NOW Corporation (NOW) is one of the most actively traded stocks today. It fell to a low of PHP 4.50 per share, down by roughly 40 percent.
This is after the news came out that the company sued the National Telecommunications Commission (NTC) over the third telco bidding rules.
NOW alleged NTC for inserting reference for the new telco player which was not discussed in the public hearings. It said that the new items were “onerous, confiscatory and potentially extortionary.”
The company filed the case at the Manila Regional Trial Court Branch 42, questioning the following items:
- 700 million participation security;
- PHP 14 billion to PHP 24 billion performance security; and
- PHP 10 million non-refundable appeal fee. The company said that these items are barriers to entry.
NOW stated that the initial participation security was only at PHP 500 million. However, it was raised to PHP 700 million.
The performance security was also previously set to either 10% cash bond or 30% surety bond. Eventually, it was finalized at 10% of the remaining cumulative capital expenditures and operational expenditure commitments for the remainder of the commitment period.
In defense, the Department of Information and Communications Technology (DICT) said that higher participation security is set to provide a guarantee and assurance to the government. It is to ensure that the new player will deliver its commitments on time.
The appeal fee was also in place to avoid further delays in the selection. DICT also said that NOW should have raised its concerns during the TOR late last month.
NOW Corporation is appealing for the President to personally open and review the bidding document. Previously, President Duterte said that he would take over and decide should the commission fail to choose by the end of November.
Strong Financial Performance
NOW released its financial statements for the first half and second quarter of the year.
Gross revenues for the first half of the year reached PHP 87.38 million. This figure is higher by 29 percent versus the same period last year at PHP 68.10 million.
The result was mainly driven by an increase both in Service Revenue and Sales of Software Licenses and Services amounting to PHP 12.975 million and PHP 6.284 million, respectively.
Moreover, the latter is the combined results of more IBM licenses sold and the recognition of revenues from services performed for the Supreme Court.
Nonetheless, NOW Corporation recorded a net income of PHP 5.82 million for the first half of the year. This amount is 158 percent higher than the recorded PHP 2.26 million in the same measurement period last year.
Profitability Ratios Remain Low
The company’s Return on Equity, a measure of profitability towards common stockholders, stood at 0.84 percent. Consequently, this figure is lower than the industry average.
From a financial standpoint, a 0.84 percent ROE is pretty small and risky. Should the company undergo any untoward financial distress, it would not have enough buffer funds to cushion the crisis.
NOW Corporation Technical Analysis
NOW Corporation dropped significantly today after the news came out.
Based on the weekly chart, the price fell below the 50 SMA. The 15 EMA and 20 SMA are poised for a bearish crossover with the 50 SMA.
Meanwhile, the volume is quite heavy on the red candle today. MACD is bearish. RSI is also bearish and has hit oversold levels.
Estimated support is at 4.19 while expected resistance is at 7.02.
As of October 10, 2018, at 03:30 PM, the volume of NOW is 341.73% 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
NOW has an EXTREMELY HIGH-RISK level due to its risk percentage of 166.09%.
Foreign Fund Flow
Furthermore, NOW registered a Net Foreign Buying worth P2,173,786.00 as of October 10, 2018. On a 30-day trading period, NOW is on a Net Foreign Selling worth PHP2,584,597.00.
Top 10 Players’ Sentiment
Trading participants of NOW with a 100% Buying and Selling Activity as of Oct-10-2018 at 03:30 PM:
12 out of 90 participants or 13.33% of all participants registered a 100% BUYING activity
8 out of 90 participants or 8.89% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 5.6111
Top 10 Players’ Selling Average: 5.6207
The psychological average price of the top 10 players as of Oct-10-2018 at 03:30 PM is from 5.6111 to 5.6207.