Two Notable Developments in the 83 Years of History of China's Gold Market

This guy, Koos Jansen is really doing a great job in tracking China's gold market. His dragon chart  or infographic gave us an overview of how gold market in China has evolved in its 83 years of history from 1930 to 2013. Among numerous developments, I consider these two as the most notable: 

1. After 51 years, the Chinese government changed from its monopoly of the gold market and prohibition of private ownership of gold in 1950 to the abolition of such monopoly. In fact, since 2001, the central government has been encouraging its citizens to consider gold as a long-term investment. 

2. After 38 years, from 14 tons of gold mined, less than 1% of global production in 1975, China was expected to have an output of 440 tons, over 14% of global production in 2013. In the same year, China was in need of 4 tons per day just to satisfy its domestic demand. This made China not only the # 1 gold producer superseding South Africa, but also the # 1 consumer overtaking India.

In times of uncertainty and doubt caused by gold market manipulation, fundamentals like these encouraged me to remain patient and focused that investing in gold - bullion, coins, and mining shares - in the long run will gain the upper hand.  

Lesson # 2: Buying Shares

Huwag habulin ang presyo ng stock. Huwag magpadala sa sulsol ng mga hypers o sa tsismis. Maraming nalulugi sa ganiyang istilo ng trading, at unang-una na ako. Sa 181k na capital, 76k na ang total loss after a year of trading. Masyadong mahal naman yata ang ganiyang tuition fee bago matuto magtrade. 

The key is patience. Find a stock that is despised, and then wait. This is a better way than running after a climbing price.  

Trading Lesson # 1: Buying and Selling Your Shares

Sa takot mong maiwan, you buy up your chosen stock only to see later that your original bid was correct. This is the problem in buying. Greed is the primary emotional barrier.

Sa kabilang banda naman, sa takot mong lumaki pa ang loss, you cut prematurely only to see later that your original exit plan was correct. This is the problem in selling. 

Lesson # 1: Buy when you and traders around you are in panic. Be patient and throw your emotion. Sell when you and traders around you are euphoric. 

If you cannot do this, stop trading. The field is not for you. If you continue being controlled by your emotion, it is the certain way to ruin your savings and your capital. 

I think this is the reason why they say that the strongest enemy of the trader is himself. It is not market, neither bashers nor the hypers, but yourself. 

Buying a Stock: MRSGI and IDC

Before buying a stock, knowing its book value per share provides me a basis to determine whether the price I am paying for the stock is not overpriced. Such information is provided by PSE Edge. For example, you can check the book value per share of DNL by looking at its financial report. As of September 30, 2015, its book value per share is 1.69. Though in a downtrend, buying it at its current price at 8.80 is still expensive. If you divide its current price by its BVPS, you will arrive at 5.20 as the price to book ratio per share. Of course, there are other numbers to consider such as the company's balance sheet, earnings, and cash flow. And besides, with the good reputation of the company, many buyers consider DNL's market price still cheap. They consider it part of their long-term value investing in a growing company. 

Take another example. This time, let us look for PX. Based on its financial report as of September 30, 2015, its book value per share is 5.45. Compare it to its current price at 4.95 and compute its price to book ratio per share and you will have 0.90. Immediately, you will see PX is a bargain. But many avoid this stock simply because the mining sector particularly a gold stock is in a downtrend due to the price of gold in the world market and other regulations imposed by the government on the mining sector. 

How about IPOs? How can you determine if the price you are paying is not overpriced? This is my primary concern in this article particularly the two recent IPOs: MRSGI and IDC. If you are to check PSE IPO list, you will see that the offer price for MRSGI is 6.10 and for IDC is 4.20. 

In MRSGI's prospectus, you can find the same price, but in the case of IDC, its 3.60. On their IPO debut, MRSGI's starting price was 3.99 and IDC remains 3.60. MRSGI ended its first trade with a 0.25% increase at 4.00 while IDC with 17.22% increase at 4.22. At present, they are trading at 3.83 and 3.86 respectively. What puzzles me about these two stocks is the information provided in their prospectuses related to their prices prior to and during their IPO. Here's MRSGI's number:

   

There you can see that MRSGI's price as of June 30, 2015 was 1.27 described as Net Tangible Book Value per Share (NTBVPS). After the offer, the pro-forma NTBVPS was 2.28. And then the final price described as "dilution to investors in the offer" was 3.82. 

Now my question is, where did MRSGI get the 6.10 offer price posted at PSE IPO list and found in its prospectus? Why is there such a big discrepancy between 3.99 as starting price on its IPO debut and 6.10 as posted at PSE? Is this the standard format in doing IPO? If it is, how come IDC did not follow such format on its debut day and followed instead the 3.60 price given in the prospectus? 

Someone said that MRSGI was actually discounted on its IPO day. Really? If it was, how come its underwriters were selling on the first trade? Is it not because the pro-forma NTBVPS of MRSGI is far below than its 3.99 offer price? 

Let us turn to IDC. In the case of IDC, there are two prices given as its NTBVPS as of June 30, 2015: 0.50 and 0.39. Which one is true? The Pro-forma NTBVPS after the offer is 1.14. The dilution to investors is 2.46. 

  

Now my question, where did IDC get the 4.20 posted at the PSE? If MRSGI right now is trading at 3.82, which is the price labeled as "dilution to investors," is it possible that the 3.86 current price of IDC is still overpriced and that the stock could also go down to that "dilution to the investors" price at 2.46? 

Recent Market Updates: Notes for Today

1. Yuan/Renminbi will be officially accepted into IMF's SDR this end of November.


2. As a result of the FED's hint of rate hike this December 16 and US recent job report, mainstream investors are predominantly bearish in their view of the stock market.


3. George Soro is liquidating his gold holdings both in Barrick Gold and Market Vectors Gold Miners.


4. Investors are dumping precious metals and banks forecast more price declines.


5. VLL disclosed last 17 November that Manny Villar bought 81,120,701 worth of VLL shares @ 7.15 last November 11. 

Gold Haters and Gold Bugs

Since the huge decline of gold's dollar price last July 20, numerous articles were written predicting for deeper decline. For these analysts, gold has just started its real bear market, and blamed the gold bugs for the big loss suffered by those who followed their advice.

Photo Credit

(To the blogger's mind, nobody best represent a gold-hater and a gold-bug than Ben Bernanke and Peter Schiff respectively.)

