DoubleDragon Properties Corp. (DD) is one of the most followed stocks recently after breaking below the PHP 20.00 level. This stock is one of the crowd favorites as it rose from PHP 2.00 to PHP 80.00. Now, it is back below PHP 20.00.
Some investors are spooked because the company has been borrowing a lot of money from convertible bonds to preferred shares for roughly two years. The company has a debt-to-equity ratio of around 2.00.
Total assets are at PHP 69.74 billion as of June 30, 2018, and liability is at PHP 46.5 billion. It means that PHP 0.66 of debt finances every PHP 1.00 of an asset.
Most property firms take a hit as BSP increased rates to curb inflation. It would result in higher borrowing cost for companies. It might also affect the bottom figure of the company due to higher interest payments.
Do note that the BSP has not signaled an end to the rate hikes. The central bank expects to increase rates in December and approve two more in 2019.
DoubleDragon Properties: Lucky or Just Smart?
However, DoubleDragon is either very lucky or very smart. Since it borrowed money earlier on, the rate hikes did not affect the company.
They opted to borrow at fixed rates with a tenor of around 7-10 years. DD also did not acquire dollar-denominated bonds. Thus, the depreciating peso does not affect them.
Subsequently, the company has no maturing obligations until 2021. By that time, the company expects that its recurring income portfolio would generate cash flows to cover the principal payments.
DoubleDragon Properties shifted its strategy from selling properties for a one-time gain to leasing spaces to generate recurring income.
Furthermore, the company recently broke ground the DD Meridian Tower, the 9th building in its flagship project, Meridian Park in Pasay City. In 2020, the Park would have one luxury serviced apartment building and eight office towers.
In May, the company opened its first four towers, all of which are now fully leased out. It expects to accommodate around 20,000 employees by the end of the year.
DD is set to have a total leasable area of 1.2 million square meters by 2020. It would include and cover 100 city malls, 5,000 hotel rooms under the JinJiang Inn Philippines and Hotel 101, and eight industrial hubs all over the country.
Revenues in Focus
For the first six months of the year, DD generated revenues of PHP 3.63 billion, more than double the recorded PHP 1.63 billion in the same period in 2017.
Net income reached PHP 1.26 billion, 234 percent higher than 2017. Net income attributable to parent totaled PHP 744.69 million, 129 percent larger than the recorded PHP 324.7 million in 2017.
Technical Analysis
DD bounced in the past few days after slipping below support. However, the moving averages are still bearishly aligned with the 15 EMA and 20 SMA as immediate resistance.
Meanwhile, the volume supports a bearish outlook. MACD is poised for a bullish crossover. RSI is trending higher but is still treading oversold levels.
Estimated support is at 18.98-19.00 while expected resistance is at 21.08 followed by 22.97-23.00.
Volume
As of October 4, 2018, at 03:30 PM, the volume of DD is 306.36% of the previous trading day. This stock’s latest volume is still below 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
DD has a MODERATE-RISK level due to its risk percentage of 55.25%.
Foreign Fund Flow
DD registered a Net Foreign Selling worth P4,080,694.00 as of October 04, 2018. On a 30-day trading period, DD is on a Net Foreign Selling worth PHP72,988,494.00.
Top 10 Players’ Sentiment
Trading participants of DD with a 100% Buying and Selling Activity as of Oct-04-2018 at 03:30 PM:
13 out of 37 participants or 35.14% of all participants registered a 100% BUYING activity
11 out of 37 participants or 29.73% of all participants registered a 100% SELLING activity
Top 10 Players’ Buying Average: 19.8650
Top 10 Players’ Selling Average: 19.8917
The psychological average price of the top 10 players as of Oct-04-2018 at 03:30 PM is from 19.8650 to 19.8917.
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