Heavy trading, Gold Coin acquisition boost AEV stock

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Outlier

By Christine Joyce S. Castañeda
Senior Researcher

A TUG of war between buyers and sellers last Tuesday, followed by net buying at the latter part of the week on news of an Aboitiz Equity Ventures, Inc. (AEV) subsidiary’s full acquisition of a Singapore-based animal feeds maker company drove the stock’s trading activity last week.

From May 27 to 31, Philippine Stock Exchange data showed a total of P1.2 billion worth of 22.15 million shares having exchanged hands on the trading floor, making it the 12th most actively traded stock during the period.

The bulk of the stock’s trading activity happened on May 28 with a volume turnover of 17.48 million shares and a value turnover of P947.14 million.

AEV shares closed at P55.90 apiece on Friday, up P1.40 or 2.6% from the previous day. It also rose 6.1% from the P52.7 finish on May 24. Year to date, it is up 5.1%.




“So far [last] week, AEV was able to keep its upward movement which started on May 16. This has been supported by the general market sentiment which lately has been defying odds, forming a four-day rally including [last Friday] despite the trade war and global economic slowdown fears abroad,” Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financial, Inc., said in an e-mail.

Mr. Tantiangco noted May 28’s trading activity, which was “a tug of war between the bulls and bears… wherein the latter got the upper hand.”

“Bargain hunters came in the afternoon, even bringing AEV’s share price to P55.85 [per share]. However, profit takers took over in the final minutes, selling AEV down to its closing price of P54.15 [per share],” Mr. Tantiangco said.

The analyst also cited agribusiness unit Pilmico International Pte. Ltd.’s acquisition of Singapore-based Gold Coin Management Holdings Ltd. — which helped lift the stock’s price by 1.20% to P54.80 per share on Wednesday — as one of the factors that affected last week’s stock performance.

For his part, Unicapital Securities, Inc. research analyst King A. De Mesa said that in terms of valuation, the stock’s year-to-date low of P46.7 per share translates to a price-to-earnings ratio of 12.6 times, which is “very cheap compared to its five-year historical average of 16.7 times.”

“I believe the market spotted this as a good bargain, possibly explaining why it was one of the most active [last] week,” Mr. De Mesa said in a separate e-mail.

In a disclosure to the local bourse last Wednesday, AEV said that Pilmico will now have 100% ownership in Gold Coin after it purchased the remaining 25% in the firm for $120 million.

The acquisition came less than a year after Pilmico initially acquired 75% stake in Gold Coin for $334 million. Pilmico will pay a one-time lump sum at the closing of the deal.

The transaction will expand the Aboitiz Group’s animal feeds business within the Asia-Pacific region, since Gold Coin is one of Asia’s largest privately owned agribusiness corporations, operating 20 livestock and aqua feed mills across 11 countries in Asia.

AEV earlier said it will spend $200 million in the next two to three years to expand and upgrade Gold Coin’s facilities.

AEV’s attributable net income dropped 27% to P3.52 billion in the first quarter of 2019 from P4.83 billion in 2018’s comparable three months.

“Net income may still grow in line with its five-year compounded annual growth rate of 1.12% to P22.482 billion,” Philstocks’ Mr. Tantiangco said.

Mr. Tantiangco pegged the stock’s support and resistance at P52.00 and P56.00, respectively.









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