Let us start with gold-haters. Here's one from Wall Street:

"Gold is supposed to be a haven amid hard times and soft money. So why, even as Greece has defaulted, the euro has sunk against the dollar, and the Chinese stock market has stumbled, has gold been sitting there like a pet rock?" - Wall Street

http://blogs.wsj.com/moneybeat/2015/07/17/lets-be-honest-about-gold-its-a-pet-rock/

And another from Washington Post: 

"When you think about it, a bet on gold is really a bet that the people in charge don’t know what they’re doing." - Matt O'Brien, 25 July 

http://www.washingtonpost.com/news/wonkblog/wp/2015/07/25/gold-is-doomed/

And two articles from Bloomberg: 

"Prices will drop to $984 an ounce before January, according to the average estimate in a Bloomberg News survey of 16 analysts and traders." - Debarati Roy and Eddie Van Der Walt, 29 July 

http://www.bloomberg.com/news/articles/2015-07-28/gold-out-of-style-like-bell-bottom-trousers-signals-lower-prices



"Other countries, however, are bigger gold bugs . . . countries like Lebanon, Egypt, Laos, Pakistan, Kazakhstan and Turkey all have a bigger share of gold in their reserves than Russia does, and so face bigger problems from the price collapse." - Leonid Bershidsky, 29 July

http://www.bloombergview.com/articles/2015-07-29/russia-can-t-help-being-a-gold-bug

And finally, from Market Watch:

"Earlier this week, he told me that the gold community now needs to consider the distinct possibility that gold will trade for as low as $350 an ounce." - Mark Hulbert, 30 July

http://www.marketwatch.com/story/investors-need-to-consider-that-gold-may-fall-to-350-an-ounce-2015-07-29?siteid=rss&rss=1

On the other hand for the gold bugs, what happened last Monday is a sign that gold's bear market is about to end. They don't deny the reality of further decline, but they are positive that the sign or reversal is close.

Here's from Business Insider: 

"Gold has had a terrible year so far, dropping to a five-year low in July to $US1080 an ounce, but analysts at Macquarie think the price could rally in 2016." 

http://www.businessinsider.com.au/the-178000-tonnes-of-gold-in-the-world-might-be-worth-more-in-2016-2015-7

And then from Kitco:

". . . gold thrives in the face of monetary turmoil, disorder and uncertainty, . . . 'I think we have all three of these things.'” 

http://www.kitco.com/news/video/show/Kitco-News/1035/2015-07-31/REPEAT-Im-Bullish-On-Gold-Fed-In-A-Hurry-To-Raise-Rates---Jim-Grant

And here's from Zero Hedge: 

". . . gold would experience a severe correction before beginning its real bull market. We are seeing his prediction unfold before our very eyes. What he also said is that as gold approached the $1,000 per/oz mark or even below, everyone would proclaim that 'gold is dead' and start making comically bearish statements." - Tyler Durden, 29 July 

http://www.zerohedge.com/news/2015-07-29/4-mainstream-media-articles-mocking-gold-should-make-you-think

And finally, from King World News:

" I’m not a day trader of gold; I’m a long-term holder. The bottom line is that I believe that the gold market has now seen the worst. Could it go just a bit lower? Yes. But compared to an upside potential of well over $2,000, the downside risk is low.” - Gerald Celente, 22 July 2015 

http://kingworldnews.com/gerald-celente-the-panic-thats-happening-right-now-is-much-bigger-than-just-the-gold-market/

What inspired me to collate the above quotes both from the gold haters and the gold bugs is my reading of a book written by another "gold bug" (Of course, Jim Rickard doesn't like to be classified as "gold bug"). In his book, The Death of Money: The Coming Collapse of the International Monetary System, I found two interesting sections related to gold market. In chapter 8, he wrote: 

"On April 16, 2009, just days after the G20 summit, President Obama sent letters to the congressional leadership requesting its support for a $100 billion commitment to the new IMF borrowings. . . . The letters to Congress stated that the new funding was a package deal intended to increase IMF votes for China and to force gold sales by the IMF."

"China wanted additional votes at the IMF, and it wanted more gold dumped on the market to avoid a run-up in the price at a time when it was acquiring gold covertly."

"It was curious that just as Federal Reserve officials were publicly disparaging gold’s role in the monetary system, the president felt the need to mention gold to the Congress as a confidence booster. Despite disparagement of gold by academics and central bankers, gold has never fully lost its place as the bedrock of global finance."

And then in Chapter 9:

"The total gold supply in the world today, exclusive of reserves in the ground, is approximately 163,000 tonnes. The portion of that gold held by official institutions, such as central banks, national treasuries, and the IMF, is 31,868.8 tonnes. Using a $1,500-per-ounce price, the official gold in the world has a $1.7 trillion market value. This value is far smaller than the total money supply of the major trading and financial powers in the world. For example, U.S. money supply alone, using the M1 measure provided by the U.S. Federal Reserve, was $2.5 trillion at the end of June 2013. The broader Fed M2 money supply was $10.6 trillion at the same period. Combining this with money supplies of the ECB, the Bank of Japan, and the People’s Bank of China pushes global money supply for the big four economic zones to $20 trillion for M1 and $48 trillion for M2. If global money supply were limited to $1.7 trillion of gold instead of $48 trillion of M2 paper money, the result would be disastrously deflationary and lead to a severe depression."

"The problem in this scenario is not the amount of gold but the price. There is ample gold at the right price. If gold were $17,500 per ounce, the official gold supply would roughly equal the M1 money supply of the Eurozone, Japan, China, and the United States combined."

(Source: James Rickards, The Death of Money: The Coming Collapse of the International Monetary System, 2014, pp. 140, 151-152)

The above paragraphs are self-explanatory. If the information provided by Jim Rickards is accurate, then the mainstream gold-haters are mistaken, and it is actually them that are misleading investors and traders. 

Future Hyperinflation in the US and Current Condition of Greek's Financial Sector

Just finished reading two articles from the Zero Hedge. They are about a possible hyperinflation scenario in the US and an interesting event in Greek's banking industry. 

The writer enumerated several concrete steps for Americans to protect themselves in case of hyperinflation. I could not relate with his other suggestions except those related to investment in natural resources, agriculture, and commodities; and to the purchase of tradable items such as jewelry, food, and foreign currency. It is also interesting that though he thinks it could be sooner depending on the turn of events, he gave "the mid-2020's to early 2030's" as a tentative period where this event could take place.   

The other article is about what's going on right now in Greek's financial sector. The writer talks about those who are taking risky decisions in continually trusting the banking sector. They include big stockholders and bondholders, the ECB, blue-chip investors, the Greek government, speculators, retail investors, and Greek depositors. Among the blue-chip investors are Fairfax Financial Holdings, Capital Group, Wellington Management Group, Hedge Fund Paulson and Company, and Dimensional Fund Advisors. The first three actually increased their stakes, while the last two decided to stick it out. What follows are relevant statements that describe the situation:   

". . . any new recapitalization of the banks is likely to hit shareholders and certain bondholders under a new set of European regulations—the Bank Recovery and Resolution Directive—enacted at the beginning of the year."


