Another Breakout Year For San Miguel Corporation (SMC)?

Ramon Ang-led San Miguel Corporation of SMC in the Philippine Stock Exchange was under the spotlight during the last quarter of 2010. From around PHP 74.00 in October 2010, SMC had risen in a relatively fast pace to end the year at PHP 163.80. Now, that's a gain of almost 120% in less than two months! Anyway, opened 2011 on a positive note when it reached a high of PHP 189.50 during the first 2 days of trading. However, the once ‘on-fire' stock has apparently lost some of its steam. After reaching the mentioned high until the present, SMC has just moved sideways while marking a low of PHP 150.00 back in January 24.

As you can see from its chart above, SMC has consolidated within an inverted (inverse) head and shoulders pattern. Notice that when the stock weakened, the red moving average came to the rescue to pick it back up. In the coming days or so, SMC could swing higher if it is able to move past the resistance or the neckline of the formation at around PHP 189.00. Check also that the MACD has just made a bullish crossover, indicating a likely move higher soon. In any case, a failure to move past the neckline could send it a drift back towards the red moving average once again or worse back to PHP 150.00.

On the fundamental side, SMC President Ramon Ang said the SMC could double its total revenues this year to PHP 530 billion from PHP 230 billion last year by consolidating its four power-generation plants and Petron Corporation (PCOR). He even went a step further when he said that the company is going to aim for a revenue level of PHP 1 trillion by 2016. Consolidating its other businesses and continually strengthening its infrastructure and power portfolio could be its ticket towards its goal. Moreover, the company will be spending about $4 billion in new investments in energy, telecommunications, and transportation. In fact, the company is already seeking to enter into a venture with Citra Lamotoro Gung Persado (Citra) of Indonesia and Star Tollway Corporation so that they can make a stronger group that can participate in the government's public-private partnership (PPP) program.

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