One of the most viewed disclosures today is CLC’s press release about the decision of the Philippine Competition Commission (PCC) on its acquisition of Trans-Asia Shipping Lines.
It appears that the decision was unfavorable as the PCC declared the 2016 acquisition void. The Commission further imposed a penalty of PHP 22.8 million.
PCC stated that the parties related to the transaction failed to secure the required approval of the commission. During the time of acquisition, the Commission had a threshold of PHP 1.0 billion for any transaction and would require Compulsory Notification.
The transaction between CLC and Trans-Asia was at PHP 1.1 billion, thus needing for Compulsory Notification.
The parties, however, disagreed with the decision since the Net Asset Value (NAV) at the time of the sale was below the threshold. They argued that the basis of the PHP 1 billion transaction was to be computed based on net assets.
Nonetheless, PCC insisted that the basis should be on gross assets, not the net assets.
The Commission recently raised the threshold to PHP 2 billion citing that transactions below this amount will not likely pose any competition issues.
CLC and Trans-Asia are weighing their options on whether to file a Motion for Reconsideration with the Commission or to go to the Court of Appeals for redress.
The decision is not yet final, thus does not impact the operations and business of CLC.
CLC had a net income of PHP 161.22 million for the year ended December 31, 2017, a 22.90 percent increase versus the recorded PHP 131.68 million in 2016.
For the first quarter of 2018, the company saw a tremendous increase in net income. Net income stood at PHP 115 million, a 326 percent increase versus last year’s PHP 27 million. This is also 71.42 percent of the previous year’s full-year income.
CLC still appears to be bucking the downtrend as it forms a possible ascending triangle — a bullish formation. The 15 EMA, 20 SMA, and 50 SMA are bullishly aligned. The 50 SMA is acting as support.
Volume profile supports a bullish outlook. MACD is bearish. RSI Is moving sideways and is at neutral levels. Support is estimated at 7.25 while resistance is expected at 8.12.
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