Long Term Investment Choices

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AC
ALI AEV BEL BPC BPI DMC ION MER MBT MPC SMC SMPH TEL URC

1. Ayala Corporation (AC)

Company Description

Ayala Corporation is a holding company and one of the largest conglomerates in the country has business interests in real estate development, banking and finance, telecommunications, electronics and information technology, manufacture of food and agricultural products. Ayala Corp., the oldest business house in the Archipelago, which is established in 1834. Some of its well known subsidiaries and affiliates are the Ayala Land Inc., Bank of the Philippine Islands, Globe Telecom, Purefoods Corporation, Ayala Life, Ayala Hotels, Inc., EDINet Philippines Inc and the Ayala Foundation.

Reasons to Buy

Investment Worthiness

  • Excellent
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    2. Ayala Land, Inc. (ALI)

    Company Description

    ALI is the country’s largest property developer. It is also recognized as a leader in the creation of well - planned and fully integrated communities. It is best known for the development of Makati’s residential and business districts. ALI is the country’s only full-line property firm that establishes and operates shopping centers, residential subdivisions, office and residential buildings, hotels, resorts, and industrial and business parks. ALI traces its roots to the Ayala Corp., the oldest business house in the Archipelago, which is established in 1834. In 1988, Ayala decided to spin off its real estate division into an independent subsidiary, Ayala Land, Inc.

    Reasons to Buy

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    1. Aboitiz Equity Ventures (AEV)

    Company Description

    It is a holding and management company that has interest in businesses that provide basic goods and services such as electricity distribution, financial services, food production, and real estate to meet the demands of the growing economy. Aboitiz Equity Ventures' diversified business interests include management participationom WG & A, Union Bank of the Philippines, CIGI, and Pilipinas Kao, Inc. The company is into power generation in the Visayas and Mindanao regions.

    Reasons to Buy

  • Earnings of already P600M as of June 30, 1998. 1997’s full year figure was P700M, if they hit their target (and its almost assured), by Dec. of ’98, they shall have seen 71% earnings growth year on year.
  • Unfavorable Aspects of its Fundamentals

    Investment Worthiness

  • Excellent
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    4. BELLE CORPORATION (BEL)

    Company Description

    From 1973 to 1989, Belle's principal business activity was mining, since then, the company has diversified into real estate development primarily in Tagaytay and gaming. The company has a 35% stake in Pacific Online, the joint venture firm responsible for installing the lotto outlets in the Visayas and Mindanao area. At the moment, the income from this investment accounts for less than 20% of total revenues, but the popularity of the game continues to grow by leaps and bounds.

    Favorable Aspects of its Fundamentals

  • Recently retired US$21M of its US$200M long-term debt as part of its effort to bring down its liabilities to a more manageable level. Jettisoning 10% of its debt immediately improves the company’s balance sheet because it gets rid of a deadweight and also its income statement because it reduces the drain interest expense exerts on operating revenues.
  • Subtle political association with the current administration is a plus in terms of obtaining permits from government regulators for licenses to jumpstart its various gaming concerns.
  • The company has a 35% stake in Pacific Online, the joint venture firm responsible for installing the lotto outlets in the Visayas and Mindanao area. At the moment, the income from this investment accounts for less than 20% of total revenues, but the popularity of the game continues to grow by leaps and bounds.
  • Its investment in a casino to be built within Belle Bay Plaza will eventually generate rental income of P16M per month, plus 20% of Pagcor’s net gaming income from the casino.
  • They also own 1/3 of the franchise to operate jai-alai down the road, which will be another good source of income.
  • The company has begun shifting its focus away from pure property development, and has devoted a lot of energy to the development of its gaming business, which promises to be an explosive money maker.
  • Unfavorable Aspects of its fundamentals

  • First half revenues as of June 30, 1998 fell to P1.14B, a 26% drop from the sales figure the company posted for the first half of 1997, which was P1.54B. Worse, net income for the aforementioned period went from P1.02B a year ago, to P548M this year.
  • Revenues are primarily generated by residential property sales of Tagaytay Highlands and Club shares sales of Tagaytay Midland. Needless to say, the slump in the real estate sector had a hand in these declines in revenues and profits.
  • Investment Worthiness

  • Excellent long-term possibilities.
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    5. Benpress Holdings Corporation (BPC)

    Company Description

    Benpress Holdings has investments in companies with business interests principally in broadcasting, power generation and generation, banking, telecommunications and more recently in infrastructure and property sector. Its principal shareholder namely, Benpres Corporation, PML and MUL have shareholdings in one or several companies and investments in real estate properties. Benpress corporation transferred all its shareholdings in ABS-CBN, FPHC, Meralco and PCIBank, and a portion of its shareholdings in Sky Vision, ICC, RCPI and EVIELCO to Benpress Holdings in exchange for common shares of the company and the assumption by the company of certain bank debt obligations o f Benpres corporation. At the same time PML assigned all its shareholdings in ABS-CBN to Benpres Holdings in exchange for common shares of Benpres Holdings.

