Understanding The Blue Chip Of The Philippines


The Philippines stock market has been the best performing market in the Southeast-Asian market since the Global Financial Crisis. The Philippines Stock Exchange Composite Index has gained closed to 300% since it fell below 2000 points back in 2008. With the macro trend in the country still looking great; with a growing population and growing economy and a government that seem determined to control corruption, is the best days of Philippines still ahead?


Today we take a look at two of the largest companies listed in the country.


The Conglomerate which owns everything

SM Investments Corporation (PSE:SM) can be considered as a true mega conglomerate in the Philippines. The company is engaged in the retail, banking, and property development businesses in the Philippines. The company operates one of the largest retail chain in the country through brands like “The SM Store”, “SM Supermarket”, “SM Hypermarket” and “Savemore”.

The conglomerate’s property portfolio includes malls, commercial buildings, hotels, convention centers and even arena in both the Philippines and China.

Lastly, the company has a strong banking influence in the country through its investment in BDO Unibank and China Banking Corporation.

The company has been growing its revenue and profit for the past few years and in the last financial year recorded a revenue of PHP 233.88 billion and a net profit of 27.45 billion. The company currently trades at a diluted P/E ratio of 27 times and offers a dividend yield of 1.1%.


The importance of Telco

In every country, the telecommunication companies tends to be one of the largest companies in the country. This is of no surprise even the vital contribution they play for a society. In the Philippines, the main telco in the country is Philippine Long Distance Telephone Company (PSE:DTEL) or better known as PLDT. The company is the main telecommunication provider in the country. It serves more than 70 million subscribers and recorded a revenue of more than PHP168 billion in FY2013.

The company has a strong profit margin, chalking up a profit of about PHP35 billion in the same year. The company trades at a P/E ratio of 20 times and offers a dividend yield of 5.6% for its investors.


Value In Action

For investors interested in looking at the Philippines market, the blue chips are typically a good place to start to understand the businesses and economics of the country. By understanding how dominance are the big corporations in the country, investors will get a better sense of how businesses interact with one another in the country.
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The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Stanley Lim’s personal capacity and do not in any way represent those of his employer and other related entities. Stanley Lim doesn’t own shares in any companies mentioned above.

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