Stock Commentary

Quick takes from around the market

Merkado Barkada
Quick takes from around the market
  1. Holcim [HLCM suspended] reported a Q3 net income of ?164 million, up 194% from its Q3/22 net loss of ?173 million, and a 9M net income of ?1.0 billion, up 104% from its 9M/22 net income of ?488 million. HLCM credited efforts in “sustainability and innovation” for its “resilient” performance so far in 2023. HLCM said that 9M net sales were down 4% y/y, and Q3 net sales were down 21% y/y, due to “slow construction activities” and “inclement weather”.

    MB Quick Take: Just in time for HLCM to delist! HCLM has been suspended for a long time after its tender offer obliterated the public float, but the stock’s actual delisting isn’t scheduled to happen until November 27. This should be the last material disclosure that we get from the company before it stumbles off into the sunset.
  2. Philippine Airlines [PAL 5.29 ?3.3%; 767% avgVol] [link] teased a Q3 net income of ?5.4 billion, up 54% y/y, and a 9M net income of ?19.2 billion, up 167% y/y, due to a 54% y/y increase in Q3 passenger flights from 2.6 million to 4.0 million and a 71% y/y increase in 9M passenger flights to 11 million.

    MB Quick Take: In Captain Stan we trust! Lucio Tan’s son-in-law, Stanley Ng, took over as President and Chief Operations Officer of PAL back in January of 2022, and has competently overseen the airline’s post-COVID and post-bankruptcy recovery. My favorite part of the press release is that Mr. Ng appears to be unwilling to just sit back and feel self-satisfied with the vast improvements in the airline's key metrics: he’s pushing to protect PAL from “external headwinds” like fuel price shocks and “the impact of world events” that could threaten PAL’s recovery. I think that’s a level of care that the airline hasn’t had in a long, long time. Stock price still sucks, though.
  3. Axelum Resources [AXLM 1.84 ?2.1%; 7% avgVol] [link] reported a Q3 net loss of ?302 million, down 201% y/y, and a 9M net loss of ?427 million, down 159% y/y. AXLM explained that it booked a ?310 million write-down on its inventory, reflecting management’s opinion of how the unfavorable market price trends will impact the value of AXLM’s inventory going forward. Excluding this write-down, AXLM claims to have booked ?8 million in core net income. AXLM said that its focus will to “finish this year on a high note” to set the table for a “major turnaround in 2024.”

    MB Quick Take: Metro Pacific Investments (MPI) said yesterday that it is still “keen” on completing its acquisition of a 34.76% stake in AXLM, and guided that it expects to close the deal “hopefully” before the end of the year. But MPI added that such a closing depends on the results of what it calls “extended due diligence”, and the ability of AXLM’s management team to “explain their forecast and the results and outcome of their numbers”. Deals are tricky things, and due diligence can be a wild ride even for the most straightforward of acquisitions, but I’d be fairly concerned after hearing those public comments from MPI if my AXLM thesis depended on the ?5.4 billion injection from the transaction. I wonder if AXLM’s sudden gushing neck wound has caused the MPI board to doubt the wisdom of the move? AXLM’s stock price is sitting below its COVID-crash low.

Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.

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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