Feb 12, 2014 – Bottom-Fishing Possible Turn Around Stock Ideas – Companies in a Reversal Technically and Fundamentally

Date Published: Feb 12, 2014

$CPG – Century Properties Group

Last Price: Php 1.35

Overview:

Century Properties Group, Incorporated, formerly East Asia Power Resources Corporation (PWR).

For traders, they may remember the chart of (PWR) when it was made as the backdoor listing vehicle of what is now known as CPG.

PWR chart

Backtrack to today, February 12, 2014 and we have $CPG trading like this:

5 year weekly

Like a roller coaster, the chart is currently trading near the 52 week lows of 1.08, although some form of support at 1.25-1.35 seems like a place where some bottom-fishers are accumulating, let us check the company’s financials to see if the company is worth buying 2 years after listing and after a series of placements (Note the placements at 1.75 and 2.05 for years 2012 and 2013 as expounded below.)

Snapshot of Bloomberg Metrics:

According to Bloomberg, Century Properties Group is trading at an estimated P/E ratio of 5.5 while its trailing twelve months P/E ratio is 6.25.  This compares to our Philippine composite which is trading at a P/E ratio of 17.75X (on a 2013 trailing basis) which is why some people are wondering why this company is trading at a discount versus the index.  The normal question is : What is wrong with the company?

bloomberg metrics on cpg

Before answering that, we proceed to the important events for CPG other than the earnings and income statement which will follow next.

Read more here: http://www.century-properties.com/investor-relations/disclosures/disclosures-archive/

2 Significant Placements (i.e. Significant Resistance Supply  for Traders)

1.) March 6, 2013 – Top Up Placement of 800 Mil shares @ 2.05 limit price via Macquarie and Standard Chartered Singapore

Top Up Placement on CPG

Once the transaction is completed, the controlling shareholders which comprise the family of businessman Jose E.B. Antonio, will trim its ownership in Century Properties to 66.73 percent from 72.73 percent.  The company’s public float, meanwhile, will increase to 33.27 percent from 27.27 percent. — VS, GMA News

 

2.)  Feb 20, 2012 – Top Up Placement of 1.333 Bil shares at 1.75/share via UBS and Macquarie; Buyer UBS Phils., Seller Ventures Securities

top up placement on cpg 2012

*****

Share Buyback Programs (I just checked snippets from their 2013 disclosures and found some interesting buybacks.  Not sure how many more they’ll buy but notice that near 1.30 levels they’ve been buying more than their usual amounts.)

You can find them all here, just check the website and SEC forms to check.  I didn’t have time to tabulate each one to know their average price and number of shares bought.  Neither do I have any idea how much more shares they will buy (for their share buyback program.)

http://www.century-properties.com/wp-content/uploads/2013/09/SEC-Form-17-C-buyback-01Aug2013.pdf

share buyback programmore shares bought

*****

I’ve been talking so much but forgot that I may be talking to someone who is a foreigner.  Okay, for anyone who’s not familiar, let me give a brief overview of CPG’s projects that were already finished, the ones that are to be completed and the ones that will soon launch.  In case you don’t know, $CPG is a real estate company existing for more than 26 years now and is highly exposed to vertical high rise developments targeted to middle end and luxury markets.

According to its Wiki page (http://en.wikipedia.org/wiki/Century_Properties)

In September 2011, currently the Gramercy Residences is the highest and topped-out reaching the 73rd floor. Upon its completion and grand opening in 2012, it will become the Philippines’ first supertall and highest completed building, surpassing the previous title holder, PBCom Tower. It was announced to have 73 floors above ground with a total height of 302 meters (990.8 feet) from ground to its architectural top.

gramercy-small

You may verify everything straight from its website: http://www.century-properties.com/

Let’s watch their corporate video here:

Corporate Video from Century Properties

From the video (notably starting 3:00 onwards),

Here’s what you will learn:

—> It has partnered with famous personalities such as IMPei, Philippe Starck, Paris Hilton, Donald Trump, Missoni and Versace, GE to create residences targeted to the Filipinos’ brand consciousness when it comes to architectural design evoking luxury and quality.

