Alerts

   George Ching

The median reduction in our 2020 earnings forecast is 27.3%, while the median reduction in our FV estimate is 29.3%. For 2020, we now forecast earnings to fall by a median rate of 18.2% compared to year ago levels. This is compared to our previous forecast of a 12% growth in earnings for 2020. Even with the downgrade, most stocks are still trading significantly below their fair value estimates. Median capital appreciation potential based on stocks’ current price and our new FV estimate is still 21.2%. However, stocks belonging to sectors that are resilient to the crisis have rallied significantly from their March lows and are no longer attractively valued (telcos, consumer staples, retailers of basic goods). Wait for pullbacks before buying the said stocks.

   George Ching

The median reduction in our 2020 earnings forecast is 27.3%, while the median reduction in our FV estimate is 29.3%. For 2020, we now forecast earnings to fall by a median rate of 18.2% compared to year ago levels. This is compared to our previous forecast of a 12% growth in earnings for 2020. Even with the downgrade, most stocks are still trading significantly below their fair value estimates. Median capital appreciation potential based on stocks’ current price and our new FV estimate is still 21.2%. However, stocks belonging to sectors that are resilient to the crisis have rallied significantly from their March lows and are no longer attractively valued (telcos, consumer staples, retailers of basic goods). Wait for pullbacks before buying the said stocks.

   John Martin Luciano, CFA

Maintain BUY. We reiterate our BUY rating on PIZZA and our FV estimate of Php8.5/sh. At its current price of Php4.9/sh, PIZZA is trading at a 2020E P/E of 10.0X, significantly below the historical average of 20.9X. We like PIZZA given its dominance in the chained full-service pizza restaurant industry as well as its favorable long-term earnings growth outlook

   Adrian Alexander Yu

After factoring an increase in risk premium from 5.5% to 9.0% following the risks posed by COVID-19, we reduced our FV estimate by 13.8% to Php1,250/sh from Pho1,450/sh for TEL . We reiterate our BUY rating on TEL, We continue to like TEL because of a) the turnaround of its mobile phone business, b) strong position of its fixed line business and c) strong balance sheet to support aggressive network expansion plan. At its current price of Php10,70/sh, capital appreciation potential is attractive at 16.8%. 2020E Valuations of 4.8x EV/EBITDA is attractive, compared to its historical average of around 6x EV/EBITDA. Moreover, TEL’s dividend yield of 7.0x is also the highest it has been in the last 5 years, which is highlighted in a low yield environment.

   Adrian Alexander Yu

After factoring an increase in risk premium from 5.5% to 9.0% following the risks posed by COVID-19, we reduced our FV estimate by 11.6% to Php1,900/sh from Php2,150/sh for GLO. Were downgrading our recommendation on GLO to HOLD due to valuations. Despite our HOLD recommendation on GLO, we believe that investors should look to buy the stock below 1,700/sh given the relative safety offered by the telco sector in an environment exposed to Covid-19 threats. We continue to like GLO given its dominant position in the wireless business and its strong growth in its fixed line businesses, which have grown by mid double digits in recent years.

   John Martin Luciano, CFA

Even after factoring in our more conservative earnings assumptions and increasing our risk premium assumption by 350 bps, the upside to our FV estimate for restaurants remains significant. We believe the negative impact of the COVID-19 outbreak is already priced in. As such, we are maintaining our BUY rating for MAXS and PIZZA. At present, MAXS is trading at only 7.9X 20E P/E while PIZZA is trading at only 9.9X 20E P/E, way below their historical average P/Es of 15.7X and 20.9X respectively.

   John Martin Luciano, CFA

Even after factoring in our more conservative earnings assumptions and increasing our risk premium assumption by 350 bps, the upside to our FV estimate for restaurants remains significant. We believe the negative impact of the COVID-19 outbreak is already priced in. As such, we are maintaining our BUY rating for MAXS and PIZZA. At present, MAXS is trading at only 7.9X 20E P/E while PIZZA is trading at only 9.9X 20E P/E, way below their historical average P/Es of 15.7X and 20.9X respectively.

   John Martin Luciano, CFA

We are upgrading our recommendation on JFC from HOLD to BUY with a FV estimate of Php130/sh. Although earnings in the near-term will be hurt badly by the COVID-19 outbreak and the first full year consolidation of CBTL, we believe that the negatives are already been priced-in. At its current price, JFC is trading at 31.5X 20E P/E, slightly below its 5-year historical average P/E of 33.9X.

   Justin Richmond Cheng, CFA

Reiterate BUY rating We are reiterating our BUY rating on CNPF with a FV estimate of Php16.1/sh. Capital appreciation potential to our FV estimate is quite significant at 19%. CNPF is one of the most resilient companies amidst the COVID-19 outbreak in the country due to its focus on basic, shelf-stable goods. CNPF’s 2020 growth prospects look robust as well given the increased demand for its products. Meanwhile, its long-term prospects also remain robust given the company’s strong brand equity and proven track record of growing revenues and profits. Its fast-growing milk business also strengthens our conviction that the company can meet its medium-term target of growing profits by double-digits.

   Richard Lañeda, CFA

Despite the downgrade, we are maintaining our BUY rating on BLOOM. Even with our conservative fair value estimate, there still is significant capital appreciation potential based on BLOOM’s current market price, leading us to believe that negatives are mostly priced in. At its current enterprise value (EV), BLOOM is trading at 13.4X our conservative 2020 EBITDA but this would drop to 6.6X based on 2021’s EBITDA. This is lower than the median 2021 EV/EBITDA of 8.2x for global gaming companies. Our fair value estimate of Php8.10 and our 2021 EBITDA estimate would translate to a 2021 EV/EBITDA of 8.3X, still in line with its global peers’ current median multiple.