Alerts

   Adrian Alexander Yu

Valuation. There is currently no consensus estimate on STI. At its current price of Php0.57/sh, STI is trading at a 19.9x FY2019 P/E ratio. We expect tertiary student population to increase as the two-year gap created from the K to 12 structural change disappears over the next two years. Company earnings and P/E ratio should improve over the said period as revenues increase from the growing tertiary population.

   Frances Rolfa Nicolas

Senate Public Services Committee Chairman Senator Grace Poe-Llamanzares has filed a senate resolution to look into the operations of ABS, including its compliance with the terms and conditions of its franchise. Ms. Poe Llamanzares said that the inquiry is well within the Senate’s oversight function on franchises, but noted that it does not preclude any action in the House of Representatives or the Supreme Court.

   John Martin Luciano, CFA

Maintain HOLD rating. Following the decline in our earnings forecasts, we are cutting our FV estimate by 11.3% to Php220/sh. We are also maintaining our HOLD rating. Although we expect some recovery in Smashburger and its domestic business in 2020, earnings could still be dragged by the first full year consolidation of CBTL and the coronavirus outbreak given its impact on Chinese sales. Valuations are also not yet attractive as at its current price of Php192/sh, JFC is still trading at 33.1X 2020 P/E, a premium over its global peers median P/E multiple of 28.1X.

   Adrian Alexander Yu

Management believes that DITO Telecommunity’s rollout of services by July will not be delayed. Two weeks ago, DITO’s top executives met with Department of Information and Communications Technology (DICT) Secretary Gregorio Honosan to discuss updates on the third telco’s timeline and rollout. After the discussions, Honasan mentioned that he was satisfied with the telco’s progress and plans to assist them secure permits quicker.

   Frances Rolfa Nicolas

House Legislative Franchises Committee Vice Chairman Tonypet Albano said that ABS would not be automatically shut down even if it fails to secure a new franchise from Congress before April. Mr. Albano clarified that a legislative franchise holder may continue to operate with an expired franchise for as long as it was able to file its application for renewal within the reglementary period. Since ABS was able to file its application within the 18th Congress, the company may continue to operate until the end of this Congress or until 2022 pending renewal of application.

   George Ching

Reiterate HOLD rating on MER We have a HOLD rating on MER with a FV estimate of Php342.7/sh. We remain positive on MER’s long term outlook as it will be the main beneficiary of rising power demand in the country brought about by faster GDP growth. Although capital appreciation potential based on MER’s market price of Php289/sh is already attractive at 18.6%, investor sentiment will most likely remain subdued in the near term due to numerous risks. The biggest risk facing MER is the looming distribution tariff cut in the next regulatory period. The SC’s decision in 2019 further increases the likelihood that the distribution tariff cut will be significantly more than our base case assumption.

   Frances Rolfa Nicolas

MWIDE Chairman and CEO Edgar Saavedra revealed that the company is looking to build more terminals in Cavite, Clark, and Cebu. He also mentioned that several local government units (LGUs) have been approaching MWIDE after seeing what the company did in the Paranaque Integrated Terminal Exchange (PITX). PITX, which opened in 2018, has served as an intermodal transport terminal for an average of 51,000 passengers daily. The company is also planning to expand PITX for its second phase, which would take another three years to complete.

   Frances Rolfa Nicolas

In a disclosure to the PSE, ABS said that it complies with all pertinent laws governing its franchise and has secured all necessary government and regulatory approvals for its operations. This is in response to the Office of the Solicitor General’s quo warranto case filed against the company. Moreover, ABS noted that the Senate, the House of Representatives, and the Executive Branch have assured the public that its franchise will be allowed to go through the proper renewal process in a fair manner.

   Richard Lañeda, CFA

ALI has submitted an application to the Securities and Exchange Commission (SEC) for the country’s maiden real estate investment trust (REIT) offer. The offer is composed of 47.8Mil new common shares and 430.8 existing common shares, with an over-allotment option of up to 23.9Mil shares at Php30.05 each. At present, the REIT plan covers three commercial buildings: Solaris One, Ayala North Exchange and McKinley Exchange. Proceeds from the listing will be used for future investments in real estate properties in Metro Manila and other key regions in the Philippines.

   Frances Rolfa Nicolas

In a disclosure to the PSE, AC announced that it would grant proxy rights to Enrique Razon, which would allow it to achieve a 51% voting interest in MWC. This came following Prime Metroline Holdings’ acquisition of a 25% stake in MWC. AC Chief Finance Officer Jose Limcaoco said that this would allow Razon to take leadership in the partnership but at the same time keep the economic benefits aligned. The agreement will become effective after the closing of the subscription agreement, which will occur after certain conditions are met, including required lenders’ consent and regulatory approvals. Upon the grant of the proxy rights, AC’s effective voting interest in MWC will be reduced from 70% to 31.6%, while economic stake will remain at 38.6%. With the increase in control, Prime Metroline Holdings, Inc. has announced its intention to make a mandatory tender offer for the shares of MWC at an offer price of Php13.0/sh.