FRI 18 OCT 2019
NOTABLE MOVERS
Shares of PHEN rallied sharply after the company disclosed more details
PHEN (+23.48%)
regarding its asset-share-swap and SRO.
(AS OF OCT 17, 2019)
Top Stories of the week: INDICES
Close Points W/W YTD %
Philippine Market Strategy: Adjusting PSEi 7,885.23 35.29 0.45 5.61
estimates on rollover to 2020
All Shares 4,755.04 13.55 0.29 5.25
Financials 1,841.26 20.09 1.10 3.45
Holding Firms 7,676.89 6.51 0.08 4.56
Industrial 10,643.01 -34.37 -0.32 -2.82
We are rolling over of our estimates from 2019 to 2020. For 2020, we forecast the PSEI’s Mining & Oil 8,907.35 -271.01 -2.95 8.62
EPS to grow by 8%, slower than the 13% EPS growth in 2019. The main factors pulling
Property 4,177.25 47.57 1.15 15.14
down 2020 EPS growth include slower earnings growth of banks and companies in the
commercial and industrial sector, coming from a high base in 2019, and the potential drop Services 1,530.25 3.93 0.26 6.07
in MER earning (due to downward rate adjustment). This was partly offset by expected
improvement in consumer sector earnings growth in 2020.
INDEX GAINERS
After factoring in the rollover, the FV estimates of stocks in our coverage list increase by a
median rate of 6.9%. Our end 2020 PSEi target is 9,000. This is 14.2% higher than the PSEi’s Ticker Company Price W/W
current level of 7,884.29. AGI Alliance Global Inc 11.64 7.98
MBT Metrobank 70.90 4.26
Due to our higher FV estimates resulting from the rollover to 2020, we upgraded MEG Megaworld Corporation 4.80 3.90
our recommendation on CIC and PIZZA from HOLD to BUY. We are maintaining our GTCAP GT Capital Hldgs Inc 873.00 3.44
recommendation on the rest of the stocks in our coverage list, although capital appreciation LTG LT Group Inc 13.72 3.31
potential has increased.
PHEN: FV to drop due to asset injection,
INDEX LOSERS
Ticker Company Price W/W
but less than what is being priced in; RRHI Robinsons Retail Hldgs Inc
76.55 -4.19
Upgrade to BUY
MPI Metro Pacific Inv Corp 4.85 -2.02
SCC Semirara Mining 22.50 -1.75
AC Ayala Corporation 855.50 -1.67
AC Energy Inc. injects key assets into PHEN in exchange for shares. AC Energy Inc. URC Universal Robina Corp 156.30 -1.39
announced today its plans to inject key assets in the Philippines into PHEN in exchange of
shares of PHEN. Assets involved in this transaction as previously mentioned by AC Energy
Inc. include AC Energy Inc.’s 35% stake in SLTEC, 68% stake in NorthWind, 36% stake in TOP 5 MOST ACTIVE STOCKS
NLREC, and 100% stake in Montesol. In exchange for these assets, PHEN will issue 6.18
Bil common shares to AC Energy Inc., priced at Php2.37/sh., valuing the transaction at Ticker Company Turnover
Php14.66 Bil. This is 17.6% lower than our than our estimated valuation of the power assets SM SM Investments Corp 445,017,600
at Php17.8Bil. However, given that the 6.18Bil new common shares that will be issued to AC Ayala Corporation 329,887,340
AC Energy, the transaction will result to a 5.7% reduction in our FV estimate for PHEN to MPI Metro Pacific Inv Corp 262,156,380
Php3.12/sh. BPI Bank of the Phil Islands 258,471,900
MBT Metrobank 255,371,420
Cutting FV estimate to Php3.12/sh, but upgrading to BUY. Despite the 5.7% reduction
in our FV estimate to Php3.12/sh from Php3.31/sh, we are upgrading our rating on PHEN
from HOLD to BUY. PHEN’s share price has declined by 22% in the past month due to
uncertainty on how the asset-share swap would impact PHEN’s valuation. After the factoring
in the details of the transaction, the 22% drop in the share price was too much. At Php2.30/
sh, PHEN is trading at 14.9X 2020E P/E, a discount relative to the 16.3X average P/E of
industry peers. Furthermore, upside to our FV estimate of Ph3.12/sh is significant at 35.3%.
Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of
the COL Financial website as these may be subject to tampering or unauthorized alterations.
