Col Financial - Philippine Equity Research

7/24/2019 Col Financial - Philippine Equity Research

1/5

INDICES

INDEX GAINERS

INDEX LOSERS

TOP 5 MOST ACTIVE STOCK

TUESDAY, 23 FEBRUARY 2016

INDICES

INDEX GAINERS

INDEX LOSERS

TOP 5 MOST ACTIVE STOCKS

Cl ose P oi nts % YTD%

PSEi 6, 783. 08 -8. 98 -0.13 -2.43

All Shares 3,911.89 -5.40 -0.14 -1.97

Financials 1,525.61 -28.02 -1.80 -1.62

Holding Firms 6,405.08 8.93 0.14 -2.97

Industrial 11,089.67 133.40 1.22 0.53

Mining & Oil 10,599.03 -166.96 -1.55 1.65

Property 2,701.16 2.31 0.09 -7.35

Services 1,539.88 -6.48 -0.42 0.63

Dow Jones 16,620.66 228.67 1.40 -4.62

S&P 500 1,945.50 27.72 1.45 -4.82

Nasdaq 4,570.61 66.18 1.47 -8.72

Ticker Company Price %

URC Universal Robina Corp 194. 40 3. 2

PCOR Petron Corporation 9.49 3.1

ALI Ayala Land Inc 31.90 1.7

BLOOM Bloomberry Resorts 4.33 1.4

DMC DMCI Hldgs Inc 12.46 1.3

Ticker Company Price %

MBT Metrobank 76.45 -3.29

BPI Bank of the Phil Islan 87.60 -3.10

AGI Alliance Global Inc 14.32 -1.92

SMC San Miguel Corporation 70.00 -1.89

MPI Metro Pacific Inv Corp 5.79 -1.86

Ticker Company TurnoverURC Universal Robina Corp 332,642,800

SMPH SM Prime Hldgs Inc 283,820,900

JFC Jol libee Foods Corp 281,746,900

ALI Ayala Land Inc 273,916,500

MPI Metro Pacific Inv Corp 214,966,800

(As of February 22, 2016)

SMPH: FY15 income meets COL estimates

SMPHs revenue and income growth slowed to 4.7% and 10.3% respectively in 4Q15 from 9.2%

and 14.9% as of 9M15. This was due to a drop in real estate revenues in 4Q15. Nevertheless,

full-year net income was up 13.6% to Php20.90 Bil and this is equal to our estimate but missed

consensus estimate on lower than expected revenues. We maintain our HOLD rating on SMPH with

a fair value estimate of Php21.70. We like SMPH for being the biggest beneciary, among property

companies, of the strong consumption in the Philippines. SMPH is the biggest mall operator in

the Philippines and continues to grow its portfolio at a good pace. However at the current price of

Php20.75, upside to our fair value estimate is limited to 4.5% therefore we maintain a HOLD rating

despite strong fundamentals of the company.

AEV: Increasing estimates on lower income tax rate for AP

and cement business JV

Due to the lower than expected income tax rate of the Tiwi-Makban, we are raising APs 2016E

and 2017E net income forecast for the said years by 2.5% and 4.4% to Php19.4Bil and Php22.4Bil

respectively. We increased our FV estimate for AP by 3.1% to Php45.15/sh. Meanwhile, given

AEVs 74% stake in AP and its earnings accretive investment in Republic Cement, we are raising

our 2016E and 2017E earnings forecast for AEV by 3.2% and 4.9% to Php20.4Bil and Php24Bil

respectively. We are also raising our FV estimate on AEV by 5.7% to Php52/sh.

STOCKS IN FOCUS:

TOP STORY:

PX: Releases inferred mineral resource estimates for Bumolo project

MARKET SUMMARY:

The PSEi took minimal losses on Monday as the release of unimpressive earnings results from

some companies did little to deter prot taking by investors. The index slipped 8.98 points or 0.13%

to close at 6,783.08.

Index gainers led decliners 14 to 13 while 3 issues remained unchanged. Sector performance was

mixed with Financials (-1.80%) and Mining & Oil (-1.55%) leading decliners and Industrial (+1.22%)making solid gains. Signicant decliners were MBT (-3.29%), BPI (-3.10%), AGI (-1.92%), SMC

(-1.89%), and MPI (-1.86%). On the other hand, notable gainers were URC (+3.29%), PCOR

(+3.15%), and ALI (+1.75%).

