Alerts

   George Ching

We reduced our FV estimate for MER by 29.3% to Php242.2/sh and reiterate our HOLD rating on the stock. Although MER’s long term outlook remains positive, the company faces numerous risks in the short term. Aside from weaker demand brought about by the COVID19 outbreak, MER faces a looming distribution tariff cut in the next regulatory period, the magnitude of which could be much steeper than expected given that the SC last year ordered the ERC to review MER’s distribution tariff which it believes to be too high.

   George Ching

We reduced our FV estimate for FGEN by 27% to Php23.6/sh, although we are also maintaining our BUY rating on the stock. We continue like FGEN given its relatively stable cash flow since bulk of its capacity is contracted. FGEN is also the only clean energy play in the PSE after its subsidiary EDC was delisted. Finally, the projected power shortage in 2023 improves the feasibility of its LNG regasification project which will enable its gas plants to remain competitive after the depletion of the Malampaya gas field. Based on FGEN’s market price of Php15.32/sh, the stock is trading at only 5.9X 20E P/E, while upside to our FV estimate is significant at 54%.

   George Ching

We reduced our FV estimate for AP by 22.7% to Php31.8/sh, although we are maintaining our BUY rating on the stock. Even with lower WESM and RES contract prices, AP’s profits are still projected to grow by a CAGR of 28.3% from 2019 to 2021, coming from a low base in 2019 and due to the 24% increase in its power generation capacity during the said period. Valuations are also attractive, with the stock trading at only 8.6X 20E P/E and providing a dividend yield or 5.5% and a 35.6% capital appreciation potential.

   Frances Rolfa Nicolas

At its current price, CHP is already trading at our new FV estimate. Moreover, despite the improved capital structure, we remain cautious of the company’s coverage ratios and financial covenants as mentioned above. Hence, we are maintaining our HOLD rating on CHP.

   Frances Rolfa Nicolas

We believe the negative impact of COVID-19 to EAGLE is already priced in. At its current price, capital appreciation to our new FV estimate is still significant at 28%. Moreover, even with our more conservative estimates, EAGLE is still trading at 4.5X 2020E EV/ EBITDA, a discount compared to the regional median of 5.3X. Hence, we maintain our BUY rating on EAGLE.

   Kerwin Malcolm Chan

Pepsi-Cola Products Philippines, Inc. (PIP) received approval from the Philippine Competition Commission (PCC) on the proposed acquisition by Lotte Chilsung Beverage Co. Ltd. through a tender offer. Recall that on December 12, 2019, Lotte Chilsung (42.2% current stake in PIP) announced its plan to acquire the remaining 57.8% of PIP’s total outstanding capital stock, which is equivalent to 2.134Bil common shares, at Php1.95/sh. This decision follows the suspension of the tender offer last February 5, pending the resolution of certain issues raised during the offer period. However, after further review, PCC announced that Lotte Chilsung’s tender offer to buy more shares will not likely result in a substantial lessening of competition. The PCC also mentioned that they will take no further action with respect to the proposed transaction between the two companies. (Source: PIP)

   Richard Lañeda, CFA

In light of the current situation of the COVID-19 outbreak and the uncertainties on government policies that might be implemented to contain the spread of the virus, we are applying very conservative assumptions to our forecast this year. Our base case assumption is that there would be a three-month enhanced community quarantine in Luzon, which is two months longer than what the government said it would implement. Therefore, we are adjusting our 2020 estimates to reflect the loss in revenues resulting from the lockdown. Segments that have significant downside adjustments are residential development, malls, and hotels. The changes in 2020 net income forecast range between 17% to 52%.

   Richard Lañeda, CFA

In light of the current situation of the COVID-19 outbreak and the uncertainties on government policies that might be implemented to contain the spread of the virus, we are applying very conservative assumptions to our forecast this year. Our base case assumption is that there would be a three-month enhanced community quarantine in Luzon, which is two months longer than what the government said it would implement. Therefore, we are adjusting our 2020 estimates to reflect the loss in revenues resulting from the lockdown. Segments that have significant downside adjustments are residential development, malls, and hotels. The changes in 2020 net income forecast range between 17% to 52%.

   Richard Lañeda, CFA

In light of the current situation of the COVID-19 outbreak and the uncertainties on government policies that might be implemented to contain the spread of the virus, we are applying very conservative assumptions to our forecast this year. Our base case assumption is that there would be a three-month enhanced community quarantine in Luzon, which is two months longer than what the government said it would implement. Therefore, we are adjusting our 2020 estimates to reflect the loss in revenues resulting from the lockdown. Segments that have significant downside adjustments are residential development, malls, and hotels. The changes in 2020 net income forecast range between 17% to 52%.

   Richard Lañeda, CFA

In light of the current situation of the COVID-19 outbreak and the uncertainties on government policies that might be implemented to contain the spread of the virus, we are applying very conservative assumptions to our forecast this year. Our base case assumption is that there would be a three-month enhanced community quarantine in Luzon, which is two months longer than what the government said it would implement. Therefore, we are adjusting our 2020 estimates to reflect the loss in revenues resulting from the lockdown. Segments that have significant downside adjustments are residential development, malls, and hotels. The changes in 2020 net income forecast range between 17% to 52%.