San Miguel Corp. (SMC)

INVESTORS UNLOADED shares in San Miguel Corp. (SMC) last week after a court ruling ordering the return of assets acquired by several firms through the coconut levy fund, which include shares of the diversified conglomerate.

SMC was the ninth most traded stock in terms of value turnover last week, with around 6.82 million shares worth P1.022 billion exchanging hands from Dec. 10-14, data from the Philippine Stock Exchange showed.

The share price of SMC closed at P142 apiece on Friday, down by 12.5% from Dec. 7’s P162.20 finish. Year-to-date, it was up by 23.7%.

“I think what made SMC one of the most traded stocks [last] week is the news about Sandiganbayan’s move to junk all appeals against the turnover of at least P75 billion in coco levy fund to the government,” said Jervin S. de Celis, equity trader at Timson Securities, Inc. (Timson Trade).

“[T]his has made investors worried, making the stock price plunge from P175 in Dec. 4 to an intraday low of P139 [on Dec. 14]. Foreigners have sold around P770 million worth of shares within this month,” he added.

Appeals to stop the transfer of the Coconut Industry Investment Fund (CIIF) worth P75 billion to the government were denied by the anti-graft court’s second division last Dec. 3.

These motions for reconsideration were filed separately by the United Coconut Planters Life Assurance Corp. (Cocolife), the United Coconut Planters Bank (UCPB) as well as by the six companies comprising the CIIF Oil Mills Group (CIIF OMG) and 14 CIIF holding companies.

The Court also ordered the transfer of 753.8 million preferred shares of SMC that were currently being held by the Bureau of Treasury, along with the income of the CIIF companies and holding firms, “to be used only for the benefit of all coconut farmers and for the development of the coconut industry,” according to the resolution.

CIIF, or the coco levy fund, was a tax imposed on coconut farmers during the administration of then-President Ferdinand E. Marcos. However, the coco levy fund was also used for the expansion of a few chosen companies.

Meanwhile, the House of Representatives’ final approval of tax measures aimed at increasing excise tax on alcohol products had some effect on SMC’s activity last week.

“I believe the investors might be digesting its short-term impact for consumption and might soften the volume for SMC particularly the San Miguel Food and Beverage group and Petron Corp.,” Cristopher Adrian T. San Pedro, certified securities representative at Unicapital Securities, Inc. (Unicap) said.

OUTLOOK

“For 2019, earnings per share is projected to grow by 12.13% and if three of the biggest revenue segments of the company continue to grow, SMC’s [consolidated] revenue may reach by as much as P1.005 trillion this year and P1.086 trillion by December next year,” Timson Trade’s Mr. De Celis said.

“A bounce play may start around the P130-135 range next week as this was the former support of the stock before the company was cleared by the BIR (Bureau of Internal Revenue) to consolidate its food and beverage businesses as well as the announcement of their share sale,” he added.

Mr. De Celis said resistance is seen at P170-180.

Unicap’s Mr. San Pedro, on the other hand, pegged the stock’s support levels at P133-135 and resistance at P148-152.9 for the coming weeks.

In the first nine months, SMC posted P761.173 billion in unaudited consolidated sales, up 27.5% from the same period a year ago. Its net income attributable to equity holders of the parent company dipped 4.9% to P19.859 billion. —