Chelsea Logistics Holdings Corp. (CLC): A Full Reversal?

Chelsea Logistics Holdings Corp (CLC) clarified the news released on October 15, 2018, by philSTAR.com stating that the company submitted a proposal for the Davao monorail project.

The company denied the statement, saying that it had not submitted any unsolicited proposal. However, CLC confirmed that Udenna Corp., its parent company actually presented the rumored monorail plan.

The Department of Transportation (DOTr) already conferred Udenna Corp. as the original proponent status. The National Economic Development Authority Board – Investment Coordination Council (NEDA-ICC) accepted the endorsement for approval.

Davao Port – Another Unsolicited Proposal

On October 9, 2018, CLC confirmed the news from the BusinessWorld Online. The article stated that CLC made an unsolicited PHP 16 billion offer to the DOTr for the modernization of Sasa Port in Davao City.

The proposal covers a 25-year concession period that has four phases, the first of which would cost PHP 5 billion. Chelsea Logistics Holdings stated that it did submit a PHP 11.2 billion proposal to the Philippine Ports Authority.

The PPA is still in the process of evaluating the plan.

Acquisition of New RORO Vessels

On October 8, 2018, philSTART.com reported that Chelsea Logistics Holdings allotted USD 142 million for new RORO vessels. It was in relation to a quoted statement from its president and chief executive officer, Chryss Alfonsus Damuy.

Damuy reiterated that CLC would have six new vessels on top of the brand new M/V Salve Regina RORO vessel, which was inaugurated last Friday.

The company clarified that it indeed aims to spend around USD 100 million to purchase more RORO passenger ships spread over two years. It already contracted four new vessels and additional two vessels as an option.

Projected delivery schedule of the four vehicles is on November 2019, April 2019, October 2019, and April 2020.

CLC also announced today that it unveiled the country’s biggest vessels, the M/T Chelsea Providence and M/V Salve Regina. They will operate a route to and from Batangas-Caticlan.

These ships were inaugurated on October 5, 2018. M/T Chelsea Providence is a medium range oil tanker spanning 183.3 meters in length. It has a carrying capacity of 54 million liters.

On the other hand, M/V Salve Regina is a RORO vessel that could carry up to 500 passengers and 41 vehicles. Kegoya Dock Co. Ltd., a shipbuilder in Japan, built Salve Regina.

Fleet Expansion Program

Consequently, CLC added two more cargo freight vessels this year and one more roll-on/roll-off (RoPax) vessel. These ships were launched in July 2018 via the Trans-Shipping Lines.

The Philippine Competition Commission also cleared Starlite Ferries Inc. of the proposed acquisition of the entire shareholdings of Southwest Gallant Ferries Inc. (Southwest Gallant) and Southwest Premiere Ferries Inc. (Southwest Premiere). Both companies own one RoPax vessel.

The corporation recently broke ground on a 2.5 hectare land in Brgy. Tipas, Taguig City, where it intends to use it as a warehousing facility. Upon completion, it would increase the company’s capacity seven folds from its current capacity via Workline Services, Inc.

To date, the company has 16 tankers, 11 cargo vessels, 22 RoPax, and 14 tugboats. It also has eight RoPax vessels, eleven fast crafts, and five cargo vessels in its investee company, 2GO Group, Inc.

CLC already released its first half results earlier. The current market leader in the shipping and logistics industry generated PHP 2.7 billion in revenues for the first half of the year. The figure is a 67 percent increase versus the same period last year.

Meanwhile, the tugs and tankers double-digit growth with 37 percent as revenues reached PHP 1.2 billion. Freighters almost doubled its revenues versus last year as it grew by 97 percent at PHP 855 million.

Revenues from passage booked the highest growth at 116 percent or a total of PHP 545 million.

Following the strong revenue growth, CLC booked a net income of PHP 360 million or 28 percent. It is higher than the recorded PHP 278 million in 2018. This amount is also more than double than what it earned for the entire 2017.

Chelsea Logistics Holdings – Fundamentally Undervalued

Currently, the company’s share trades at PHP 5.53 as of writing. It is fundamentally undervalued versus its book value of PHP 7.63.

CLC has an EPS of PHP 0.12, which further translates to a P/E of 69.13. However, it is quite expensive.

If earnings accelerate due to the acceptance of its unsolicited proposals, P/E might start going down, and valuation would become attractive.

Technical Analysis

CLC made a surprise rally today. It breached the 15 EMA and 20 SMA and may signal a bullish reversal.

Volume also supported the rally. MACD made a bullish crossover. RSI is also bullish but is currently not in overbought levels.

Estimated support is at 5.27 followed by 4.76. Expected resistance is at 5.91 followed by 6.85.

Volume

As of October 18, 2018, at 03:30 PM, the volume of CLC is 735.41% of the previous trading day. This stock’s latest volume is already above its 30-day volume average.

Remember the correlation between price and volume.

bullish price + volume above the 30-day volume average = bullish
bullish price + volume below the 30-day volume average = neutral
bearish price + volume above the 30-day volume average = bearish
bearish price + volume below the 30-day volume average = bearish

Risk Level

CLC has a HIGH-RISK level due to its risk percentage of 98.64%.

Foreign Fund Flow

CLC registered a Net Foreign Selling worth P196,490.00 as of October 18, 2018. On a 30-day trading period, CLC is on a Net Foreign Selling worth PHP20,257,500.00.

Top 10 Players’ Sentiment

Trading participants of CLC with a 100% Buying and Selling Activity as of Oct-18-2018 at 03:30 PM:

11 out of 57 participants or 19.30% of all participants registered a 100% BUYING activity
23 out of 57 participants or 40.35% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 5.2199
Top 10 Players’ Selling Average: 5.2163

The psychological average price of the top 10 players as of Oct-18-2018 at 03:30 PM is from 5.2163 to 5.2199.

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