Quick takes from around the market

Quick market takes...

1. Repower Energy Development [REDC 7.04 ?8.3%; 468% avgVol] [link] surged another 8% on Friday, locking in (and going well beyond) the considerable gains the stock made on the week’s only other trading session on Tuesday (+10%). REDC is now up 34% over the past month, and is up 41% from its July IPO price of ?5.00/share. The dramatic increases were not accompanied by any new public information.
   
   MB Quick Take: Leaving aside the “how” and the “why” of this pump for a second, it is pretty wild to step back and see that REDC is challenging SP New Energy [SPNEC suspended] for the title of “Most Profitable Recent IPO Relative to IPO Price”. SPNEC has enjoyed this title for over a year (essentially from the day of its IPO); with no other challengers even in positive return territory, it’s really been a one-company race from the time SPNEC first opened its eyes and decided to change its name and entire business plan. As REDC and SPNEC converge, there are a few things worth noting: first, SPNEC is probably going to have a major announcement to make over the next couple of weeks if it wants to avoid being delisted in December (that might dramatically impact valuation), and second, with SPNEC’s stock being suspended almost six months and a couple of massive transactions done under its current ?1.46/share last-traded price, it’s not even clear if that price is even representative of SPNEC’s actual market price. My bet is that if the suspension were lifted, that trading would send the price down pretty quickly and leave REDC as the new title holder.
    
2. Philippine Business Bank [PBB 8.50 ?2.4%; 50% avgVol] [link] teased what it called “solid net income despite challenging economic conditions”. PBB’s 9M net income was ?1.14 billion (+24% y/y), with 9M net interest income of ?4.74 billion (+18% y/y). PBB said that its total deposits grew 10% over that same span to ?116 billion, and that its total resources grew 12% to ?140 billion.
   
   MB Quick Take: PBB has dreams of getting a universal banking license from the BSP, and while its March stock rights offering was a step in that direction, Alfredo Yap’s bank has not acted with a noticeable sense of urgency. At least the bank’s performance has been solid. I mean, it’s not BDO [BDO 128.00 ?0.4%; 83% avgVol], but at least it’s still making layups in this high-interest environment while the ownership group wanders through the license upgrade process.
    
3. DMCI [DMC 9.18 ?0.1%; 57% avgVol] [link] reported a Q3 net income of ?4.1 billion (-44% y/y; -50% q/q), down from its record-setting ?7.3 billion that it posted in Q3/22 thanks to the incredible rise in the global price of coal and the domestic spot price of electricity. DMC attributes this quarter’s under-performance with the high bar of Q3/22, plus weaker selling prices for its coal, nickel, and electricity. DMC’s total Q3 revenues dropped 32% to ?32.8 billion.
   
   MB Quick Take: Live by the sword, die by the sword. Like with DMC’s subsidiary, Semirara Mining and Power [SCC 29.00 unch; 44% avgVol], it wasn’t like DMC or SCC did anything special or great from an operations or business perspective to reap those massive profits through large parts of 2022 and 2023. They were simply in the right place at the right time to be ripping coal out of the ground and generating electricity in the Philppines. Now that prices have largely normalized, so too have SCC’s and DMC’s Quarterly Reports. Would Iran getting involved in the Israel/Hamas conflict set off a chain of events that could replicate any of the conditions that dropped so many fat dividends into the laps of SCC and DMC shareholders over the past year? Maybe. But it feels cynical to hope for conflict to upset the energy markets for the sake of personal profits, but that’s sometimes the life of a commodities trader.

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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.