Alerts

   George Ching

As a result of the changes in our estimates for Maynilad, we are reducing our earnings forecast for MPI by 2.9% to Php17.5Bil for 2020, and by 5.6% to Php18.9 Bil for 2021E. We are also reducing our FV estimate on MPI by 7.6% to Php8.66/sh. Despite the reduction in our estimates, we reiterate our BUY rating on MPI. 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 Php3.80/sh, the company is trading at a 61.2% 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 130% 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 104% to Php7.63/sh.

   Justin Richmond Cheng, CFA

   Justin Richmond Cheng, CFA

Last Tuesday, PIP notified the Philippine Competition Commission (PCC) regarding the plan of Lotte Chilsung Beverage Co. Ltd. to acquire the remaining 57.8% of the company’s total outstanding capital stock through a tender offer. Korean conglomerate Lotte, currently with a 42.2% stake in PIP, is offering to buy up to 2.134Bil of PIP’s common shares at Php1.95/sh, which is a 12.27% premium compared to the six-month volume weighted average price (VWAP) and a 6.14% premium over the three-month VWAP of the company’s common shares. The tender offer will end at 5 p.m. later today. Should the acceptance of the tender offer cause PIP’s public ownership to shrink below 10%, which is the current minimum public float in the Philippines, then PSE will suspend trading of the company’s shares for six months. If they are still unable to comply with the requirement after said period, then PIP will be delisted from the PSE. Lotte mentioned that it does not intend to voluntarily delist PIP.

   Richard Lañeda, CFA

MEG is expanding in Cebu with the launching of a new 20-story residential condominium in its 30-hectare The Mactan Newtown township in Lapu-Lapu City, currently with 1,836 residential units. The new 222-unit residential condominium, which will be called The Pearl Global Residences, is expected to raise Php2.3Bil in Sales and is scheduled for completion by 2025.

   Richard Lañeda, CFA

https://www.colfinancial.com/ape/FINAL2_STARTER/researchcompupdates/downloads/2020-01-14-PH-S-Property.pdf

   Richard Lañeda, CFA

we like RLC for its defensiveness as it derives more than 70% of its operating income from malls, offices, and hotels. It is also worth noting that It has insignificant exposure on the POGO segment. Aside from a solid investment property portfolio, RLC is continuously improving its residential development segment. This is being done not only through joint ventures with reputable names like Hong Kong Land and Shang Properties but also improving on product offerings under its own brands. We forecast net income of RLC to grow 12% this year to Php10.18 Bil. RLC is trading a 33.7% discount to NAV compared to SMPH’s 2% discount to NAV est.

   Richard Lañeda, CFA

https://www.colfinancial.com/ape/FINAL2_STARTER/researchcompupdates/downloads/2020-01-14-PH-S-Property.pdf

   Richard Lañeda, CFA

https://www.colfinancial.com/ape/FINAL2_STARTER/researchcompupdates/downloads/2020-01-14-PH-S-Property.pdf

   Frances Rolfa Nicolas

Justice Secretary Menardo Guevarra denied allegations that the government would compel the two water concessionaires to accept the terms in the new water contracts. He also said that the water firms will be given a reasonable opportunity to comment on the proposed amendments in an open and public discussion of the issues.

   George Ching

Justice Secretary Menardo Guevarra denied allegations that the government would compel the two water concessionaires to accept the terms in the new water contracts. He also said that the water firms will be given a reasonable opportunity to comment on the proposed amendments in an open and public discussion of the issues.