Q3 earnings season arrives with a batch of zombies
Technically, Wilcon [WLCON 28.60 1.38%] got the Q3 earnings party started on Wednesday with its disclosure, but yesterday we saw a series of rapid-fire earnings reports from some of the smaller stocks on the PSE, and the results were all “fine”. MEDCO Holdings [MED 0.23 4.17%] [link] lost P0.7 million in Q3, up from the P1.2 million that it lost in Q3/21.
Lodestar Investment [LODE 0.58] [link] lost P0.4 million, which is marginally worse than the P0.3 million it lost last year.
NiHAO Mineral Resources International [NI 0.82] [link] lost P1.2 million in Q3, which was much worse than the P0.1 million that it lost in Q3 last year.
GEOGRACE Resources [GEO 0.18 1.11%] [link] lost P0.2 million, a huge improvement over the P0.6 million it lost last year.
And finally, Dizon Copper-Silver Mines [DIZ 3.40 2.86%] [link] lost P0.1 million this quarter, as opposed to P0.5 million in Q3 last year.
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What do all of these stocks have in common, besides losing money year after year? They’re non-operational.
Not one of these companies is running something that you’d recognize as a “business”, though their stocks are still trading on the PSE, and each has a skeleton crew retained just to meet the PSE’s disclosure requirements.
Many other stock exchanges have a “net income from continuing operations” clause that is meant to filter zombies like MED, LODE, NI, GO, and DIZ out after a period of time.
Perhaps the PSE tolerates their inclusion because it pads the “number of listed companies” stat, or perhaps they’re allowed to stay so long as the PSE receives its fees and dues, but realistically, the PSE should look into developing a mechanism that protects minority shareholder interests while resolving some of these long-lingering issues.
How to deal with zombie companies? How to deal with repeat reporting offenders?
How to deal with involuntary delisting generally in situations where a company has violated the rules so severely that it must remain suspended for over a year?
Growing the number of companies on the PSE is good, from the point of view that the PSE is a mechanism for companies to access capital for growth, but keeping them on the PSE past their expiration date doesn’t serve that primary mechanism, and opens the door for lame backdoor shenanigans that undermine transparency and legitimacy on the PSE.
I’m excited to see what the rest of the PSE has to offer, though! Bring it on, Q3!
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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
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