Outlier

INVESTORS sold off ISM Communications Corp. shares last week with analysts attributing the movement to overall negative market sentiment as well as news on Dito Telecommunity Corp.’s possible delay in its commercial operations.

A total of 525.40 million ISM shares worth P1.09 billion were traded from Feb. 10 to 14, data from the Philippine Stock Exchange showed, making it the fifth-most actively traded stock last week.

ISM shares closed at P1.90 apiece on Friday, down 21.8% from P2.43 a week ago. Year to date, the stock’s share price slipped by 51%.

“ISM’s share price movements were influenced by the developments in Dito Telecommunity. The company is poised to be the telecommunications, media, and entertainment arm of the Udenna group, so it was negatively affected with the reports [last] week about the possible delay of Dito Telecommunity’s roll-out due to problems in permit application,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message.

Mr. Tantiangco noted the report “drew skepticism” on the part of investors, which led them to sell positions on ISM.

A news article published on Feb. 9 reported that Dito’s commercial operations will be delayed “over the complicated cell tower permitting process,” adding that there were concerns from some lawmakers and Department of Information and Communications Technology (DICT) Secretary Gregorio B. Honasan II regarding Dito’s capability to complete its rollout program by July this year.

To recall, Dito is scheduled to launch its services in the second quarter of 2020, with a government commitment to deliver a minimum broadband speed of 27 megabits per second (mbps) to 37.03% of the national population by July.

ISM has gained approval from its board of directors in December to buy 100% of Udenna Communications, which it will use as the parent firm for Dennis A. Uy’s telecommunications, media, and entertainment businesses.

Dito is owned and controlled by Mr. Uy’s Udenna Corp. and Chelsea Logistics and Infrastructure Holdings Corp., and China Telecommunications Corp.

In a separate disclosure on Wednesday, Chelsea said that “there is no truth” to the said delay, assuring the public that it will be able to meet its commitments to the government.

For Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio, the decline in ISM was more due to the overall negative investor sentiment in the market.

“While the downturn may indicate some stock-specific negative investor sentiment, ISM’s movement last week is more of a reflection of the local market as a whole. ISM was but one of the many companies that bore the brunt of the bearish volumes and selling pressure we saw from the index the past days,” Ms. Agravio said in an e-mail.

“If anything, investors sold down ISM due to the increased uncertainties brought about by the global virus outbreak. Again, this is as much a reflection of the company as it is on the Philippine stock market,” she added.

ISM posted a net income of P50.42 million in the nine months to September 2019, up 235.8% from P15.01 million in the same period in 2018.

“ISM has an initial support range from P1.55 to P1.60. If this fails to hold, its next support will be at P1.30. Initial resistance lies at P2.00, while the next resistance is at P2.60,” said Philstock’s Mr. Tantiangco.

Meanwhile, Regina Capital’s Ms. Agravio placed the stock’s support and resistance levels at P1.7 and P2.37, respectively.

“ISM is already at its almost two-year low. Given that indicators are already deep into the oversold region, it is likely that the stock will soon settle at a new bottom before consolidating sideways. Note that at this rate, it is more plausible that ISM will trade closer to its support than the resistance for the rest of the month,” Ms. Agravio said. — Jobo E. Hernandez

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