JG Summit’s share price down after raising stake in PLDT

By Mark T. Amoguis Senior Researcher

THE recent purchase of PLDT, Inc. shares by Gokongwei-led JG Summit Holdings, Inc. made the latter one of the most actively traded stocks last week with investors deciding to take profits.

A total of 6.54 million JG Summit shares worth P518.74 million exchanged hands from Jan. 6 to 10, data from the Philippine Stock Exchange showed.

The stock was lower by six percent on a week-on-week basis to P77.05 apiece last Friday from its P82-per-share close on Jan. 3. Since the start of the year, the stock has fallen by 1.2%.

“[B]ased on the movement of the share price, some investors of JG Summit decided to take profit because there’s still uncertainty as to how PLDT will be able to adapt in an environment where the third telco will be coming in,” Rachelle C. Cruz, senior research analyst at AP Securities, Inc., said in a phone interview.

“Investors are curious on the rationale behind the additional investment… Additional investment of JG Summit could be a sign of confidence on PLDT,” she added.

For Regina Capital Development Corp. Senior Equity Analyst Rens V. Cruz II, news of JG Summit buying into PLDT benefitted the latter more than the former.

“PLDT was trading on a sideways consolidation prior, so when a good name started buying into it — on top of reinforcing the fact it is still a good dividend play — [it] enticed most investors to buy up the stock for the week,” he said in an e-mail interview.

Last Tuesday, the holding firm of the Gokongwei family disclosed to the bourse that it bought 7.05 million common shares — representing 3.26% — of PLDT through the purchase and conversion of American Depositary Receipts of the telco company.

As a result of the acquisition, JG Summit increased its stake in the telco to 11.23% from 7.96%.

These shares were priced at $19.70 apiece, totalling $138.83 million. The deal was paid in cash and settled on Jan. 6.

JG Summit considers said it considers the deal as a “valuable investment” given PLDT’s good history of dividend payments. The company also said that this transaction will not have any adverse effect on its financial condition.

To recall, PLDT acquired JG Summit’s controlling stake (51.55%) in Digital Telecommunications Philippines, Inc. (Digitel). In exchange for the Digitel stake, JG Summit got 12.9% of PLDT, comprising 27.7 million common shares.

In November that same year, JG Summit sold 5.81 million and 4.56 million PLDT shares to Metro Pacific Resources, Inc. — an affiliate of Hong Kong-based First Pacific Co. Ltd. — and NTT Docomo, Inc, respectively. Both companies are major shareholders of PLDT.

Aside from telecommunications, JG Summit has business interests in branded consumer foods; agro-industrial and commodity food products; real property development; hotels; banking and financial services; petrochemicals; air transportation; and power distribution.

As of the third quarter, JG Summit posted a 50.3% increase in its net income attributable to equity holders of the parent company. This, despite recording a 2.4% drop in its attributable net income in the July-September period.

For this week’s trading, AP Securities’ Ms. Cruz pegged JG Summit’s support levels at P76.65 and P75.90 and resistance at P83.

Meanwhile, Regina Capital’s Mr. Cruz gave JG Summit a “near-interim” support of P76.85, followed closely by a “stronger” support level of P76.33. Meanwhile, he placed the stock’s resistance at P82.

Metro Pacific Investments Corp. is one of three Philippine units of First Pacific, the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains interest in BusinessWorld through the Philippine Star Group, which it controls.