ARANETA PROPERTIES (ARA) 3Q2016 Net Income Up by 37% (w Technical Analysis)
Jaycee De Guzman

Jaycee De Guzman

Hi! I'm Jaycee De Guzman. I have helped thousands of Filipinos trade independently and execute investment plans profitably through the Stock Signals Philippines. I have also helped thousands of international clients and businesses from 100+ countries build their online presence and boost their sales through iPresence Business Solutions. Read my About Me page.
Jaycee De Guzman

In its 3rd quarter filings with the Exchange, Araneta Properties Inc.’s (PSE:ARA) net income is up by 37% to P10.4 million from P7.6 million a year ago. Revenues from January to September 30, however, dropped by 13%  or P30.3 million from 34.7 million a year ago.

Despite the drop in revenues, ARA was still able to generate a positive net income because of a significant decrease in the cost of sales. The cost of sales decreased to P9 million from P15.7 million in 2015.

The drop in the cost of sales of the company was attributed to the current strategy which is to hold to some inventory to induce a more competitive price. This strategy likewise includes a price watch which shows a higher forecast of demand in the real estate within the locality, evidenced by the launching of real estate projects of Ayala Land Development Inc., Avida Land, as well as the opening of SM Shoemart in San Jose, Del Monte, Bulacan.

The company was able to sell 95,057 square meters, bringing the company’s total land area sold 909,543 square meters as of September 30, 2016.

For the 9-month period, revenues and net income both dropped by 23% and 14%, respectively. In absolute amounts, ARA generated P98 million in revenues and P25.5 million in net income compared to P127 million and P29.5 million a year ago.

The Weighted Average Number of shares increased to P1.95 million from P1.56 million a year ago.

Assets increased to P2 billion from P1.8 billion a year ago. No new shares were either issued or reacquired. Retained earnings continued to be negative (deficit). However, the deficit has decreased due to the income realized this past 9 months. The deficit last year was P416 million and is P390.6 million to date.

Note that companies can only declare dividends from unappropriated (positive) retained earnings. Since the company still has a deficit, investors cannot expect any dividends anytime soon.

ARA closed at 2.30 today, October 27, 2016, up 103.54% year to date.

Chart

While ARA can be considered bullish on a long-term scale as it stays above the 200-day SMA, it is bearish on a short-term scale as it moves below the 10-day SMA and this 10-day SMA is below the 20-day SMA.

If the price closed above the 10SMA while MACD is moving slightly above the signal line, it could have been reviewed for a possible entry signal.

Support is near 2.07 and resistance is near 2.57.

If you’re using MACD and SMAs or other indicators to identify entry or exit signals, I advise that you wait for your indicators to confirm your conviction. Leave the “anticipation play” to those who have a high-risk trading profile.

If you are already holding a position on ARA, I advise that you stick with your personal trailing stop-loss. Don’t trade without this.

ARA - ARANETA PROPERTIES - Daily Chart - October 27, 2016

Top 10 Players

Participants with a 100% Buying and Selling Activity from Oct-03-2016 to Oct-27-2016 at 03:30PM:

  • 14 out of 64 participants or 21.88% of all participants registered a 100% BUYING activity
  • 9 out of 64 participants or 14.06% of all participants registered a 100% SELLING activity
  • Top 10 Players’ Buying Average: 2.3975
  • Top 10 Players’ Selling Average: 2.3870

ARA - ARANETA PROPERTIES - Top 10 Players - October 27, 2016

Foreign Fund Flow

On a 30-day trading period, ARA is on a Net Foreign Selling worth PHP3,368,779.00.

ARA - ARANETA PROPERTIES - Foreign Fund Flow - October 27, 2016

Risk Level

ARA has a moderate risk level based on my proprietary indicator of a stock’s risk level.

ARA - ARANETA PROPERTIES - Volatility - October 27, 2016

Volume

Volume went back to its 30-day volume average today.

If the price moves downward and the price crosses above its 30-day volume average, I translate that as a strong selling momentum. If the price moves upward and the price crosses the 30-day volume average, it’s a strong upward momentum. I advise that you co-relate price and volume when you make trading decisions.

ARA - ARANETA PROPERTIES - Volume - October 27, 2016

I do hope I was able to help you through my analysis and simplified interpretation of data. Always have a trailing stop-loss to preserve your capital and to protect your gains.

Please let me know your thoughts by commenting below.

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