Value turnover was thin, declining to Php4.4Bil from Php6.5Bil the previous session. Foreigners

were net sellers, liquidating Php82Mil worth of shares.


2/5

P H I L I P P I N E E Q U I T Y R E S E A R C H

TUESDAY, 23 FEBRUARY 2016 pa

SMPH: FY15 income meets COL estimatesQ15 earnings up 10.3% to Php5.44 Bil. SMPHs revenue and income growth slowed to 4.7% and0.3% respectively in 4Q15 from 9.2% and 14.9% as of 9M15. This was due to a drop in real estate

evenues in 4Q15. Nevertheless, full-year net income was up 13.6% to Php20.90 Bil and this is equal

o our estimate but missed consensus estimate on lower than expected revenues.

xhibit 1: Results summary

ource: SMPH, COL estimates, Bloomberg

Residential revenues drop in 4Q15 while rentals remain strong.Total revenue growth droppedo 4.6% in 4Q15 due to a 9.8% decline in real estate revenues. This was due to lower revenue

ecognition from the almost-completed projects that were launched in 2011 and 2012. Because of

he drop in 4Q15, real estate revenues were at compared to 2014. Despite this, SMPH remains

ptimistic this year as they expect to see an acceleration in booking of revenues from projects

aunched in tha past three years. Projects of SMDC continued to enjoy strong sales which boosted

s reservation sales in 2015 by 15% to Php39.8 Bil from Php34.6 Bil.

On the other hand, other core businesses maintained their strong performance during the quarter

with revenues from rental and cinema and event ticket sales respectively growing 12.2% and 37.5%

espectively. Growth in rental revenus came from the 12.65% y/y expansion in Philippine mall GFA

rom 6.5 Mil sqm as of end FY14 to 7.3 Mil sqm as of end last year. Excluding new malls and

xpansion, same-store rentals grew 7% y/y.

xhibit 2: FY15 Revenue breakdown

ource: SMPH

Maintain HOLD and FV estimate of Php21.70. We maintain our HOLD rating on SMPH with a

air value estimate of Php21.70. We like SMPH for being the biggest beneciary, among property

ompanies, of the strong consumption in the Philippines. SMPH is the biggest mall operator in

he Philippines and continues to grow its portfolio at a good pace. However at the current price of

Php20.75, upside to our fair value estimate is limited to 4.5% therefore we maintain a HOLD ratingespite strong fundamentals of the company.

STOCKS IN FOCUS:

Richard Laeda, CFA

Ticker: SMPH

Rating: HOLD

Target Price: Php21.70

n Php Mil COL Consensus

Revenues 18,441 19,301 4.7% 66,240 71,500 7.9% 100.0% 95.3%

Core Net income 4,934 5,444 10.3% 18,391 20,900 13.6% 100.0% 91.6%

% of estimate4Q14 4Q15 % change FY14 FY15 % change

n Php Mil 4Q14 4Q15 % change FY14 FY15 % change

Rental revenues 10,055 11,285 12.2% 36,497 40,700 11.5%

Real estate 6,183 5,576 -9.8% 22,152 22,200 0.2%

Cinema and event ticket sales 1,004 1,380 37.5% 4,269 4,781 12.0%

Other revenues 1,203 1,059 -11.9% 3,323 3,819 14.9%

Total 18,445 19,301 4.6% 66,240 71,500 7.9%


3/5pa



AEV: Increasing estimates on lower income tax rate for AP and cement business JVDue to the lower than expected income tax rate of the Tiwi-Makban, we are raising APs 2016End 2017E net income forecast for the said years by 2.5% and 4.4% to Php19.4Bil and Php22.4Bil

espectively. We increased our FV estimate for AP by 3.1% to Php45.15/sh. Meanwhile, given AEVs

74% stake in AP and its earnings accretive investment in Republic Cement, we are raising our 2016E

nd 2017E earnings forecast for AEV by 3.2% and 4.9% to Php20.4Bil and Php24Bil respectively.

We are also raising our FV estimate on AEV by 5.7% to Php52/sh.

Raising AP earnings estimates on Tiwi-Makbans lower than expected income tax rate.The

ncome tax holiday of the Tiwi-Makban geothermal plant will end in June 2016. However, given that

he plant already obtained the Certicate of Endorsement (COE) from the ERC as a renewable

nergy (RE) producer, it will only need to pay 10% income tax (vs the 30% income tax of traditional

ower producers) once its income tax holiday expires. This is a positive development as we assumed

30% income tax rate for the Tiwi-Makban.