    Favorable Aspects of its Fundamentals

    Unfavorable Aspects of its Fundamentals

    Investment Worthiness

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    6. Bank of Philippine Islands (BPI)

    Company Description

    BPI is a member of the Ayala Group of companies. It is one of the largest universal bank in the Philippines. It is the pioneer in electronic banking and it has the largest branch network in the banking industry. It is engaged in meeting all the banking needs of the public by offering the best and widest array of products and services to its consumers and corporate customers. Its merger with Citytrust secures BPI’s position in the consumer banking business, particularly in auto and mortgage financing where it captures 60% of the market.

    Reasons to Buy

    Unfavorable Aspects of its Fundamentals

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    7. DMCI HOLDINGS, INC. (DMC)

    Company Description

    The company that is for all intents and purposes, the biggest construction company in the country. Other activities include real estate development and infrastructure project development. The company has four flagship companies: DM Consunji, Inc. (100%), Atlantic Gulf & Pacific Co. (51%), Semirara Coal Corp. (66%) and Prime Developers, Inc. (100%). The company is the largest producer of high strength concrete and high-tech construction equipment. The company has 28% share in country’s largest infrastructure project - Northrail (US$ 2.0B, 102-km between Clark and Fort Bonifacio)

    Reasons to Buy

     

    8. IONICS Circuits, Inc. (ION)

    Company Description

    ION was incorporated in 1982 but started its full-scale commercial operations in 1987 due to political, economic and market developments. The company engages in the manufacture and assembly of electronic components and sub-assembles under contract from foreign companies. The electronic components include: disk drives, cellular phone assembly, chip-on-board, printed circuit board assembly, bridge rectifier assembly, computer cards, magnetic head, LED cards and semi-conductor devices.

    Reasons to Buy

    Unfavorable Aspects of its Fundamentals

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    9. Meralco (MER / MERB)

    Company Description

    Meralco is the largest electricity distribution utility in the Philippines serving a franchise area that covers the whole of Metro Manila, the provinces of Bulacan, Rizal, Cavite and parts of Laguna,, Quezon, and Batangas provinces. Meralco acts as a distributing and purchasing arm of National Power Corporation(NPC) and sells their electricity in its franchise areas at a mark-up.The power rates charged by Meralco are regulated by the Energy Regulatory Board (ERB) that has the authority to approve rate increase applications by Meralco.

    In 1991, industrial production in the franchise areas was estimated to have contributed about 41% to the country’s GDP.

    Reasons to Buy

    Unfavorable Aspects of its Fundamentals

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    10. Metropolitan Bank and Trust Co. (MBT)

    Company Description

    Metrobank is one of the biggest universal banks in the country in terms of assets, revenues, deposits and loans.

    Reasons to Buy

    Unfavorable Aspects of its Fundamentals

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    12. Metro Pacific Corporation (MPC)

    Company Description

    Metro Pacific Corp, is the local flagship of the Pacific Group of Hong Kong. It was known as Metro Drug before and was engaged in the manufacture of pharmaceutical and consumer products. Since then it has transformed into an investment holding company and a diversified conglomerate with businesses ranging from: property, telecommunication, consumer products, packaging and banking. Its presence in the Philippine property sector is notable with ownership stakes at Fort Bonifacio Development Corp., Landco and the Pacific Plaza Towers.

    Reasons to Buy

    Unfavorable Aspects of its Fundamentals

     

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    13. San Miguel Corp. (SMC / SMCB)

    Company Description

    Established in 1890, San Miguel Corporation is the Philippines’ largest food, beverage and packaging company. It is the nation’s biggest private employer with over 30,000 employees. The company’s products are exported to 24 countries. There are overseas ventures in Hong Kong, China, Taiwan, Guam, and Indonesia. San Miguel is also accelerating its involvement in real estate, with several deals already being negotiated.

    Reasons to Buy

    Unfavorable Aspects of its Fundamentals

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    14. S M Prime Holding (SMPH)

    Company Description

    SM Prime Holdings, Inc. is the holding company of Henry Sy’s businesses, from its shopping malls to underlying real estate, and other landholdings programmed for future development. It was incorporated in January 1994. The company has 50 years of retail experience and is one of the largest mall operators in the world. The company plans to venture into other activities aimed at maximizing the value of its properties while complementing its mall operations. These include theme parks, hotels and office condominiums.

    Reasons to Buy

    Unfavorable Aspects of its Fundamentals

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    15. Phil. Long Distance Tel. (TEL)

    Company Description

    PLDT is the country’s principal supplier of domestic and international telecommunication services. PLDT’s charter, which extends until 2028, authorizes it to provide virtually every type of telecommunication service. PLDT provides digital-leased lines for domestic and international communications, high-speed data transmissions, high performance packet switching services and private network.

    Reasons to Buy

    Unfavorable Aspects of its Fundamentals

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    16. UNIVERSAL ROBINA CORPORATION (URC)

    Favorable Aspects of its Fundamentals

    Unfavorable Aspects of its Fundamentals

  • P6B from a year ago. How soon the receivables will be paid for is still uncertain.
  • Technical Considerations

    Investment Worthiness

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