Financial Adviser: 5 Worst-Performing Stocks in the PSE in 2023 and How to Profit from Them

Contrarians love to say that when you buy stocks that are battered and out-of-favor, there is a good chance that you can make money over the long-term.

The decline in the stock market this year has led to a substantial drop in stock prices, with over 60 percent of all listed companies on the PSE experiencing negative year-to-date returns.

Although the stock market has been recovering lately, with the PSE Index rising by 6.2 percent from a low of 5,920 in October to as high as 6,271 last month, investor sentiment continues to be uncertain.

Concerns about a global economic slowdown and increasing interest rates could elevate market risks and reduce stock price valuations.

The 10-year Philippine bond yield recently corrected from a high of 7.2 percent to 6.2 percent, but it has begun to rise again. If it breaks out to 6.3 percent, it could indicate a resurgence in interest rates, potentially pushing them back to 6.65 percent.

With rising interest rates, the stock market, specifically the PSE Index, could potentially fall to as low as 5,700 levels, given the current market uncertainties.

While most stocks nowadays may have fallen significantly, there is no assurance that a sustainable recovery is underway. In fact, share prices may fall further with the prevailing market pessimism.

It may probably take some time before the market finally recovers. In the meantime, current weakness in the stock market should provide opportunity for investors to find and accumulate potential value stocks.

Stocks that have experienced the most significant declines may present the highest potential for substantial returns when they eventually recover, although it's important to note that not all severely affected stocks will necessarily rebound quickly.

Let’s take a look at the five biggest losers in the stock market today and let’s analyze where you can possibly pick them up:

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1| Geograce Resource Philippines

Price: P0.03

Year-to-date loss: -83.78 percent 

Geograce Resource Philippines (PSE: GEO) was previously known as a holding company named Global Equities, Inc (GEI), which was engaged in the manufacturing of absorbent cotton and personal care products.

In 2006, the company underwent a name change to Geograce Resource Philippines, and its primary purpose shifted from investment holding to mining.

This transformation was marked by the acquisition of a 97 percent ownership stake in Abeilles Assets, Inc., which, in turn, owns several mining companies, namely GEO8 Resources, Inc., Masbate 109 Philippines, Inc., Richground Philippines, and Minevalut, Inc.

GEO, however, has never actually operated these businesses. As a result, the company currently does not have a source of income. This lack of revenues contributed to significant losses, causing GEO to accumulate a total deficit of P2.8 billion.

As of September 2023, while the accumulated deficit of P2.8 billion has been covered by its capital stock, resulting in a net equity of P4.4 million, GEO still needs to undergo organizational restructuring. This is necessary to eliminate its deficit by raising new capital, which will be recorded as additional paid-in capital to enable the company to wipe off the deficit.

GEO currently has a clean balance sheet with no debt. It has total assets of P12.5 million, of which P11.9 million is held in cash. The company is seen as a prime candidate for backdoor listing.

The stock price of GEO has plummeted by 83.78 percent this year, resulting in a market capitalization of only P105 million. The stock is currently trading at an all-time low of P0.03 per share, presenting a speculative buying opportunity.

2| Agrinurture, Inc

Price: P1.16

Year-to-date loss: -83.64 percent 

Agrinurture (PSE: ANI) operates in the manufacturing and distribution of various food products, including fruit beverages, puree, dried fruit snacks, processed fruit mix, frozen fruits and vegetables, dairy items, and rice products.

The company's brand portfolio includes Fresh Choice Always, offering fresh and processed wellness food products; La Natural, specializing in coconut juice; Sungrown, focusing on rice; Superfresh and Big Chill, known for fresh fruit beverages and dessert kiosks; and Fresh Bar by Big Chill, and C’Verde by Big Chill, offering healthy snack bars and cafeteria options.

ANI also owns the master license of Tully’s Coffee International Pte Ltd to operate the renowned Tully’s coffee shop in the Philippines.

About 56 percent of ANI’s revenues come from foreign trading, involving the sale of real estate property and finished goods products, while 33 percent comes from exports of fruits and vegetables.

Earlier this year, ANI reported that its total revenues for 2022 fell by 15.6 percent to P3.8 billion from P4.5 billion in the previous year. The decline in revenues and increase in financing costs resulted in a net profit of only P2.5 million, a substantial loss of 99.7 percent from P1.057 billion in 2021.

This year, ANI’s total revenues for the first nine months continued to decline, with a 6.1 percent decrease from P2.8 billion in 2021 to P2.6 billion. Total net income, as a result, declined by 77.9 percent to only P22.1 million from P100.3 million in the previous year.

The fall in the company’s profitability mirrored the performance of its stock price this year, which lost 84.8 percent of its value, dropping from a high of P7.67 per share in March to only P1.16 per share.