"This becomes all the more obvious when observing that the ECB itself is now the single biggest stakeholder in the Greek banking system, with some €130 billion in claims, well above the total amount of deposits, suggesting that any other Greek bank liabilities are now almost certainly null and void." 

"The Greek state already owns sizable chunks of the major banks following a recapitalization in 2013. Existing shareholders were given warrants by the government to buy back their stakes; the share prices have, however, continued to collapse following the bailout."


". . . speculative investors, including a number of Greek retail investors and high net worth investors, picked up stocks in Greek banks."


". . . bank depositors are nothing more than unsecured creditors. If and when the reality of the Greek economic collapse is fully tabulated (as the IMF appears to have finally done) it won't be just the equity that is wiped out - depositors themselves face the risk of creeping haircuts to their 'liabilities.'"

Other institutional investors chose the other way; they sold their shares. They include "the Dutch national pension fund, Franklin Templeton, TIAA-CREFF, and emerging market hedge fund Charlemagne Capital, . . ."

After seeing the present scenario in Greek's banking industry, I am thinking about the source of its primary threat. Will the Greeks continue to trust the banking sector after experiencing first-hand the pain of a bank run? Or will they rush into the banks and withdraw all the deposits they have? If the latter be the case, we are about to see what would be the next move of the authorities to restrain such distrust. 

PX: Downward Trend Again?

Though I know the economics of gold, still it is difficult to see the price of a gold stock, PX going down. I saw it came down from 6.20 to 5.56 and then bounced back to 5.97 during the first two weeks of this month, from July 1 to 15. Today, it seems that a downward trend is happening again. PX's closed near its low price at 5.90.

Photo Credit

I am tempted to sell my PX shares and wait for this stock at the bottom and buy again. Two technical analysts told me that it could go down as low as 4.50 before it would bounce back again. However, despite the fact that the price of gold today is reaching another historical low, I changed my mind after listening to the video below.

I hope the speaker is right that we will see the price of gold and precious metals rally the end of July up to August. I think I heard him say that even until the end of this year.

By the way, here's the current price of gold: 

Photo Credit

Latest Updates:

1. From SchiffGOLD

Why is it difficult for the markets to learn?

2. From Peak Prosperity

"During the selloff, gold hit 1141.90, just 30 cents above the previous low of 1141.60. It did manage to rally back, but not all that enthusiastically. Based on today's behavior, I'd guess the next try at 1141 will succeed. If the buck continues to rally, next stop for gold is 1130."


"The miners looked even worse, with GDX off -2.28% on moderately heavy volume, making a new six-year low just today. Last time we were here: October 2008."

"The dollar rose +0.51 to 97.28, making a new closing high for this cycle and inching up towards the May high of 97.88. The continued move higher in the buck is pressuring gold; while we here in the US whine about how horribly gold is performing, over in Europe they see gold moving more or less sideways over the past five weeks and right now it is about at the middle of its seven-week trading range. This tells me gold's swoon is entirely a currency effect. Strong dollar = weak gold."

"This suggest to me, if the buck keeps rallying, gold will most probably drop through 1130 support."

"Oil has dropped to the lower end of its recent consolidation range. My code says oil has further to drop."

"The code also thinks gold and silver are due for a rally. I have noticed that the code can be early - I see further downside ahead, given the strength in the buck."

"The buck is strong. There is no good news right now in metals or in commodities overall. If the buck continues to rise, commodities including PM will most likely continue falling."

As of 18 July 2015:

"Gold, silver, copper, platinum, palladium, miners, oil - all of the commodities I track fell this week. Gold actually held up better than most. However, gold also made a new 5-year low, which suggests to me that there is danger ahead. This tells me that, more likely than not, gold will break lower before it rallies significantly."

"Commodities are all looking bad. Dollar is rising, which is the likely cause for many of them. Oil is continuing to correct and has yet to find its low. . ."

"No catalyst yet for gold, or for silver, or for most of the commodity complex. Physical buying does not trump COMEX, and Shanghai doesn't look particularly excited to buy at the moment. Right now is a seasonally weak period for gold, improving somewhat in August. Likely, new lows are ahead. I hate to be a Gloomy Gus, but that's what I see."

"You may well say to yourself, 'the Fed will never raise rates' - but my sense is, the market believes they will, and that belief pushes the dollar higher. And of course, dollar strength right now ends up pushing commodities (and PM) lower."

"Senior miners sold off quite hard this week, dropping to new lows and ending Friday with hints of a capitulation, dropping to new lows last seen in October 2008. Miners haven't quite broken that 2008 low, but it is not so very far away. . . . Gold isn't the most unloved asset class in the world - that status is reserved for the gold mining shares."

As of 20 July 2015:

"Wow, what a bad day for gold. It fell -35.60 [-3.14%] on massive volume, with most of the damage happening during the Asia trading session. . . . This wasn't about the buck, or about commodities. Those things shape the trend; today's move was about a trading gambit pure and simple - and it worked."

"At 09:29 China Standard Time a huge number of contracts was unloaded onto the market; one article I read suggests the assault happened on the Shanghai Gold Exchange first, and then COMEX responded. . . . Regardless, the short assault snapped gold instantly through support and drove it down to 1080 in one minute. It was a $50 loss, clearly an engineered move designed to run the stops below 1130. . . .Bottom line: not enough traders wanted to buy the dip."

"The RSI-7 for gold is now hovering around 8, which signals a strongly oversold market. . . . I believe the gold market is ripe for a rebound, but so far, that's only potential. We have to see the buyers appear first. . ."

"Miner losses were catastrophic today, . . . Superlatives fail me, I've not seen losses this big in the mining shares ever. Its total and complete capitulation in the miners, everything is being sold. Usually this happens at or near the lows, but before I buy, I want to see a reversal pattern show up. . . . Juniors made new lows too."

"If you ever wanted to know what "capitulation" means, . . . of traders panic selling out . . . - regardless of price. Sell. Sell! SELL!!!"

". . . On days like today, a reasonable question is, when should we buy? Is now the time? What process might we use to decide?"

"One process is just picking a day and saying 'boy, XXX sure looks cheap, I think I should buy now!' Yesterday could well have been such a day for the mining shares - lowest prices in ages, a great deal to be sure. . . that strategy seems...sub-optimal."

"Another process is waiting for a 'reversal pattern' to appear. The concept is, before buying, you wait for the market to show momentum has changed direction. i.e. you wait for the knife to stop falling before you try catching it."

"How does this work? One simple method waiting for a swing low: a two-day chart pattern where the closing price of today is higher than the high of yesterday. . . . Waiting for the swing low would have stopped you from buying . . . That seems pretty good. At the very least, it would have saved you from today's disaster."

". . . I hate to say its a sure thing, but under today's circumstances, a swing low is a very powerful signal. Without high volume, without other signs of capitulation, the swing lows are more iffy."

