The Philippine Stock Market - July 9, 2009

Dow Jones Industrial Average (DJIA) Summary
Index Value: 8,178.41
Trade Time: July 8
Change: Up 14.81 (+0.18%)
Prev Close: 8,163.60
Open: 8,157.02
Day's Range: 8,087.19 - 8,219.52

The DJIA moved within a 130-point range and closed little changed.
With no leads to follow once again; the local equities market traded in a very narrow range but with a positive bias. It continues its drifting movement from the past week. The Philippine Stock Exchange Index (PSEi) just regained yesterday's losses.

PSEi previous close - 2461.99 (July 8)

open / low - 2463.42 (+1.43)
high - 2474.95 (+12.96)
close - 2473.85 (+11.86 or +0.48%)

Value turnover: PhP 2.201 bn
Cross transactions: PhP 659 mn

Advancers 60
Decliners 34
Unchanged 55

Sectoral Indices.
Industrial +1.63%
Property +1.59%
Financial +0.58%
Holdings +0.41%
Services -0.42%
M-O -0.82%

The Day's Top Gainers:
PRIM: PhP 0.81; +50.00%
ORE: PhP 0.64; +48.84%
FJP: PhP 1.48; +48.00%

The Day's Biggest Decliners:
FED: PhP 9.00; -14.29%
KPM: PhP 2.02; -13.68%
ALCO: PhP 0.125; -10.71%

Index Movers:
MER - PhP 176.00 (+4.14%)
MER accounted for a gain of 6.60 pts in the PSEi.
ALI - PhP 8.40 (+2.44%)
ALI accounted for a gain of 3.48 pts in the PSEi.


From SB Equities Research:

MER income seen reaching P13 to P15 bn per annum
(Maintain SELL rating)

A Meralco director indicated that Meralco's net income will improve sharply in 2009
According to the official, MER is poised to earn P13 to P15 bn this year
This is a gargantuan increase from only P3.1 bn last year although core income was estimated at P5 bn per annum
Source of the increase will come from the significant jump in MER revenues due to the performance-based regulation (PBR) implementation effective this May
Earlier this year, Meralco treasurer Rafael Andrada projected that the PBR implemented increases revenues by P6 bn p.a.
This is based on a P0.25/ kwh rate hike on 2 bn kwh sales of power annually

COMMENT: Going back to our statement last June 15 we said: "We believe current price of P145/ share can be justified fundamentally only if annual income can be brought up to P11 to P12 bn per annum (this translated to an estimated PER then of 13x"
Based on current market capitalization of P188 bn, a net income of P15 bn based on the statement would translate to the fair PER we have noted of close to 13x for MER.
Maintain fundamental SELL for MER. Price run up continues to be attributed to the race towards taking control by acquiring as much ownership in the coveted power distributor.
A hefty dividend payout based on this new income level could be the catalyst to justify current levels


At mid-day:
Asian equities markets were mostly higher.
The Philippine Peso was at PhP 48.251 vs US $1.00.


CLOSING PRICES OF SELECT STOCKS (as of July 09, 2009):
ABA: PhP 0.99
ALI: PhP 8.40
DGTL: PhP 1.30
EDC: PhP 3.90
EIBA: PHP 0.26
FLI: PhP 0.72
GEO: PhP 0.62
GOB: PhP 0.17
JOH: PhP 1.20
LOTO: PhP 10.00
MEG: PhP 0.98
MPI: PhP 5.70
MUSX: PhP 0.105
PAX: PhP 2.48
PX: PhP 7.50
SPH: PhP 2.75
SUN: PhP 0.46
TA: PhP 0.96
UW: PhP 0.0975
V: PhP 1.04
WEB: PhP 0.0525