ANI has recently registered its all-time low at P0.96 per share. With the slowdown in its revenue and earnings growth, negative market sentiment may continue to drag down the share price.

ANI’s total current asset is greater than its total liabilities. If we get the difference, we will derive a net current asset value of P739 million, which is equivalent to P0.72 per share.

Given the momentum in the decline in ANI’s share price, we can use the stock’s net current asset value of P0.72 as reference point. Buying the stock at a discount to its net current asset value could provide some good value play opportunities.

3| Greenergy Holdings, Inc

Price: P0.2480

Year-to-date loss: -83.01 percent 

Greenergy Holdings (PSE: GREEN) is an investment holding company that has diversified interest in various industries including renewable energy and waste recycling projects, food and agriculture, information technology, fintech, biotech, green infrastructure, and property development.

However, most of the subsidiaries that GREEN has established have not been operational. Similar to its affiliate ANI, GREEN derives all of its total revenues from the sale of fruits and vegetables.

GREEN reported that its total revenues in 2022 grew by 38 percent from P30.2 million to P41.9 million. However, higher cost of sales caused the company to yield a negative gross profit of P2.8 million. With general and administrative expenses totaling P35 million, GREEN incurred a total net loss of P37 million.

This year, GREEN’s total revenues for the first nine months dropped by 84.5 percent from P42.4 million to only P6.6 million. The substantial loss in revenues resulted in a net loss of P23.3 million, more than doubling its net loss of P9.1 million in the same period last year.

The significant decline in GREEN’s business this year mirrored the collapse in its stock price, which plummeted by 83.9 percent from a high of P1.54 per share at the beginning of the year to only P0.248 per share.

GREEN’s total current asset of P1.5 billion is more than four times bigger than all of its total liabilities of P325 million, giving a net current asset value of P1.2 billion. If we divide this by its total shares outstanding of 2.6 billion, we will derive a net-net per share of P0.468 per share.

The current share price of P0.248 per share, which is trading near its 20-year all-time low, represents a 47 percent discount to its net current asset value.

While the stock offers a historically low price, the uncertainty over the company's ability to sustain its revenue and business growth could keep the stock to trend lower.

4| Enex Energy Corp

Price: P4.65

Year-to-date loss: -66.88 percent

Enex Energy Corp (PSE: ENEX) was formerly known as PHINMA Petroleum and Geothermal, Inc before it became 75.92 percent subsidiary of AC Energy (PSE: ACEN) of the Ayala Group.

ENEX’s primary business is the exploration and production of crude oil and natural gas through interests in petroleum contracts and holdings in resource development companies.

ENEX has no commercial operations yet. The company has been incurring losses through these years. Last year, ENEX’s incurred total net loss of P73.7 million, almost double its losses of P40 million in 2021. This year, ENEX continued to report losses with P40.9 million for the first nine months.

ENEX has current assets of only P6.9 million against current liabilities of P256 million. The company also has a cumulative deficit of P346 million that is higher than its capital stock of P250 million.

ENEX is a highly speculative stock but unlike other dormant companies, ENEX company is backed by a large conglomerate with a solid financial track record. ENEX will need a serious capital restructuring in the future. This will likely involve fundraising via issuance of new shares.

ENEX was among the top five worst-performing stocks on the Philippine Stock Exchange in 2022, experiencing a total loss of 62.1 percent. Remarkably, this year, ENEX has once again secured a spot in the top 5 worst-performing stocks, with an even more significant loss of 67 percent.

Without any positive developments in ENEX, the stock price appears to be heading lower near its historical all-time low at P1.64 per share. 

5| LFM Properties, Inc.

Price: P0.0520

Year-to-date loss: -60 percent

LFM Properties (PSE: LPC) is involved in leasing out real estate properties, including office spaces and condominium units. As a subsidiary of Liberty Flour Mills (PSE: LFM), LPC was listed on the Philippine Stock Exchange by way of introduction in 2022.

Last year, LPC reported that its total rental income grew by 3.1 percent to P230 million from P223 million in 2021. However, the company incurred one-time costs of P85 million from loss on pretermination of lease contract, resulting to a net loss of P45 million from a net income of P149 million in 2021.

This year, LPC's total rental income for the first nine months decreased by 10.7 percent, amounting to P140.8 million compared to P157.8 million in the same period last year. This decline resulted in a net loss of P15.8 million, compared to a net loss of P37 million in the previous year.

LPC's share price is currently trading 7.0 percent below its book value of P0.017 per share as of September 30. Given its return on equity of only four percent, there is potential for the stock price to fall much lower.

When we compare LPC with Kepwealth, which has a return on equity of less than 3.0 percent and a Price-to-Book Value ratio of 0.38 times, LPC might trade as low as 0.40 times its book value, equivalent to P0.0068 per share.