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EXIT ALL POSITIONS NOW FROM SMC

bauer · 299 · 54211

bauer

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on: Feb 13, 2014, 03:53 PM
INVESTORS – EXIT NOW FROM SMC


Maybe it’s too late before I made this call since my last review of SMC’s financial report for the first half of 2013.  During that time, I did not consider the wide implication of PAL’s dire financial condition until I notice the sudden and abrupt drop in SMC’s stock price to a range of less than 60 pesos per share.  I think the big players in SMC stock have already taken into consideration the overall financial health of SMC.

The total liabilities of SMC based on the 3rd quarter 2013 report stated 789.758 BILLION against 688 Billion from the 2nd quarter 2013 report or an increase of a huge 14.7% in 3 months time!

Surprisingly, when you look at page 22 of the most recent quarter, I noticed that the total contractual cash flow financial liability is a gargantuan 889.3 Billion pesos or an equivalent of 19.76 Billion DOLLARS (45:1 exchange rate).    If we consider the Central Bank’s current reserves of US$78 Billion, then SMC’s total liability represents 25% of our government’s dollar reserves.  Although it does not correlate directly with SMC’s financial position, it somehow shows the EXTENT of SMC’s effect and wide influence on our national economy.  I am clearly concern now of the over-all implication once SMC’s debt bubble burst on the PSE market performance in the very near future.

Moreover, I have conducted a quick ratio computation on SMC and the result is 1.07, still with a very slim margin to maneuver until I included the financial report of PAL. 

PAL is the LAST STRAW that will break SMC’s back
- (sorry to be continued)

Due to urgency of my call, I will post my initial review and explain in future posts my assessment.
« Last Edit: Feb 13, 2014, 03:54 PM by bauer »


logicheart

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Reply #1 on: Feb 13, 2014, 04:09 PM
Thank you sir for the info  :applause:


regor

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Reply #2 on: Feb 13, 2014, 05:10 PM
Thank you sir, hope to read the continuation soon..


chinito77

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Reply #3 on: Feb 13, 2014, 07:20 PM
Sir what cause the jump of the 14.7% jump from 2nd quarter to 3rd quarter?

What are the items that bloated the debts further to 889.3 Billion from 789.75 Billion?

Sorry sir for the questions... Was PAL financial also included already this time?


GIG

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Reply #4 on: Feb 13, 2014, 08:24 PM
uh oh!


GIG

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Reply #5 on: Feb 13, 2014, 08:36 PM
lets map out the fall out. Who are lending to SMC? are they secured or unsecured?

Although I don't think this will blow up any time soon, its best to be prepared.


lemreyes

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Reply #6 on: Feb 13, 2014, 08:51 PM
lets map out the fall out. Who are lending to SMC? are they secured or unsecured?

Although I don't think this will blow up any time soon, its best to be prepared.

I'm holding SECB.  I think they have loans from SECB since they mostly partner with SMC on bond swaps and that latest e-card deal.
Is there a way to know how much percentage of SECB's loan portfolio is exposed to SMC?


Wills

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Reply #7 on: Feb 13, 2014, 09:45 PM
Ito exciting panoorin :D


wilch23

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Reply #8 on: Feb 13, 2014, 10:30 PM
The increase in debt is probably largely due to the PhP - USD exchange rate falling to 45.5 from 41. That right there is 10%. Interest rate has crept up a bit too.

What happens if PAL losses more money? How does it affect SMC?
Is SMC directly invested or is it RSA and Co. with PAL as a minor partner?

Either way, SMC can write off that loss without incurring any actual cash loss, right? The lost will now be in paper. Cash has already flowed out. I don't think SMC will be made to pay for the debts and losses of PAL. Please correct me if I'm wrong.

On the other hand, if enough people should panic, then it can be a self fulfilling prophesy.


chinito77

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Reply #9 on: Feb 14, 2014, 12:46 AM
DNL is a supplier to SMC, they have huge credit line and has good term payments.. in case SMC defaults.. DNL might not be able to collect all the 90days or more purchases by SMC.


