Stock Commentary

Quick takes from around the market

Merkado Barkada
Quick takes from around the market

SMART [TEL 1780.00 1.77%] [link] joins the war of words against Dito Tel [DITO 3.80 1.06%], by backing the accusations made by Globe [GLO 2050.00 0.89%] that DITO’s network was too poorly managed and secured to prevent thousands of daily fraudulent long distance calls, and claiming that DITO was only filing its complaint at the Philippine Competition Commission in order to distract from the hundreds of millions in penalties that it owes GLO and TEL for the unmitigated fraudulent activity. TEL called DITO’s claims “false”, and kind of inferred that DITO should be more grateful, “considering that PLDT built for DITO a big portion of its telco infrastructure”.

MB: Now this is a real telcoserye! It’s getting spicy on all sides. It’s worth remembering that it’s possible for all parties to be technically correct: It’s possible that DITO has actually tried to stop the fraudulent traffic, but it’s also possible that it didn’t try hard enough, or that it doesn’t know how to stop the traffic. It’s possible that TEL and GLO have been abusing their dominant positions, but it’s also possible that TEL helped DITO build out its infra, and that DITO might need to fix the problems before TEL and GLO increase the interconnection capacity. Let’s wait to hear what the PCC has to say next week.

Shakey’s [PIZZA 7.50 5.49%] [link] Q2 profit mushroomed 1282% y/y, up 129% q/q, to P174 million; 9M profit surged 1685% y/y to P250 million. PIZZA’s system-wide sales of P5.8 billion (up 77% y/y) exceeded its pre-pandemic system-wide sales for the first time since the onset of COVID. More importantly, same-store sales were up 23%. PIZZA said that its strategy of investing in expansion during the lows of the pandemic has paid off now that the economy is reopening, and it hopes to “accelerate” that pay-off later this year thanks to the “ber months” busy season, and the boost that face-to-face classes should provide to casual dining stores.

MB: It will be interesting to see how the PIZZA rebound compares to Jollibee [JFC 218.00 0.46%]McDonald's [AGI 8.98 0.79%], and Fruitas [FRUIT 1.03 1.98%], considering that PIZZA is by far the least delivery-ready of the group. During the pandemic, it looked like consumer consumption patterns had changed for good; JFC and AGI made large bets on dine-out configurations for stores based on the assumption that the vast majority of consumers would not want to eat in-store. PIZZA took a different approach. Instead of overhauling its menu and portfolio to become more delivery-friendly, it leaned into creating more stores while the economy was crippled. PIZZA’s growing so fast it barely has time to take the wrappers off before it cooks the food!

Monde Nissin [MONDE 16.16 0.50%] [link] said that it expects a “dampening effect” in its second-half results due to the negative press and consumer caution that has resulted from the European recall for certain Lucky Me! batches that were produced abroad with unacceptable levels of pesticides in the final product. MONDE said that domestic sales dropped 15% in July, and expects this to continue forward for some time.

MB: MONDE has an “action plan” that it wants to execute, to win back the trust of domestic consumers. While it’s true that the Lucky Me! products that were manufactured here in the Philippines did not have this pesticides problem, it’s still a little odd/concerning to see the company also list “Strengthen our understanding of regulations” and “Work with our suppliers to institute testing at key points throughout our supply chain before shipments”. Like, how could those things be blind spots? If I were a shareholder, I’d be absolutely losing my mind at the prospect of something similar happening again, before testing at “key points” can be implemented. The action plan makes it sound like it was only a matter of time before something like this would happen.



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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

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