Petron Corporation (PCOR): Good Company, Bad Stock?

Petron Corporation (PCOR) clarified news today released by BusinessWorld Online stating that Petron has plans to add a new petroleum refinery in Bataan. This new refinery would increase the production capacity by 100,000 barrels a day.

According to Ramon S. Ang, PCOR’s CEO and President, the refinery will cost USD 3 billion. It will produce high-grade or Euro 6 petrochemical, diesel, and gasoline.

Petron Corporation’s New Refinery

Accordingly, PCOR confirmed that it reviews its plans to expand its current refining capacity. One of the targets is the refinery stated in the above report.

Nonetheless, the company assures the public to share appropriate disclosures should any developments happen.

Refinancing Debt

On October 16, PCOR disclosed that it completed the latest bond offering of its Series C bonds and Series D bonds amounting to PHP 20 billion. The proceeds of which will be used for debt refinancing.

This bond offering is the last of the three tranches of shelf registration with an aggregate total of PHP 40 billion. The bond was given by PhilRatings the highest quality rating with minimal risk of PRS Aaa.

It means that PCOR’s capacity to meet its financial obligation is stable. It also provides a stable outlook which means that the current rating will most likely remain in the next 12 months.

Furthermore, PhilRatings considered the growing sales volume of PCOR and the continued expansion of the company’s distribution network in rating.

According to the ratings agency, Petron Corporation is also the market leader in its industry. Its sound business strategy and management expertise were also considered.

Strong Financial Performance

Petron Corporation showed a strong performance as it recorded consolidated net income of PHP 9.5 billion. This figure is 16 percent higher than the PHP 8.2 billion recorded in the same period in 2017.

Moreover, consolidated revenues of the company totaled PHP 273.50 billion, a 32 percent growth versus the same period last year. The strong sales volume of its Philippine and Malaysian operations drove the numbers.

Higher prices for crude oil and finished products also contributed to the strong earnings growth.

Moreover, Benchmark Dubai crude oil averaged USD 68 per barrel in the first half of the year. The amount is 32 percent higher than that of 2017. Sales volumes grew to 54.4 million barrels.

Within the country, PCOR gearing on high-margin products paid off as it resulted in petrochemicals generating more sales. It even surpassed its volume last year by 14 percent.

Aviation fuel and Gasoline also grew by 4 percent and 8 percent, respectively.

Meanwhile, Malaysian operations recorded a growth of 7 percent concerning sales volume. The company’s network expansion program contributed to the increase in retail volume.

Petron Malaysia now has 620 service stations. It also became a major player in that country’s highly competitive market.

PCOR also generated additional gains from the recovery of the Malaysian Ringgit.

Technical Analysis

PCOR closed to a new 52-week low today. The moving averages of the stock align with the 15 EMA and 20 SMA as immediate resistance.

Additionally, the volume supported the red candle confirming the bearish leaning. MACD is also bearish.

RSI is also bearish despite showing some bullish divergence. Immediate support is at 8.22 followed by 7.90. Expected resistance is at 8.60.

Top 10 Players’ Sentiment

Trading participants of PCOR with a 100% Buying and Selling Activity as of Oct-22-2018 at 03:30 PM:

12 out of 29 participants or 41.38% of all participants registered a 100% BUYING activity
8 out of 29 participants or 27.59% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 8.3156
Top 10 Players’ Selling Average: 8.3224

The psychological average price of the top 10 players as of Oct-22-2018 at 03:30 PM is from 8.3156 to 8.3224.

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