"I like to say, 'wait for the buyers to show up.' The chart evidence for buyers showing up is a swing low: a two-day chart pattern where the second day's close is higher than the first day's high."

"So I should have mentioned that, after a major move like we saw yesterday, retail buyers (like you and me) see the lower prices, and rush out to buy. This will cause a big spike up in the morning, as retail buys the dip."

'However, once that first hour is over, then we get to see where things really go. Is the big money loading up, or selling the rally? This morning, GDX was up over 5%, and that rally peaked out at 10:26 EST, right at the end of the first hour of trading. It has faded a bit since then."

"This is why we wait for the close. The last half-hour of trading is when the big money decides to either buy and take whatever-it-is home for the evening, or to sell. "

"Many times I have been tricked into buying during that first hour. Sometimes its the right thing to do, such as when you see a major break above resistance, but in today's circumstance, when the market hasn't yet proven it wants to reverse course, its a bit dangerous, as that first hour rally often fades and by end of day, perhaps even turns red."

'I believe the PM market will turn, and soon. We have a great buying opportunity in the very near future. Capitulation is exactly what we want to see to set up the low, and we definitely saw capitulation yesterday. But we need to wait for the market to show us that it is ready to reverse. That could be today, or tomorrow, or the next, but I believe it is not far away."

As of 30 July 2015

"If the dollar keeps rising, we'll test the 1072 lows soon enough, and I'm not sure they will hold."

"Commodities are trying hard to reverse. It's not clear if they'll manage that now, or if they need to fall to a lower level to find buyers. Some parts of the commodity complex have marked lows, but the strengthening dollar may short-circuit any commodity rally if it continues. How long will this dollar move last is anyone's guess - my sense is it was driven by increased optimism for a Fed rate hike following the FOMC meeting that ended Wednesday."

"All we can do is watch and wait." 

3. From CNBC

"Ultimately, Garner said the key level to watch for gold is the support around $1,125 to $1,120. If the price can break above $1,230, that could trigger to make the bulls happy all the way up to $1,305 or $1,400."

4. From Williams Lindsey

5. From Profit Confidential

6. From Zero Hedge

". . . 1080 happens to be the multi-decade channel limit above which it breached in 2009 and the 50% retracement of the uptrend from 1999 low to 2011 high."

"Although Gold is holding the channel median support, RSI depicts an increase in bearish momentum resulting in the break below the up sloping channel in force since 2 years."

"This suggests the down trend could extend further towards January 2008 highs of 1045/1030 but also, from an Elliott wave standpoint, the projected target for the 5th wave of the broad bearish cycle that started at 2011 highs."

"Short-term, in light of daily RSI which is sustaining a 1-year low (blue line) a rebound looks under way. However, it should be viewed as corrective so long the Head and Shoulder pattern persists i.e. 1130/1146 levels hold."

7. From King World News

"I’m not a day trader of gold; I’m a long-term holder. The bottom line is that I believe that the gold market has now seen the worst. Could it go just a bit lower? Yes. But compared to an upside potential of well over $2,000, the downside risk is low.”

Ang Pagkalugi ng Shareholder sa Stock Market

Tanong: Paanong nalulugi ang isang shareholder sa stock market?

Sagot: Nalulugi ang isang shareholder sa stockmarket pag bumaba ang presyo ng stock na kaniyang binili.

Photo Credit

Tanong: Bakit ba bumababa ang presyo ng isang stock?

Sagot: Bumababa ang presyo ng isang stock sa iba't-ibang mga kadahilanan. ilan sa mga ito ay ang mga sumusunod: 

1. Pagkawasak ng mga makinarya o mga kasangkapan na gamit sa produksiyon. Ito ay maaaring sanhi ng kalumaan, kapabayaan o dili kaya ay pananabotahe ng ilang mga tao na may galit sa kumpanya.

2. Pagbaba sa inaasahang kita. Ito ang dahilan kung bakit kinakailangang basahin ng maigi ang mga financial statements ng kumpanya na bahagi ng kanilang public disclosure. Matutunghayan ang mga impormasyong ito sa kanilang annual at quarterly reports. Malalaman sa net income at earnings per share ng kumpanya kung tumataas ba o bumaba ang kita nito.

Bumababa ang kita ng isang kumpanya sa mga sumusunod na kadahilanan:

• Pagbaba ng product demand

• Pagkahuli sa paggamit ng makabagong teknolohiya. Kung ang kakumpetensiyang kumpanya ay gumagamit ng makabagong teknolohiya, normal na resulta na ito ay bababa ang halaga ng produkto. Ang kumpanya na nahuling sumabay sa ganitong mga uri ng pagbabago ay natural na makararanas ng pagliit ng kabuuang benta.

• Pagtaas ng halaga ng mga hilaw na materyales na ginagamit para sa produksiyon

• At mga panlabas na panghihimasok upang patigilin ang paggawa 

3. Capital Consumption. Ito ay nangyayari kung mali ang accounting system, masamang mga batas ng pagbubuwis o dulot ng mga maling business practices.

4. Pagtaas ng interest rates. Ang tendency ng mga negosyante pag mababa ang interest ay mangutang either for business expansion, pagbili ng sariling shares, o pag-iinbest sa ibang mga securities. Gayundin naman, dahil sa mababa ang interest rates, ang mga inbestors ay mas pipiliin ng bumili ng mga shares sa halip na mag-impok ng pera sa bangko. Sa kabilang banda, pag tumaas ang interest rates, kabaliktaran ang magiging resulta. Magiging konserbatibo ang mga kumpanya sa pangungutang at mas nanaisin ng ibang mga inbestors ang mag-impok na lamang ng pera sa bangko. At dahilan sa ang tendency ng daloy ng pera ay palabas sa stock market tungo sa credit market, bababa ang presyo ng stock.

5. Malinvestment. ito ay mga maling business decision na mag-invest sa mga maling linya ng produksiyon na hindi nagbibigay ng inaasahang kita. Kung ito ay hindi malulunasan ng agaran, nauuwi ang ganitong uri ng pag-aaksaya ng kapital sa bankruptcy.

6. Reaksiyon ng mga inbestors at traders sa pinananiwalaang overvaluation ng isang stock. Sa oras na ang merkado ay magduda sa batayan ng labis na pagtaas ng presyo ng isang stock, mas higit na dadami ang mga sellers kaysa sa mga buyers. Bunga nito, bababa ang presyo ng stock sa normal na level nito. Kayang lubhang mahalaga na malaman ang book value at price to book value ratio ng isang stock bago ito bilhin.

Reference:

Machlup, F. (1940). The Stock Market, Credit and Capital Formation. London/Edinburgh/Glasgow: William Hodge and Company, Limited.

