Alerts

   Richard Lañeda, CFA

November 14, 2024. Shares undervalued, BUY with FV estimate of Php916. We have a BUY rating on AC with a fair value estimate of Php916.00, Our fair value estimate implies a 39.4% upside from the current price of Php657. AC’s earnings have exceeded pre-pandemic levels and the company is targeting to grow is earnings at an average rate of 16.6% to reach Php65 Bil by 2026. Meanwhile, AC’s share price is still 12.9% below 2019 closing price and 23.5% below 2018 closing price. We view the disconnect in share price performance and earnings performance as an opportunity for investors.

   George Ching

November 14, 2024. Maintaining HOLD rating. We are maintaining our HOLD rating on NIKL with a FV estimate of Php5.08/sh. We remain positive on the long term outlook for nickel due to the rising EV battery demand. Furthermore, we believe that NIKL’s expansion of its RE power generation business comes at an opportune time given the strong cash flow generation of its nickel mining business, as well as the tightening of power supply in the country. However, we believe that near term outlook for nickel price will continue to be challenging given the slowdown in China’s economic growth. At its current price of Php3.32/sh, upside to our FV estimate is at 53%.

   Richard Lañeda, CFA

November 14, 2024. HOLD with FV estimate of Php1,021. We continue to be cautious on SM Retail as the recovery in revenues has not yet resulted in a recovery in net income. Meanwhile, SMPH, although has a very strong leasing business, is currently going through challenges in its residential development business. The banks continue to be a bright spot for SM with growing loan book and expanding net profit margins translating to high returns on equity. Overall, we still like SM’s for its track record and for being the leader in retail, banking, and malls. However given than our fair value estimate of Php1,021 presents limited upside from the current price, we maintain our HOLD rating on SM.

   Charmaine Co

November 13, 2024. Fine-tuning forecasts; reiterate BUY. We are fine-tuning our forecasts on MONDE following the release of its 9M24 results. In particular, we slightly lowered our revenue forecasts due to the muted top-line performance of APAC BFB and sluggish recovery prospects for sales of MAB. We also reduced our GPM assumptions to reflect tempered margin expectations due to FX headwinds; nonetheless, this was partly offset by our lower opex projections. Hence, our core income forecasts only slightly decreased by 2.6% to Php9.7Bil for FY24 and 2.4% to Php10.6Bil for FY25. Additionally, we also factored in the one-time impairment loss of fixed assets from MAB (Php540Mil) and cumulative FV losses on the guaranty asset booked in P&L this year (Php723Mil), which brought our net income forecast lower by 18% to Php8.4Bil for FY24. After factoring in our adjustments, our FV estimate on MONDE slightly decreased to Php12.8/sh from Php13.0/sh previously.

   Richard Lañeda, CFA

November 12, 2024. Maintain HOLD. We maintain our HOLD rating on FLI with a fair value estimate of Php0.79. We continue to see good strides in FLI’s residential business and the office leasing segment looks to have bottomed out. Nevertheless, we remain neutral on FLI given that their return on equity is lower than their cost of capital. We forecast a return-on-average-equity of 3.8% for FY24 and 4.1% for FY25. Meanwhile, its weighted average cost of capital based on our estimate is around 8.7%.

   George Ching

November 12, 2024. Maintaining BUY rating.We have a BUY rating on FGEN with a FV estimate of Php30.8/sh. We continue like FGEN given its relatively stable cash flow since bulk of its capacity is contracted. Furthermore, with the Department of Energy’s moratorium on new coal power plants, this increases competitiveness of FGEN’s gas and renewables plants, and improve the feasibility of FGEN’s LNG regasification project which will enable its gas plants to remain viable after the depletion of the Malampaya gas field. At FGEN’s market price of Php17.94/sh., upside to our FV estimate is at 72%.

   Denise Joaquin

November 12, 2024. Reiterate HOLD. While we continue to like CNPF for its strong brand equity, stable track record of sales and earnings growth, and long-term prospects for its emerging categories, we maintain our HOLD rating on the stock due to current valuations. We believe the stock is already fairly valued as it is trading above our FV estimate of Php31.0/sh. We recommend accumulating closer to our buy below level of Php26.90/sh.

   Charmaine Co

November 11, 2024. Maintain BUY. We currently have a BUY rating on PNB with a FV estimate of Php38.0/sh, based on 0.30x 2024E P/B (ex-goodwill). We continue to view PNB as a deep value play, given that it is only trading at 0.20x 2024E P/B (ex-goodwill) with expected FY24 ROE at ~9%. As interest rates stay higher for longer, we expect PNB to be a net beneficiary due to its substantial low-cost deposit base. The bank is also pushing forward with its endeavors to improve profitability by reducing low-earning assets and trimming down non-performing loans.

   Richard Lañeda, CFA

November 08, 2024. Reducing FV estimate to Php20.40.We are reducing our FV estimate to Php20.40 as we factor in higher net debt and higher discount to NAV (from 35% to 45%) due to the declining residential mrevenues and take-up sales, which will result in slower revenue booking a few years from now, just as this year’s weak revenues are a result of the low takeup sales in 2020. Revenues from JV projects are also starting to taper off with revenue growth turning negative in 3Q24. Nevertheless, we are maintaining a BUY rating on RLC given the 37.5% upside from the current price of Php14.84. We view RLC a value play given its deep discount to our NAV estimate of Php37.13 which mostly come from its investment properties (malls, offices, hotels). Even if we totally discount its residential segment and keep the target discount to NAV of 45%, the FV estimate will still be 27% higher than the current price.

   Denise Joaquin

November 08, 2024. Maintain BUY. We currently have a BUY rating on DNL with FV estimate of Php8.80/sh. We expect earnings recovery for DNL to be sustained amid peaking inflation and recovery in household spending. We also like the stock given the improving outlook for Chemrez in light of the energy department’s renewed push to hike the minimum biodiesel blend requirement. Furthermore, DNL’s long-term growth prospects remain attractive as we expect the significant capacity expansion from its new Batangas facility will allow DNL to scale its export business over the next few years.