Featured on the Completed Projects spaces are the following:

1.) Essensa Forbes (http://www.essensa.com.ph/home.html)

ud-livingroom

2.) Bel-air Sohobelair-soho

3.) Soho Central Private Residences (http://www.sohocentral.com.ph/)

thumbs

4.) South of Market

south-of-market

To see more pictures – http://www.century-properties.com/portfolio/completed-projects/

Current Developments

http://www.century-properties.com/portfolio/current-developments/

I took some pics from the site above and placed it here: Acqua Iguazu, Acqua Livingstone, Century Spire, Azure Beach, Gramercy Residences just to give you a glimpse.  Of course there’s Centuria Medical Makati, Centurion New york, Trump Tower Manila, Missoni et al where you can just go straight to the site for more information.

acqua-small centuria century-spire1 iguazu-currentdev livingstone-currentdev2

*****

Some Numbers and Facts:

Taken from Recent 9M13 Presentation to Analysts  – found here

http://www.century-properties.com/wp-content/uploads/2013/11/Q3-2013-AP-11-17-13.pdf

Let’s talk about their current buyers.

Self explanatory.  They basically have mostly International clients who are mostly professionals and management owners or presidents so the likely fears of a default rate from these buyers will be lower than industry standards.

target market

Similarly, the OFWs who are buying (from the Philippines’ population) are earnings 3.2X Metro Manila salaries such that they will not likely reneg on their monthly amortizations as well.   This largely explains why they only have a default rate of 2.5% (as of 9M13) in their sales.

ofws

While we laymen don’t know much about the real estate market, Colliers states that despite increasing supply of condo units, the take up on the launches has also grown.  So no fear of bubble yet.

no fear of bubbleAccording to Colliers, when you look more micro in the real estate market, the number of luxury condominiums actually tightened.

supply tightened

Nature of Pre Sales Breakdown 

Affordable = 2-3.5M

Middle Income = 3.5-7M

Luxury = 7 M and above

nature of pre sales breakdown

The Company employs premium branding as their prime differentiating point to the end buyer.

premium branding

income results

The company is on track to possibly end the 2013 year with at least P2 Bil income.  Note that it’s been averaging at least half a billion pesos in income every quarter for the past 8 quarters straight, after successful launches and high pre-sales reservations.

presales launches

no subprime ninja loans

earnings and revenuesEarnings and revenues.  Note that earnings have a 20% net profit margin on revenues.  Also note the consistent revenue stream.

Debt to Equity Ratio manageable at 48%(as of (9M13)

Net Debt to Equity Ratio at 32.6% (as of 9M13)

*****

Interesting that while their recurring income is still small as % of their total sales, it is slowly growing.   Note that they are partnering with Mr. Okada for building retail space in the Tiger Resorts (construction starts 2015)

growing revenues

manila bay resort

Upcoming for Year 2014 (4 Projects to be Completed this year)

1.) Century City Mall Soft Opening – Feb 2014

http://www.interaksyon.com/business/80538/century-properties-aims-to-complete-4-projects-in-2014

*****

*Currently $CPG is  trading at the lowest valuation against most of the smaller sized peers such as VLL,FLI,MEG. Perhaps it could be affected by some adverse news before from a Manila Times article citing the “Museum of Me” on Mr. Antonio’s son

http://manilatimes.net/a-p1-billion-museum-of-me/12475/

However, it seems to me that the company is doing well and is good to accumulate while there’s low downside at current levels.  Just take note of the following resistances of 1.75 and 2.05 (due to the nature of the huge placements there.)

Current Technical Chart of $CPG.

Note the bearish double tops (2-2.40) as well as the strong resistance between 1.80 to 2.00.  Although the break of 1.30 is a good sign, we still have no confirmation unless we fully break out of the 1.50 (box pattern) similar to the ones at the left (green box) I encircled.

cpg

– Faceless Trader

(P.D. As of publishing this piece, author is long shares.  Neither should this affect you as the author can easily leave and sell as well.)

(Ongoing stock ideas and notes _not yet done_ will add as I go along.)

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3 Responses to Feb 12, 2014 – Bottom-Fishing Possible Turn Around Stock Ideas – Companies in a Reversal Technically and Fundamentally

  1. Learn more about investing in the Philippine stock market, visit pseacademy.com.ph

    The PSE Academy is the official market education website of the Philippine Stock Exchange, Inc. (PSE) created in partnership with the PSE Foundation, Inc.

    Like

  2. Investor says:

    How is the founder, Jose E. B. Antonio, reputation among the Philippines business community? Is he a reputable businessman?

    Like

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