PSEi, Mutual Funds, and ETF: Pros and Cons

May iba't-ibang klase ng index funds depende sa sector. May financial index, mining index, property index, etc. at bukod pa yong PSE index na binubuo ng 30 companies na ginagamit na sukatan sa performance ng stock market. So ang mga companies na ito kinakailangang ma satisfy nila ang 3 requirements: free float level na at least 12%, dapat kasama sa top 25% in terms of median daily value sa loob ng 9 na buwan within a year, at ito yong top 30 companies base sa market cap. 

Major advantage ng investment sa indices ay mararanasan during the bull rally. And at the same time, pagninerbyos na ang mga bears, ang indices din ang unang naaapektuhan. So okey lang mag-inbest sa mga index funds kung naniniwala ang isang inbestor na ang PSE ay nasa bull market pa rin. Kung mga bears na ang naging dominante, mainam na dumistansiya muna sa mga index stocks.

Pagdating naman sa mutual funds, kumukuha rin sila ng mga stocks sa index at malaya rin silang mamili outside the index coming from growth stocks, cyclicals, and emerging stocks. And besides, may iba't-ibang klase rin ng mutual funds. Meron na purely stocks lang, meron naman bonds either corporate or government, merong combination at meron ding money market. 

Ang kagandahan sa mutual fund maaaring maka-avail ang isang investor ng mga blue chips stocks kahit limitado ang kaniyang pondo dahil sa pinagsasama-sama ang mga pondo ng iba't-ibang mga inbestors. So bilang isang inbestor, kasama ka rin kung tutubo o malulugi yong pondo. 

Sa ETF naman, unlike sa ibang bansa na ang ETF ay binubuo ng commodities, stocks, bonds or a basket of assets, sa PSE, ang ETF ay binubuo ng ilang mga stocks galing din sa index. Ang kaibahan lang nito sa mutal fund, traded siya sa stock market. Kung matutuloy yong recent development na pati mutual fund, puwede na ring itrade, halos wala na silang pagkakaiba maliban na lang sa mas malawak ang sakop ng mutual funds. 

Pagdating sa iba pang mga advantages halos pareho lang. Hindi na problema ng inbestor ang pamimili ng mga stocks. Bahala na ang mga eksperto. So angkop ito sa mga walang oras magresearch. Dagdag din dito yong pakinabang ng diversification. Ayon sa conventional na paniniwala, bumababa ang risk sa ganitong strategy. 

Ilan sa mga disadvantages ay yong underpferformance at overdiversification. Pag dating sa mga bayarin, mas okey ang ETF dahil wala ka ng babayaran na management fee. I am not sure dahil hindi ko pa nasubukan ang ETF kung ano ang ibig sabihin ng "no sales-load commissions" sa ETF. And the final advantage ng ETF sa mutual fund, nakikita ng inbestor yong ETF composition hindi kagaya sa mutual fund, pwedeng palitan ng fund manager ang composition ng securities na hindi alam ng inbestor.

And of course dahil sa ang nature ng ETF is to track the index, depende rin sa business cycle ang performance nito. 

Sources:

1. Mutual Fund

2. Index

3. ETF

ACE

Ang sabi ng mga experts, PSE is still in the bull market, sitting bull nga lang daw. Today, expected ng marami na red ang PSE. But contrary to expectation PSE rose from 7,580.46 last Friday to 7,670.37 today. Napansin ko, this first five months of 2015, from Feb 11 to 27 and March 25 to April 7, heavy ang buying ng mga foreign brokers. Pagpasok ng April, nag-iba na ang tono. From April 8 to 20 and May 8 to 28, heavy selling ang gawa ng mga foreign brokers. Today, June 1st, lumiit ang net ng foreign brokers down to 40,881.00. Hopefully, magbago na ang timplada in the coming days. 

As a result of heavy selling during the past two months, I decided to change my trading strategy. I call it "bottom fishing". Anumang stocks na sound ang fundamentals subalit nakaranas ng malaking % loss ay kandidato sa bottom fishing na ito. I am still testing this idea if it will work. Last Friday, both PNB and RFM fell down more than 14%. I thought of buying them today, but I changed my mind. I just want to observe if my projection is correct. It turned out that today PNB rose up 10.65% and RFM 6.16%. Kung bumili pala ako ng 2 stocks na ito, ayos sana ang gain. Anyway, nandiyan lang naman ang stock market. Today, after studying the decliners, I came up with one stock na sound ang fundamental, ACE. 

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From 1.15 to 1.09, ACE's price fell down to 5.22% today. I think this stock is safe to buy below 1.09 for 84.27% of buyers today bought @ 1.18. Still the ideal price for me to enter this stock is between 1.00 to 1.03.

Other Relevant Information:

Today's Market Price: 1.09

Previous Price: 1.15

% Change: 5.22 %

Volume: 170,000

Number of Trades: 7

Top Buyer: Westlink, 194,000 @ 1.17

Top Seller: Angping, 118,000 @ 1.18

More solid sellers than buyers, 3 to 2

AR 2013 Book Value: 3.58

AR 2014 Book Value: 3.71

1Q 2015 Book Value: 3.75

AR 2013 EPS: 0.03

AR 2014 EPS: 0.13

1Q 2014 EPS: 0.05

1Q 2015 EPS: 0.04

FNI: Bashers and Hypers

As a five-month old small time trader, reading the comments on numerous threads from Facebook stock market groups provides me a free education how to conduct my own trading activity. Just recently, one stock caught my attention due to frustration of those who suffer big paper loss as a result of buying FNI on the basis of "experts'" analysis.

Out of curiosity, I checked FNI's company disclosures. I focused particularly on its 2014 Annual Report and 2015 1st Quarterly Report. I was looking for an answer for the constant decline of FNI's market price, and at the same for a potential gain. As the saying goes, "where there's smoke, there's fire." I know it's risky, but that's part of a trader's life. 

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After reading the reports, I found details that are both popular and unknown to FNI owners. I am hesitant to post the unknown details on those threads for I do not want to be misunderstood as making fun of the pain of those who are losing their hard-earned money. Instead, I decided to write about it hoping that this article could help somehow in finding answer for FNI's decline. I know that the truth hurts, but knowing it is better than relying on false hope.

Before I share what I found, I want to clarify that I might be mistaken in my analysis. This is just my personal interpretation of the mentioned reports. I encourage FNI owners to check the documents for themselves.

These are the details:

1. FNI's book value as of 1Q2015 is 0.29. Of course, some technical analysts who consider book value as irrelevant in their trading would dismiss its importance. And others would even argue that the book value approach is not applicable to FNI. I respect their opinion. However, as for me, unless the firm has an established performance of earnings for several years, I would never venture buying a stock with a high Price to Book Value ratio.  