WEEKLY NOTES I PHILIPPINE EQUITY RESEARCH
FRI 18 OCT 2019
Other Stories:
MPI: Raising estimates on partial sale of MPHHI
MPI: KKR invests in MPHHI
BPI: Earnings beat estimates on surge in trading gains
UBP: Fine-tuning estimates; Maintain BUY
MER: Raising earnings estimates on write back of provisions, maintaining FV and HOLD rating
CNPF: Expecting better growth in 2H19
MER: MER looks to build floating solar facility in Laguna Bay
NIKL: LME nickel inventory plunges on China purchases
CIC: 3Q19 earnings jump 47% y/y, in line with estimates
Economy: FDI net inflows drop 41% y/y in July 2019
Market Summary:
The PSEi ended the week higher by 35.29 points or 0.45% at 7,885.23. Value turnover decreased
to Php25.1Bil from Php36.5Bil in the previous week. Meanwhile, foreigners continued to be net
buyers this week, accumulating Php1.4Bil worth of shares.
COL Financial Group, Inc. 2
WEEKLY NOTES I PHILIPPINE EQUITY RESEARCH
FRI 18 OCT 2019
Change in shareholdings:
Date of Acquired or Price per
Stock Volume Person (Designation)
Disclosure Disposed share
Ramoncito S. Fernandez
14-Oct MPI 3,125,000 A 4.60
(Regular Director)
10,000 1,095.05
James L. Go
14-Oct TEL 14,835 A 1,099.03
(Director)
1,445 1,099.28
Rosemarie P. Rafael
14-Oct AXLM 300,000 A 5.00
(Independent Director)
Ricardo C. Lopa Jr.
14-Oct AXLM 200,000 A 5.00
(Director)
Maria Theresa Z. Paguirigan
14-Oct AXLM 2,000 A 5.00
(Treasurer / CFO / Asst. Corporate Secretary)
Karilagan Imelda Z. Gorospe
14-Oct AXLM 60,000 A 5.00
(Assistant Vice President & Investor Relations Officer)
Paul Rene Z. Tayag
14-Oct AXLM 2,000,000 A 5.00
(Senior Vice President & Compliance Officer)
Ray C. Espinosa
15-Oct MPI 2,000,000 A 4.60
(Regular Director)
20,720 140.00
5,000 141.10
Jose Paolo Enrique A. Magpale
15-Oct BDO 1,170 D 141.50
(Senior Vice President)
5,000 141.70
3,110 141.80
7,371,029 D 25.50 Joaquin T. Dee
16-Oct CHIB
7,371,029 A 25.50 (Director)
Herbert T. Sy
16-Oct CHIB 68,534 D 24.95
(Director)
Alexander C. Yu
17-Oct COL 50,000 A 18.60
(Vice Chairman)
David J. Nicol
18-Oct MPI 6,250,001 A 4.60
(Executive Director)
Augusto P. Palisoc Jr.
18-Oct MPI 6,250,001 A 4.60
(Regular Director)
Marilyn K. Go
18-Oct BDO 2,000 D 145.00
(Senior Vice President)
Luis S. Reyes, Jr.
18-Oct BDO 500 D 147.00
(Executive Vice President)
Source: PSE
COL Financial Group, Inc. 3
WEEKLY NOTES I PHILIPPINE EQUITY RESEARCH
FRI 18 OCT 2019
I M P O R TA N T R AT ING DEFINITIONS
BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the
next six to 12 months.
HOLD
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 in line or underperform in the market in the
next six to twelve months.
SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.
I M P O R TA N T DISC L AIM ER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may
be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are
subject to change without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of
a security. COL Financial and/or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies
mentioned in this report and may trade them in ways different from those discussed in this report.
CO L R E S EAR C H T EAM
APRIL LYNN TAN, CFA
VP & HEAD OF RESEARCH
april.tan@colfinancial.com
CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA
DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com r i c h a r d . l a n e d a @
colfinancial.com
ANDY DELA CRUZ JOHN MARTIN LUCIANO FRANCES ROLFA NICOLAS
SENIOR RESEARCH ANALYST SENIOR RESEARCH ANALYST RESEARCH ANALYST
andy.delacruz@colfinancial.com john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com
JUSTIN RICHMOND CHENG ADRIAN ALEXANDER YU
RESEARCH ANALYST RESEARCH ANALYST
justin.cheng@colfinancial.com adrian.yu@colfinancial.com
CO L F IN ANC IAL G R O UP, IN C.
2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com
COL Financial Group, Inc. 5
