Target Price: PHP 23.00

In Q1 of 2021, SHLPH’s net sales declined 17.5% y/y to P39.92 billion, reflective of the still weak fuel demand amid the pandemic induced economic recession. The firm’s sales volume for the period plunged 31.0% y/y to 997.8 million liters. Still, due to cost management measures including the transformation of its oil refinery in Batangas into an import facility, the firm was able to post an EBITDA of P3.82 billion.

This is a reversal from the same period last year’s loss before interest, taxes, depreciation, and amortization of P6.18 billion. Operating income registered P3.16 billion, a turnaround from the same period last year’s operating loss of P7.41 billion. This together with lower finance expenses and favorable adjustments in taxes due to the CREATE Law led to a net income of P1.02 billion, a reversal from the same period last year’s net loss of P5.55 billion. (PSE Edge)

For Q2 of 2021, we expect the reimposed stringent quarantine measures in the NCR Plus in the earlier half to further weaken fuel demand which will negatively affect SHLPH’s topline. Meanwhile, the gradual reopening of the said area, if continued, is seen to help SHLPH’s revenues in the succeeding quarters of the year. Oil prices are seen to support SHLPH’s financial performance for the year amid its recovery. Year-to-date, the benchmark Brent crude is already up by 32.9% to $68.83 per barrel.

Last week, SHLPH declined by 7.05% to 20.45. This brings it near its 20.00 support. Its drop last week also brought it below its 10-day, 50-day, and 200-day exponential moving average. Its MACD line has also crossed below its signal line implying bearish momentum. Given these bearish indications, it is advised to wait for SHLPH to confirm the strength of its 20.00 support level first before buying the share. If it does, SHLPH could be traded with 20.00 as its support and the 23.00 as its resistance.

If its breaks below the 20.00 level, wait for it to fall to and confirm its next support at the 17.50 – 17.80 range before buying. If the 17.50 – 17.80 range holds, SHLPH could be traded with the said range as the support and 20.00 as its resistance. Remember to set a cut loss point 5% below your acquisition price.

Material in this article is obtained from sources we believe to be reliable, but its reliability or precision cannot be guaranteed. This is for the sole purpose of providing details and does not provide an offer from us to buy or sell securities mentioned in this document.


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