2. Increase in authorized and outstanding shares. From 7,300,000,000 authorized shares in June 2014, FNI has increased them into 35,871,428,572 as of December 2014. When it comes to outstanding shares, they were increased from 7,003,920,939 to 17,467,014,310 as of December 2014. I think it is important to understand the implications of these increase on your portfolio. Knowing the difference between the authorized shares and the outstanding shares affects your investment in that stock due to its potential for stock dilution. This is what Investopedia has to say about this: 

"Dilution reduces a stockholder’s share of ownership and voting power in a company and reduces a stock’s earnings per share when new stock is issued. The larger the difference between the number of authorized shares and the number of outstanding shares, the greater the potential for dilution."

Concerning the increase in outstanding shares, I think the acquisition of PGMC has a lot to say about this. In exchange to 99.5% ownership of PGMC, FNI issued 10,463,093,371 common shares to the 13 stockholders of PGMC. This is how I understand that "share swap" thing. 

3. PSE's suspension of FNI. PSE suspended FNI from public trading due to the firm's non-compliance with the 10% minimum public ownership requirement. This suspension took effect during the 1Q2013. As of December 2012, FNI's public float was 2.41%. The suspension was lifted after FNI complied with the PSE requirement and it resumed public trading again beginning 2Q2013. At present, FNI's free float level is 22.91%. It is just interesting that FNI declared a huge cash dividends of 1.656/share on May 22, 2013 while the lifting of the suspension happened on June 2013. 

4. Government incentives. Verify if this is true. Is it really true that PGMC's fiscal incentive and income tax holiday will expire this 2015?

5. Third largest nickel producer. This is popular. I think most investors know this that makes FNI's "low" price attractive. PGMC is considered as the third largest nickel producer in the Philippines. As of 2014, PGMC produced 10% of nickel ore production.

6. Unrestricted earnings as of December 2014: 4,691.5 M. This is another thing that makes FNI attractive. Considering this, the speculation that FNI will soon be delisted from PSE is unlikely to happen.

7. History of Market Price from 2012 to December 2014. As of 2012, 4Q was the best. It gave both a great buying and selling opportunities with a low price of 1.21 and a high price of 3.34. Realizing this, what's happening right now in FNI's price is not something new. As of 2013, 2Q was the best. You could buy FNI @ 0.9 and sell it @ 1.98. Reaching 2014, 1Q was the best quarter to buy @ 0.96 and between 2Q and 3Q as the best time to sell @ a price between 3.00 to 3.01. 

Question: What does this price history tell you about trading decision concerning this stock?

8. Key Performance Indicators. As of 1Q2015, FNI's ROE and ROA are (4.172%) and (3.030%) and its EPS was (0.030879). In other words, 1Q2015 had a negative return. There are traders and investors that such negative financial report is a sufficient reason to sell this stock. However, just focusing on 1Q2015 would give a superficial impression that buying FNI is not profitable. But if you will review the firm's performance during the previous year, you will get a bigger picture of the company's financial standing. As of AR2014, FNI's ROE and ROA were 89% and 63% and its EPS was 0.66. Now, that's impressive! Another thing I like about this company is its small debt. As of 2014, its Debt to Equity ratio was 0.41 and it was even reduced down to 0.369 this 1Q2015.  

9. Stock subscription. FNI deposited 50M of the 200M stock subscription in PGMC on March 31, 2015. 

10. Production period. PGMC mine is only in production durng drier months of the year between April to October of each year. This explains the 216,277M loss in 1Q2015, which represents the recurring and general administrative expenses of the company.

After reading these details, can this blogger be categorized as an FNI hyper or a basher? I can't control what you think. I am not an FNI hyper for I do not own any shares in this company. At the same time, I am also not a basher for I intend to buy at my entry price. My goal is just to satisfy my curiosity about the popularity of this stock. I also wish that understanding these details would be of help somehow particularly for those who suffer an emotional setback as result of paper loss. As for the "joke" that FNI's price could sink down to 1.00/share and even to 0.50/share is a possibility that present owners must prepare themselves emotionally. However, this is not the end of your world. The stock could bounce back anytime. 

Relevant Article:


FNI Update as of 31 March 2015

Technical Analysis of FNI as of June 16 2015

My # 2 Stock: DMPL-

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Since Del Monte Pacific Limited acquired DMFI in 2013, its capital structure changed. During the early stage of the acquisition announcement, the market received it positively. After releasing to the public the firm's financial statements with negative returns, its share price started to decline. The firm stopped paying dividends to shareholders. Many investors left this stock. It was during its decline that this stock got my attention and so I researched for its cause. After reviewing the annual and quarterly reports of the company, I am still cautious. I think if DMPL will be able to digest DMFI, it will grow more than 4x its previous size. That would mean, its share price could jump from 12.68, its current price to above 40.00. There is no better time to buy this stock than now. Still the crucial part is the release of its 4Q FY2015!

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Update as of July 1, 2015

1. Trade Summary 

Lowest Price: 11.56 

Highest %: 67.25% @ 12.00 

Average: 11.92 

Volume: 531,200 

Number of Trades: 91 

Net Foreign: 5,385,872.00 

2. Personal Interpretation

What do these numbers mean? The way I see it though the volume and the number of trades are still small, but this could be a signal of a reversal. If my memory serves me right, I think for 6 months DMPL's price just ranged between 10.70 to 13.50, a big drop from 27.05 in May 2013 due to DMFI acquisition. Another thing to notice is the entry of CLSA just today. Between June 15 to June 30, you cannot see CLSA trading DMPL. Unlike ATR Kim, which I consider an "early bird," CLSA is just waiting for the release of 4Q FY2015 before making a decision. As of today, July 1st, due to impressive improvement in DMPL's financial standing, CLSA is the biggest solid buyer with a net amount of Php 3,600,000.00 followed by ATR KIM, Php 1,102,004.00.

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July 2 Update

Lowest Price: 12.00

Highest %: 56.58 % @ 12.70 (This is a good sign from 12.00 with highest % yesterday).

Average: 12.65

Volume: 584,400

# of Trades: 160

Net Foreign: 5,731,084.00

Notable Buyers:

1. ATR KIM

Volume: 300,400

Buy Amount: 3.8M

Average: 12.67

2. UOB KAY HIAN

Volume: 120,000

Buy Amount: 1.5M

Average: 12.67

3. DEUTSCHE

Volume: 62,500

Buy Amount: 786K

Average: 12.58

Notable Sellers:

1. The First Resources Man

Volume: 223,000

Buy Amount: 2.8M

Average: 12.67

2. PH Equity Partners (PEP)

Volume: 160,300

Buy Amount: 2M

Average: 12.69

3. BPI SEC

Volume: 51,100

Buy Amount: 643K

Average: 12.59

Comment:

The volume slightly increased compared to yesterday's trade. As for number of trades, 69 more were added. What I consider a good sign is the increase in average price in trading DMPL. I missed CLSA. Was it done buying and waiting for an exit price?

