Investors lukewarm on JG Summit after posting net loss

INVESTORS were on the sidelines last week after Gokongwei-led JG Summit Holdings, Inc.’s bottom line swung to a net loss in 2020.

A total of 4.69 million JG Summit shares worth P282.57 million were traded from March 29 to 31, data from the Philippine Stock Exchange showed.

Financial markets were closed on April 1 and 2 in observance of the Holy Week.

Shares in the holding company ended at P59.75 apiece last Wednesday, inching up by 0.1% than the previous week’s P59.70-per-share finish. Year to date, the stock fell by 16.1%.

“[JG Summit] may have been affected by the re-enforced movement and travel restrictions, and the uncertainty as to whether they will be extended for a few more weeks in April,” Timson Securities, Inc. Head of Online Trading Darren Blaine T. Pangan said in a Viber message.

Mr. Pangan noted the holding company’s air transport arm and petrochemical segment as some of the contributors to JG Summit’s loss due to lower sales as well as the selling prices swayed by the overall weaker global demand.

“With the conglomerate’s diversified portfolio with exposure to food, real estate, air transportation, petrochemicals, and banking to name a few, its performance for the year may still greatly depend on the country’s movement and travel restrictions, as well as other guidelines that the government will enforce amid the ongoing pandemic,” Mr. Pangan added.

JG Summit shares traded sideways last week “and ended basically flat from a week before despite reporting a net loss for the full year of 2020 which means it was already factored into the price,” AAA Southeast Equities, Inc. Head of Research Christopher John A. Mangun said in a separate text message.

In a disclosure to the local bourse last Wednesday, JG Summit reported a consolidated net loss of P468 million last year, dragged by booking nonrecurring fuel hedging losses and a one-off impairment charge from its investment in Manila Electric Co. This was a turnaround from the P31.29-billion attributable net income posted in 2019.

Meanwhile, the company’s consolidated revenues plunged by 27% year on year to P221.6 billion.

JG Summit has stakes in food (Universal Robina Corp.), air transportation (Cebu Air, Inc.), real estate (Robinsons Land Corp.), petrochemicals (JG Summit Petrochemical Corp.), and banking (Robinsons Bank Corp.), among others.

Mr. Mangun said Cebu Air’s higher-than-expected P22.2-billion net loss ate into JG Summit’s bottom line.

“The stock (JG Summit) has been trading flat for the last two weeks… It is basically moving with other blue chips with a slight negative bias due to the weakness in CEB,” he said, referring to the ticker symbol of Cebu Air, the operator of budget carrier Cebu Pacific Air.

“We may have to see how and when the air transportation restrictions will be eased, as this will greatly help with the conglomerate’s earnings recovery. If vaccines are rolled out as planned and COVID-19 (coronavirus disease 2019) cases decline in the coming months, then we might witness some easing of losses for JG Summit’s air transportation segment this 2021,” Mr. Pangan said.

He added market participants may have opted to stay on the sidelines given that it was a shortened trading week ahead of the Holy Week holidays.

For this week, Mr. Mangun placed the stock’s major support at P56.00 and he doesn’t expect that it will be breached, while resistance at P66.60.

Mr. Pangan pegged JG Summit’s immediate support at P56.00, while immediate resistance at P68.70 and next resistance at P74.50. — Jobo E. Hernandez