share, respectively. — Carmina Angelica V. Olano

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