What I want to see in the coming days is the doubling or even tripling of volume and the number of trades. How I wish DMPL will return to its previous price of 27.05. But I think, it will take another quarter or if not the whole FY 2016 to convince investors that DMPL has returned to profitability. For now, as a trader of stocks with fundamentals, what I am guarding is unusual market volatility caused by uncertainty among investors and traders alike related to the possible increase of interest rates. In the meantime, I think I will guard the movement of the above 4 brokers to determine my own exit price: CLSA, ATR KIM, UOB KAY HIAN and DEUTSCHE.  

My # 1 Stock: PX

The numbers provided by both the AR2014 and 1QR2015 of Philex Mining Corporation are not impressive. However, since PX is a gold stock, I believe that this stock has a long prospect, for about 5 to 10 years. Buying this stock is my way to protect my income from inflationary monetary policy. Almost everyone I talked to in several stock market fora do not like this stock. Their primary reason? In addition to the current decline of mining sector, the restrictive regulation of PH government adds more burden to mining firms. But I think the real reason why they fail to appreciate the value of a gold stock is that they don't understand the economics of gold. 

Photo Credithttp://business.inquirer.net/186136/philex-mining-cleared-from-p18-m-tax-case

The major barrier to the growth of gold price is political. I think that governments will continually inflate the money supply in the coming years "to save the market" from itself. As I review the price history of gold, I realized that for 4 years now, its price has been depressed. I don't think that it will last 5 or 10 years more. The longest period in recent history that the price of gold has been depressed was 13 years, between 1988 to 2001. Both governments and central banks hate gold for it limits their power to create fiat currency. But they cannot do it indefinitely. Sooner or later, there will be a day of reckoning. When that time comes, investments in gold in whatever form - bullion, coins, mining shares - will soar! This is the best long-term investment I can suggest to my relatives and friends.


Relevant Article:

China Is Laying the Groundwork for a Gold Standard Right Now (Video)

Reasons for Buying CROWN

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After reading CROWN's prospectus, I came up with a list of reasons for buying this stock on its IPO day:

• Lower number of outstanding shares. The firm's total authorized shares is 1.3 B. Its present total number of shares is 472.8 M. Through this IPO, 158 M shares will be added. The total number of common shares will be 630.8 M after the IPO. This will increase the BVPS from 1.19 to 1.22. This is still small compared to other firms. This means that lesser number of stockholders will share with the firm's profit. 

• I see CROWN as an emerging growth stock. The firm has been growing since 2012. It is adding 62 new employees into its 246 existing employees, purchasing new land, and building new structures beginning April 2015 to March 2016.  

• Dividends policy is clear. Its 10% of net income.

• Strong financial ratios: D/E - 0.47; E/A - 0.67; BVPS after the IPO - 1.22; P/BV - 1.15; P/E - 10.07; ROE - 11.61%; DY - 1.04%, and; ROI - 12.65%.

• Reasons for capital raising: plant and equipment, debt retirement, modernization of plant, and working capital. Debt retirement will strengthen the firm's balance sheet.

• Competitive strengths. The firm has been in operation for 25 years and has been offering quality and USP products. The company considers DNL as compounds' leader. CROWN's total income is close to 1/3 of DNLs. Since DNL is trading @ 21.00/share, CROWN could potentially be trading fairly @ 7.00/share in the near future. In pipes, Neltex is the leader and CROWN is the fifth, but in terms of net profit, CROWN is the 3rd next to Emerald. 

• Impressive website and prospectus. These demonstrate that the firm anticipates something big beginning this April 2015. 

• Taking advantage of the opportunity in construction sector. 

• Favorite words of the company: quality, relationship, customization, modernization and increase. Great company culture.

• The firm has strong customer base.

• The firm owns 51 motor vehicles.

• Products and services. The company has 2 business groups, compounds and pipes. Compounds are used in wires, cables and bottles. Pipes are used in electrical, potable, telecom wiring and gas pipelines. The company is a pioneer in PP-R pipes. 

Retail Sector

In terms of total assets under the retail sector, CAL is the smallest. It has 1.6 B total assets as of Sept 2014. RRHI is the leader with 57.4 B; followed by PGOLD, 53.6 B; SSI, 15.1 B, and SEVN, 7.8 B. 

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In terms of earnings per share (EPS), on the basis of September 2014 quarterly report, CAL is the highest considering its small total assets compared to its competitors. ITS EPS was 0.22. Others have the following EPS:

RRHI - 2.60

PGOLD - 1.63

SSI - 0.29

SEVN - 1.91

Concerning debt to equity ratio [D/E (x)], RRHI is the most conservative followed by PGOLD. Their balance sheet is very strong. SSI is the weakest.

RRHI - 0.39

PGOLD - 0.56

SSI - 2.96

SEVN - 1.39

CAL - 0.96

How about price to book value ratio [P/BV (x)]? I think CAL is the most fairly valued with 1.52. SEVN is overpriced with 15.59. RRHI's P/BV is 2.92, PGOLD's is 3.18, and SSI's is 8.58.

Again, when it comes to price to earnings ratio [P/E (x)], CAL is the cheapest stock with 15.86. SEVN is the most expensive, 58.63. RRHI has a 32.15 P/E ratio, PGOLD has 24.20, and SSI has 34.13.

When it comes to return on equity (ROE), SEVN is the highest with 26.90% followed by SSI with 17.62%. PGOLD has the 3rd highest ROE with 13.20%. CAL is the 4th with 9.65%. RRHI has 9.53% ROE.

Finally, concerning dividend yield, PGOLD is the first with 0.50% followed by RRHI with 0.49% and SEVN with 0.26%. Both CAL and SSI have no dividend yield. CAL stopped paying dividend last 2014. And SSI was just publicly listed last November 7, 2014. 

On the basis of these numbers, CAL will be the best choice for investment. However, since its financial report for 2014 is still not available, its better to wait first to know the firm's financial standing as of 2014. Once the report is released and shows an unfavorable outcome, the next investment option in retail sector would either be RRHI or PGOLD. As for me, I will go for RRHI provided that both its P/BV and P/E ratios will go down a little bit.      