Republic Cement acquisition to be earnings accretive.In September 2015, AEV CRH Holdings

nc, the cement business joint venture of AEV and Irish building materials company CRH PLC,

ompleted the acquisition of a 99.09% stake of Republic Cement (formerly Lafarge Republic Inc.

r LRI). Net of nance cost, the acquisition of Republic Cement should boost AEVs earnings by

Php303Mil for 2016E (1.5% of earnings), and by Php406Mil for 2017E (1.7% of earnings).

TOP STORY:

PX: Releases inferred mineral resource estimates for Bumolo projectReleases inferred mineral resource estimates for Bumolo project .Philex Mining Corp. disclosed

he release of a maiden inferred mineral resource estimate (MRE) as a result of its on-going drilling at

he Bumolo porphyry copper-gold project. The MRE resulted to 21.7Mil tonnes of ore at 0.2% coppernd 0.3g/ton of gold, at a 0.274% copper equivalent cut-off grade. The project is part of PXs on-going

esource denition drilling program, which is aimed to provide additional ore to the Padcal Mine. The

Bumolo deposit is located in the Baguio Mineral District and is 1.5km to the east of the Sto. Tomas II

eposit of the Padcal Mine. PX is continuing the program to increase the inferred resources and to

pgrade it to measured and indicated resource estimates.

Results positive but still needs to be confrmed. The potential addition of resources bodes well

or PXs Padcal Mine given that it is currently estimated to last only until 2022, with an estimated

emaining reserve of 66.8Mil tons of ore as of end-2015. Assuming that the inferred 21.7Mil tonnes

re proven to be mineable, it will extend the Padcal Mines life by around two more years (or until

024). This translates to an estimated additional Php22.0Bil in metals revenues. However, the

isclosed gure is still an inferred estimate and further tests will need to be done to classify these

esources as conrmed.

Maintain HOLD rating. Though the potential extension of the Padcal Mines life is positive for PX,

we remain cautious over its protability because of the persistent decline in metal prices. We are

maintaining our HOLD rating on PX with a FV estimate of Php4.85/sh.

George Ching

Ticker: AEV

Rating: HOLD


Angelo Lecaros

Ticker: PX

Rating: HOLD



4/5


TUESDAY, 23 FEBRUARY 2016 pa

Calendar of Key Events

FEBRUARYMON TUES WED THURS FRI SAT

1 2 3 4 5 6

VMC:Annual

Shareholders Meeting

UBP:Ex-date Php1.50

Cash Dividend

LOTO:Ex-date Php0.60

Cash Dividend

8 9 10 11 12 13

TECH:Ex-date Php0.005

Cash Dividend

HOUSE:Ex-date

Php0.25 Cash Dividend

TFC:Annual

Shareholders Meeting

15 16 17 18 19 20

PF:Ex-date Php1.20

Cash Dividend

WEB:Ex-date Php0.20

Cash Dividend

GLO:Ex-date Php22.00

Cash Dividend

IMI:Ex -date Php0.2204

Cash Dividend

MFC:Ex-date Php0.185

Cash Dividend

22 23 24 25 26 27

URC:Ex-date Php3.15

Cash Dividend

SLF:Ex-date Php0.39

Cash Dividend

29 1 2 3 4 5


5/5pa



Investment Rating Defnitions

Stocks that have a BUYrating have attractive

fundamentals and valuations, based on

our analysis. We expect the share price

to outperform the market in the next six to

twelve months.

Stocks that have a HOLD rating have either

1.) attractive fundamentals but expensive

valuations; 2.) attractive valuations but

near term earnings outlook might be poor

or vulnerable to numerous risks. Given the

said factors, the share price of the stock may

perform merely inline or underperform the

market in the next six to twelve months.

We dislike both the valuations and

fundamentals of stocks with a SELLrating.

We expect the share price to underperform in

the next six to twelve months.

BUY HOLD SELL

Securities recommended, offered or sold by COL Financial Group, Inc.are subject to investment risks, including the possible loss of the principal amo

invested. Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and it m

be incomplete or condensed. All opinions and estimates constitute the judgment of COLs Equity Research Department as of the date of the report and

subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale o

security. COL Financial ans/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities

securities of the companies mentioned in this report, and may trade them in ways different from those discussed in this report.

Important Disclaimers

2401-B East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City 1605 Philippines

Tel: +632 636-5411 Fax: +632 635-4632 Website: http://www.colfinancial.com

Documents

Col Financial - Philippine Equity Research