POGO crackdown, RWM delisting weigh on AGI stocks

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Outlier

By Lourdes O. Pilar
Researcher

THE government’s crackdown on Philippine offshore gaming operators (POGO) weighed on Alliance Global Group, Inc. (AGI), making it one of the most actively traded stocks last week.

A total of P755 million worth of 66.546 million shares exchanged hands on the trading floor from Sept. 23-27, data from the Philippine Stock Exchange showed. AGI was the 11th most active stock last week.

AGI shares closed at P10.90 apiece on Friday, down 3.5% from P11.30 the previous day and 11.1% from P12.26 a week ago. Year-to-date, shares slipped by 8.4%.

“The drag on AGI is due to the crackdown of Philippine offshore gaming operator (POGO) in the Philippines by China. They recently closed down a POGO operator in Libis, Quezon City that dragged both Megaworld Corp. and AGI stock,” Unicapital Securities, Inc. Technical Analyst Jeff Radley C. See said in a text message.




Last week, the Bureau of Internal Revenue (BIR) shuttered the operations of a POGO service provider that was not registered with the tax agency. Great Empire Gaming and Amusement Corp. is said to be one of the biggest POGO service providers in the country, with offices in QC, Subic Bay Freeport Zone, and Parañaque City.

“Alliance Global sustained its downward momentum, having been unable to snap its two-week losing streak despite already being well oversold,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in an e-mail.

“Recently the company announced it would be resuming the buyback of its shares. At the same time its sister company (Travellers International Hotel Group, Inc.) went private after successfully making a tender offer for the remaining free floating shares,” he added.

AGI is embarking on a P2.5-billion share buyback program over next 12 months.

Mr. See noted there has been negative sentiment against AGI due to the delisting of Travellers International, the owner and operator of Resorts World Manila (RWM). It is voluntarily delisting from the stock exchange on Oct. 15.

“The conglomerate has been under pressure lately, seeing its earnings for the first semester of 2019 under perform several analysts’ estimates — due to increased cost pressures, coupled with weaker performance of Emperador, Inc., RWM, and Golden Arches Development Corp. (GADC),” Mr. Limlingan said.

AGI reported its attributable income rose 4% to P8.1 billion in the first half, driven by double-digit growth in revenues while its consolidated revenue jumped 15% to P82.8 billion. Emperador, RWM and GADC posted attributable net income of P3.25 billion, P844.71 million and P751 million respectively.

“Though we think the stock is due to consolidate, there is more downward pressure at the moment, and we think this may persist before bargain hunters start coming in,” Mr. Limlingan said.

He gave AGI a support of P10.70 and resistance of P12.00 due to rather “volatile trading” the last few sessions.

“Alliance Global might continue to trend down further due to strong selling pressure with support levels between P10.20 to P10.00 for now,” Mr. See said, giving a resistance level of P11.30 and P12.20.









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