Wills

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Reply #10 on: Feb 14, 2014, 01:23 AM
DNL is a supplier to SMC, they have huge credit line and has good term payments.. in case SMC defaults.. DNL might not be able to collect all the 90days or more purchases by SMC.

Correct me if I'm wrong.

We are talking about SMC as a holding company, I think DNL will not be affected if SMC goes down.


jmces

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Reply #11 on: Feb 14, 2014, 08:56 AM
hahaha dati chneck ko to eh ganda ng PE, yun pala lubog sa utang :D


bauer

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Reply #12 on: Feb 14, 2014, 12:17 PM
PAL is the LAST STRAW that will break SMC’s back
- (second part of my assessment)

Based on the most recent quarter financial report of PAL (3rd Q 2013), the total liabilities is about 110 Billion pesos with a very small margin of total assets of about 120.9 Billion pesos.  Upon computing its quick ratio, the result is a very alarming 0.304 which means that for every 1 peso of payables within the year, there is only 0.30 centavos of easily convertible to cash allocated for payment.  Total current liability for the same period is a huge 66.7 Billion pesos!

To put things in perspective, total revenues was about 36.5 Billion pesos that represents a big 5.9% decrease compared to same period last 2012 equivalent to 38.8 Billion pesos.  For the sake of argument, although unlikely to happen, even if all revenues will be use to pay all current obligations, it will not be enough to escape a liquidity crisis without an injection of cash from other sources.

Interesting to mention that total notes payables to local banks is about 11.8 Billion pesos (Allied and PNB has a combine 1.24 Billion pesos exposure) with long term debts of about 46 Billion including the current portion which may or may not include another set of risk exposure from our local banks.  Also, PAL currently owned only 21 out of 69 planes in service.  In case of a liquidity issue, we can expect that only 21 will remain in service while the rest will be returned immediately to third party owners.  Imagine the airport nightmare of passengers holding tickets without any planes to use!

The same report also mentioned that 4 brand new planes (Boeing 777) scheduled for delivery within 2013 to 2014 which will add to the expenses in the last quarter report of PAL (unpublished as of this time).  Alarmingly, PAL confirmed a FIRST BATCH order of 44 model A320 airbus planes to be delivered from 2014 up to 2020 plus another optional order of 20 model A320 planes during the same period. 

The SECOND BATCH order of 20 model A330 airbus planes are all confirmed for delivery from 2014 up to 2020 as well for a total committed order of 64 planes with 20 optional planes more aside from the 4 planes earlier mentioned.

Where will PAL secure the cash payment?  It is obvious that operations and present cash flows could not meet the present and future obligations.  There is no recourse but to solicit a cash call from its owners (SMC and Lucio tan group).  I doubt if banks will lend more given the quick ratio analysis score result.

-- to be continued
« Last Edit: Feb 14, 2014, 12:29 PM by bauer »


bauer

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Reply #13 on: Feb 14, 2014, 12:38 PM
DNL is a supplier to SMC, they have huge credit line and has good term payments.. in case SMC defaults.. DNL might not be able to collect all the 90days or more purchases by SMC.

If indeed DNL is a supplier of SMC, and due to the impending liquidity crisis,  I expect that ALL suppliers, creditors, employees, and customers of SMC will SUFFER financial losses.  Aside from this, I'm also CONCERN that the ENTIRE stock market will be heavily affected in the short to medium term with heavy implications from our banking industry plus all related public companies of SMC such as san Miguel purefoods, petron, ginebra, pal, and liberty telecoms to name a few.

Once it happens, this occurance will be the Philippines' own version of "ENRON" experience or the most recent "LEHMAN" event from the US.


wilch23

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Reply #14 on: Feb 14, 2014, 02:09 PM
I did some back reading some time ago on different topics in PMT forums. The earliest call on SMC to go down is sometime in 2010. So it's fair to say the warning has long been issued.

Wait and see.


 


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