Alerts

   Justin Richmond Cheng, CFA

May 5, 2020. Maintain BUY rating. We are maintaining our BUY rating on RRHI with FV estimate of Php74.5/sh. We continue to like RRHI given its well-diversified portfolio of retail formats. This puts the company at the forefront in benefiting from the favorable growth opportunities in the retail sector. Furthermore, it has allowed the company to be relatively resilient in this challenging time with COVID-19 due to its exposure to staple retail formats apart from its discretionary stores.

   Consensus

May 5, 2020. Valuations: At its current price of Php4.71/sh, MAC is trading at only 5.23X 2020E P/E based on consensus’ estimates, although earnings face downside risk from the suspension of flights. Consensus also has a BUY rating on MAC with an FV estimate of Php15.76/sh.

   George Ching

May 5, 2020. Maintaining BUY rating on MPI. We have a BUY rating on MPI with a FV estimate of Php6.39/sh. While near term sentiment on MPI will most likely remain negative due to the uncertainties on Maynilad, we believe that concerns are overblown given MPI’s depressed valuation. Based on MPI’s current market price of Php2.51/sh, the company is trading at a 65% discount to its NAV which implies that Maynilad, its toll road business and its stake in the hospital business are already worthless. MPI is even trading at a discount to the value of its 45.5% stake in Meralco (MER’s value is equivalent to 129% of MPI’s current market capitalization). Even if we assumed the worst-case scenario where Maynilad would become worthless, capital appreciation potential based on MPI’s current price is still 131% to Php5.80/sh.

   Adrian Alexander Yu

May 5, 2020. Maintain HOLD rating. We maintain our HOLD rating on GLO with an FV estimate of Php1,900/sh. We continue to like GLO because of its a) dominant position in the wireless business; b) strong growth of its fixed line business; c) and resiliency of demand for data during the lockdown and pandemic. At its current price of Php2,258/sh, the company is currently trading at 2020E EV/EBITDA of 5.6x. It also provides a 2020E dividend yield of 4.9%.

   George Ching

Reducing estimates, downgrading to HOLD rating. In light of the reduction in our 2020E EBITDA forecast and the increase in our depreciation expense assumption, we are lowering our earnings forecast for AP by 27% to Php12. 4Bil. We are also lowering our FV estimate on AP by 0.5% to Php31.09/sh. We are also downgrading our ratingn on AP to HOLD from BUY. Based on AP’s current market price of Php27.4/sh, upside to our FV stimate is at 13.5%.

   George Ching

Maintain HOLD rating. Due to the reduction in our estimates for AP, we are lowering our earnings 2020E earnings forecast for AEV by 20% to Php13.8Bil. We also reduced our FV estimate on AEV by 0.4% to Php34.4/sh. Meanwhile, we are maintaining our HOLD rating on AEV. We continue to like AEV given the expansion plans of its power subsidiary AP. AEV is also well positioned to participate in the government’s infrastructure projects owing to its investment in republic cement as well as its strong balance sheet and excellent track record in acquiring businesses. However, based on its current market price of Php41.4/sh, there is no more upside to our FV estimate.

   Adrian Alexander Yu

MAC cancels cash dividends; pursues 20% stock dividends MAC has decided to cancel its cash dividend of Php0.25/sh declared last March 6. Instead, the company will be pursuing 20% stock dividends equivalent to 315,159,639 shares with any resulting fractional share to be dropped, to be paid out from the company’s unrestricted retained earnings. The stock dividend declaration is still subject to the approval of the shareholders to be held on July 17, 2020. The record date for the 20% stock dividends remains on April 3. Although the company has no liquidity concerns, it is on currently on standby to support major business units in the aviation industry as they recover from the pandemic and adapt to post-ECQ conditions. Cash for operational and expansion requirements must be readily available for business units that call for capital assistance after the Luzon-wide ECQ is lifted. Valuations At its current price of Php4.71/sh, MAC is trading at only 5.23X 2020E P/E based on consensus’ estimates, although earnings face downside risk from the suspension of flights. Consensus also has a BUY rating on MAC with an FV estimate of Php15.76/sh.

   Justin Richmond Cheng, CFA

April 30, 2020. Downgrading to HOLD; wait for pullbacks to buy. We like URC for its positive medium-to-long term growth prospects. We remain confident in the company’s ability to revitalize its business and return to previous levels of profitability. However, we are downgrading our rating on URC from BUY to HOLD given the significant rally in its share price (nearly 50% up from its low in the last two months). Recall that we reduced our earnings and fair value estimates to factor in the heightened risk aversion. In fact, we increased our risk premium to 9.0% from 5.5%, considering the risks posed by the coronavirus pandemic. Currently, upside to our FV estimate of Php127/sh is already limited to 3%. We recommend clients to wait for pullbacks closer to our buy below level of Php110/sh before buying.

   Justin Richmond Cheng, CFA

April 27, 2020. Maintain BUY rating. We currently have a BUY rating on MRSGI with a FV estimate of Php2.50/sh. MRSGI is one of the more defensive companies amidst the COVID-19 outbreak due to its exposure to grocery retail. The increased demand for basic goods during the ECQ should help offset MRSGI’s exposure to discretionary retailing. Moreover, we continue to like MRSGI given the positive growth outlook in the retail sector as well as the company’s ongoing expansion plans. Even with our more conservative assumptions (e.g. lower estimates, higher risk premium of 9% from 5.5%), upside to our FV estimate remains significant at 47%.

   Adrian Alexander Yu

EEI cancels cash dividends EEI Corporation, in its aim to ensure to continuity of its business operations, has decided to withdraw its cash dividend of Php0.40/sh declared last March 13, 2020. Despite the withdrawal of cash dividends, the company would like to assure investors that it has sufficient funds on hand to address any contingencies that may arise during the on-going pandemic. The cancellation of the cash dividends will increase the company’s liquidity to ensure that all workers will be paid during the quarantine period. Reiterate BUY rating We currently have a BUY rating on EEI with a FV of Php7.76/sh. Despite the risks posed by the coronavirus pandemic, we continue to like EEI given its a) dominant position in the construction industry, b) healthy construction segment supported by the government’s Build, Build, Build program, and c.) the company’s strong construction backlog. At its current price of Php5.10/sh, capital appreciation potential is compelling at 52.2%.