Alerts

   COL Research Team

July 30, 2020. (Data from PH Market Strategy report) Due to our higher FV estimates resulting from our lower risk-free rate assumption and the rollover to 2021, we upgraded our recommendation on BPI, AP, CIC, CNPF, DNL, PGOLD, TEL, GLO and ALI from HOLD to BUY. We are maintaining our recommendation on the rest of the stocks in our coverage list, although capital appreciation potential has increased.

   COL Research Team

July 30, 2020. (Data from PH Market Strategy report) Due to our higher FV estimates resulting from our lower risk-free rate assumption and the rollover to 2021, we upgraded our recommendation on BPI, AP, CIC, CNPF, DNL, PGOLD, TEL, GLO and ALI from HOLD to BUY. We are maintaining our recommendation on the rest of the stocks in our coverage list, although capital appreciation potential has increased.

   COL Research Team

July 30, 2020. (Data from PH Market Strategy report) Due to our higher FV estimates resulting from our lower risk-free rate assumption and the rollover to 2021, we upgraded our recommendation on BPI, AP, CIC, CNPF, DNL, PGOLD, TEL, GLO and ALI from HOLD to BUY. We are maintaining our recommendation on the rest of the stocks in our coverage list, although capital appreciation potential has increased.

   John Martin Luciano, CFA

We are raising our FV estimate on UBP to Php56/sh based on a 0.75X 2021E P/BV (adjusted for goodwill) as we reduce our risk free rate assumption from 6% to 4% and roll over our estimates to 2021. We reiterate our HOLD rating as upside to our FV estimate remains unattractive. We expect earnings to be hurt by the COVID-19 pandemic and ECQ as these are expected to slow economic activity which will inevitably curtail loan demand and financial transactions. More importantly, we expect some deterioration in asset quality amidst the suspension of business operations given that its consumer loans account for higher portion of its total loans (~32%) compared to most banks.

   John Martin Luciano, CFA

1H20 net income down 15% y/y due to provisions for COVID-19; in line with estimates BPI’s 2Q20 net income declined by 25% y/y to Php5.3Bil, mainly dragged by higher provisions for loan losses for the COVID-19 pandemic. In particular, provisions in the second quarter increased to Php10.8Bil from Php1.7Bil last year. We view the increase positively as the bank is being conservative and proactive in increasing its NPL cover to 140.7%. Meanwhile, net interest income grew by 12% y/y during the quarter, while total loans expanded by 5.9% y/y. The first quarter earnings brought the first half total to Php11.7Bil, down 15% y/y. This ended in with our forecast, accounting for 46.3% of our full-year target. The first half results translate to an annualized ROE of 8.4%. Maintain HOLD We currently have a HOLD rating on BPI with a FV estimate of Php76/sh based on 1.20X 2020 P/BV. BPI’s earnings will be hurt by the COVID-19 pandemic and the ECQ as these are expected to slow economic activity which will inevitably curtail loan demand and financial transactions. We also expect some deterioration in asset quality amidst the suspension of business operations in various locations. Although valuation is no longer attractive, we continue to like BPI given its strong position to capitalize on the country’s favorable economic prospects, particularly once the COVID-19 pandemic is resolved.

   John Martin Luciano, CFA

July 09, 2020. Given the minimal change in our earnings forecast, we maintaining our FV estimate of Php76/sh based on 1.20X 2020 P/BV. However, we are downgrading our recommendation to HOLD as upside to our FV is no longer attractive. BPI’s earnings will be hurt by the COVID19 pandemic and the ECQ as these are expected to slow economic activity which will inevitably curtail loan demand and financial transactions. We also expect some deterioration in asset quality amidst the suspension of business operations in various locations. Nevertheless, we believe that the negatives have already been priced-in. We continue to like BPI given its strong position to capitalize on the country’s favorable economic prospects, particularly once the COVID-19 pandemic is resolved.

   Frances Rolfa Nicolas

June 24, 2020. Accordingly, we are reducing our FV estimate on CEB to Php44.0/sh. While the near-term prospect of CEB looks bleak due to the COVID-19 pandemic, we believe its long term prospects remain favourable. We believe the company is better-positioned to weather this storm compared to other domestic airline companies given its strong balance sheet and efficient operations. Moreover, CEB’s fleet expansions and shift to more fuel efficient aircrafts should help boost its earnings after the COVID-19 pandemic is contained. However, at its current price of Php41.8/sh, upside to our new FV estimate is limited at 5.2%. As such, we are downgrading our rating to HOLD. We recommend clients to wait for pullbacks near Php38/.0sh or better before accumulating shares.

   Richard Lañeda, CFA

We are downgrading our recommendation for RLC from BUY to HOLD as the share price of RLC is now 2.2% higher than our fair value estimate after RLC rallied from a low of Php10.00 to Php18.00. With the limited upside to our fair value estimate coupled with the uncertain outlook for the malls business of RLC, which is its biggest income contributor, we advise investors to wait for valuations to become more attractive before buying.

   George Ching

June 15, 2020. Raising FV estimate to Php2.60/sh, Upgrading to BUY. Due to the delay in the AC Energy-ACEPH exchange (previously scheduled to be completed within 1H20), we are reducing our 2020E earnings estimate for ACEPH by 50.8%to Php1.06Bil. However, with the AC Energy-ACEPH exchange and the consolidation of Presage expected to be completed within the year, we forecast ACEPH’s 2021E earnings to grow by 507% to Php6.4Bil. However, EPS is expected to increase by a slower pace of 40% to Php0.20/sh (due to the issuance of more shares), although this is still 16% higher than our previous forecast. We are also increasing our FV estimate for ACEPH by 9.2% to Php2.60/sh. At Php2.24/sh, ACPEH is trading at 11.4X 2021E P/E, a premium relative to the 10.2X average P/E of industry peers. However, the premium is justified given ACEPH’s better earnings growth profile. Furthermore, upside to our FV estimate of Php2.24/sh is significant at 18%.

   Justin Richmond Cheng, CFA

June 3, 2020. Downgrading to HOLD. We are downgrading our rating on PGOLD to HOLD. While we continue to like PGOLD given its resilient outlook amid the COVID-19 pandemic, PGOLD’s share price has rallied over 50% from its March 2020 low. As a result, there is currently no more upside to our FV estimate of Php43.5/sh. We recommend clients to wait for pullbacks near Php37.8/sh or better before considering to accumulate PGOLD.