SHNG and LAND

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Among 86 companies under the property sector, PSE included 15 in its index. The existence of these numerous companies shows that real estate industry is booming in the country. Whether it is a bubble or not is another question. Among 15 companies, in PSE property index, my broker selected 7. They are ALI, CPG, FLI, MEG, RLC, SMPH and VLL. During my first three months in the stock market, I tried three stocks from my broker's list: ALI, SMPH and MEG. As a result, I gained once in ALI, twice in SMPH, and almost even in MEG. However, after reaching a price almost close to their "fair value," these three stocks started to dance sideways. This makes it difficult for me to enter. And so I did my own research and came up with my own list after using fundamental analysis. I came up with 11 stocks. My only criterion is to do further research on stocks that are consistently paying out dividends. To my surprise, 8 stocks in PSE property index did not appear in my list and 1 in my broker's list, CPG. I think if there is any common opinion I share with both PSE property index and my broker, it is about MEG and FLI. What surprises me is the exclusion of both SHNG and LAND. Among the 11 stocks in my list, I see SHNG as the most attractive. Its P/E ratio is 5.60; P/BV ratio is 0.64, and; its ROI is 16.5%. LAND on the other hand is the next undervalued stock following SHNG with a P/BV ratio of 0.75. I wonder about the reason for exclusion. Perhaps, the experts know something about these 2 companies that the financial statements do not show. That's the limitation of a small time individual investor.  

An Experiment in Stock Valuation: Market Price and BVPS

I want to make an experiment in stock valuation. I intend to use this as a personal reference in investing, trading and speculating. Don't ask me how I manage to combine these three approaches. Personally, I prefer long-term investment, but with the kind of market that we have, I consider it blind to stick with this plan regardless of stocks that you buy. I still believe that long-term investing is applicable particularly if you still have time and has enough patience to wait for several years. 

We are living in an interventionist society. And so the stock market is no place for long-term investors who follow conventional wisdom. In a market that we have, whether you like it or not, you will be pushed either to speculate or trade. 

In this experiment, I selected 8 tickers and 2 of them are not included in my portfolio. And by the way, I have to emphasize that this article is NOT A RECOMMENDATION to buy the stocks I selected. I am simply learning while writing my thoughts and do actual trading. 

The 8 tickers are as follows: CAL, CEB, COSCO, CPV, DMPL, EDC, PSPC and PX. In this article, I just want to focus on market price and book value per share of these stocks. 

Market Value (MV)

What is a market price of a stock? A market price of a stock is "the current price at which the stock is traded" at PSE. As of March 22, 2015, the market price of my selected stocks are as follows:

CAL: 3.94 

CEB: 86.05 

COSCO: 9.14 

CPV: 5.6

DMPL: 12.2 

EDC: 8.19 

PSPC: 2.88 

PX: 7.62

Book Value (BV)

Now let's go to book value per share (BVPS). What is BVPS? BVPS is

"A measure used by owners of common shares in a firm to determine the level of safety associated with each individual share after all debts are paid accordingly. Should the company decide to dissolve, the book value per common share indicates the peso value remaining for common shareholders after all assets are liquidated and all debtors are paid. In simple terms, it would be the amount of money that a holder of a common share would get if a company were to liquidate." - Investopedia

Computation:

BVPS = Value of Common Equity (Total Shareholder Equity - Preferred Equity) / 

# of Shares Outstanding

The Book Value of the 8 Stocks as of 2014

CAL: 828,645,599 / 359,827,000 = 2.30

CEB: 22,554,884,877 / 605,953,330 = 37.22

COSCO: 58,423,000,000 / 7,401,763,564 = 7.89 

CPV: 1,260,676,104 / 564,210,000 = 2.23

DMPL: 10,048,852,000 (228,383,000*44) / 1,944,035,406 = 5.16 

EDC: 35,433,800,000/18,750,000,000 = 1.88

PSPC: 3,449,920,000 / 2,165,024,111 = 1.59

PX: 26,110,000,000 / 4,940,399,068 = 5.28

Notes:

1. CAL's BV is based on a balance sheet reported as of December 31, 2014 and the number of outstanding shares is current.

2. CEB's BV is based on a balance sheet reported as of September 30, 2014 and the number of outstanding shares is current. 

3. COSCO's BV is based on a balance sheet reported as of December 31, 2014 and the number of outstanding shares is current. Moreover, the figures in the report are expressed in million and that is why I added 6 zeros to COSCO's total common equity for computation:

Total Assets: 82,420 - Total Liabilities: 23,997 = Shareholders' Equity: 58.423 

4. CPV's BV is based on a balance sheet reported as of December 31, 2013 and the number of outstanding shares is current.

5. DMPL's BV is based on balance sheet reported as of December 31, 2013 and the total # of outstanding shares is current. Furthermore, the original figures are expressed in USD in thousand and the forex applied is 1USD=44Php.

6. EDC's BV is based on balance sheet reported as of December 31, 2012 and the total # of outstanding shares is current.

7. PSPC's BV is based on balance sheet reported as of June 30, 2014 and the total # of outstanding shares is current.

8. PX's BV is based on balance sheet reported as of March 31, 2014 and the total # of outstanding shares is current. 

9. I am aware that to have a more accurate data, one has to use either a "weighted outstanding shares" (which I do not have time to research now and my initial impression is that the subject is too technical) or to go back to the past (which can on only be done if you have Michael J. Fox's time machine) to come up with the exact shares outstanding consistent to the year the book value of the stocks was reported.. And so I deliberately ignore this difficulty and simply worked with figures taken from two different time to compute BVPS. 

Comparing Market Value (MV) with Book Value (BV) 

Finally, let us compare the market value (MV) and the book value (BV) of the 8 stocks:

CAL                MV: 3.94                   BV: 2.30 

CEB                MV: 86.05                 BV: 37.22

COSCO           MV: 9.14                   BV: 7.89 

CPV               MV: 5.6                     BV: 2.23 

DMPL             MV: 12.2                   BV: 5.16 

EDC               MV: 8.19                   BV: 1.88 

PSPC              MV: 2.88                   BV: 1.59 

PX                 MV: 7.62                   BV: 5.28

I used purple color in typing the stocks, which I think in a market flooded with excessive liquidity are not "overpriced". However, these stocks are problematic. For one, PX is under the mining sector, which I assume all analysts agree is in the downward and sell trend. 

Second, both CAL and PSPC are unpopular. In fact, their IPO stories are not good. After reaching higher prices than the initial offering for a short period of time, they sunk below their original prices. 

Third, the fundamentals of COSCO is good. However, its financial statements and EPS appears questionable to me. The firm reported a soaring income in 2014, but paid a very minimal dividend to its shareholders. 

Fourth, both CEB and EDC are considered solid firms. In fact, they are included in one broker's top stock picks this 2015. Though the USD is strong and it certainly has an impact on CEB's financial position, still I have no question about its market price due to the low price of oil, which a huge part of their operational expenses goes. But in the case of EDC, I am beginning to doubt its soundness, not only because it has been into expensive renewable energy but I sense the interfering hand of the government in this firm. 

Finally, though I am suffering loss in buying DMPL, but instinctively I like this stock after reading a considerable number of pages of the company's report. I just wish that my instinct is right. If there is a way for me to ask few of their personnel, I want to know which firm they consider a strong competitor and also questions related to the financial impact and current status of its acquisition of DMFI.