Alerts

   Justin Richmond Cheng, CFA

Maintain BUY rating. Notwithstanding our lower earnings and FV estimate, we are maintaining our BUY rating on MRSGI. We continue to expect MRSGI to deliver better earnings growth given the reopening of its flagship stores. Note that it could take some time before the recovery fully materializes as MRSGI’s store expansion tempers the impact of the reopening of Metro Ayala Cebu. However, we expect these stores to ramp up over the short-tomedium term, allowing MRSGI to reap better scale efficiencies. On another note, MRSGI’s valuations remain attractive with the company still trading at 10X 19E P/E (using core earnings ex-insurance claims), a steep discount to the consumer average of 21X.

   Justin Richmond Cheng, CFA

After bringing in the first No Brand store in the Philippines, RRHI plans on opening more stores in the succeeding months. In fact, RRHI will be opening its second store on December, followed by another store around April or May next year. The No Brand store is the private label brand of South Korean retailer, E-Mart. Under RRHI’s contract with E-Mart, RRHI is expected to open 10 No Brand stores in the Philippines by April 2021. The No Brand store offers a wide array of Korean products (e.g. food, cooking ingredients, kitchenware, toiletries, skincare products, etc.), highlighting utility over appearances with their no branding approach to products.

   John Martin Luciano, CFA

The BSP is now requiring banks seeking universal banking status to go public within one year after the issuance of their licenses, subject to rules of the SEC on minimum public ownership and the listing rules of the PSE. According to BSP Deputy Governor Francisco Dakila Jr., the amendments are aimed to supplement the BSP’s enhanced corporate governance framework by encouraging dispersed shareholdings in banks. Prior to the amendment, note that banks that were granted universal banking license were required to list their shares in the PSE within three years.

   Richard Lañeda, CFA

ALI is looking to allocate over Php100Bil for CAPEX in 2020, of which around Php15- 20Bil will be financed through local debt, in a bond format. ALI CFO Augusto Bengzon mentioned that the company was able to raise Php21Bil from the bond market this year and plans to make a similar level of borrowing for next year. However, the company prefers to have longer tenors in its issuances next year.

   Richard Lañeda, CFA

MEG is building its first upscale residential village, the Arden Botanical Estate, in Trece Martires City, Cavite. The company will offer 329 lots with sizes between 280 to 609 sq.m. which will be priced from Php18,000 to Php22,000 per sq.m. The project is expected to generate Php2.5Bil in sales and is targeted for completion in 2024.

   Ed Martinez

Termination of coverage

   Richard Lañeda, CFA

VLL has formed a joint venture (JV) with Japanese real estate developer Mitsubishi Estate Co., Ltd. to develop a mixed-use condominium in Manila. The JV will build a high-rise condominium with 32 floors for residential units, seven floors for parking and one floor for commercial space. The project is targeted to be launched within the first half of 2020, and to be turned over to tenants by the second half of 2024.

   Richard Lañeda, CFA

Maintain BUY with FV estimate of Php21.63. We maintain our BUY rating on AGI following the favorable 9M19 income of the group. In addition, AGI’s share are priced at a 47.7% discount to its market price-based NAV of Php21.76. We believe at this price the market has factored in much of the downside for AGI. In the short term, we may see continued pressure on the share price because of the MSCI rebalancing where in AGI was removed from Philippine big cap index and added to the Philippine small cap index. The rebalancing should be done by Nov. 26.

   Justin Richmond Cheng, CFA

We are maintaining our BUY rating on COSCO with a FV estimate of Php12.8/sh. COSCO remains severely undervalued with the market not valuing its other businesses (apart from PGOLD) like the liquor distribution and real estate business. In fact, if we only value COSCO (adjusting for parent net debt) for its 49% stake in PGOLD based on the latter’s market value, this still translates to a target price of Php8.9/sh, presenting a 29% upside to COSCO’s current price. COSCO also recognizes the severely low market valuation of its company. As such, the company has been more aggressively buying back their shares. Under their current buyback program, COSCO has repurchased 161,640,400 shares at an average price of Php6.7/sh.

   Justin Richmond Cheng, CFA

We are maintaining our BUY rating on COSCO with a FV estimate of Php12.8/sh. COSCO remains severely undervalued with the market not valuing its other businesses (apart from PGOLD) like the liquor distribution and real estate business. In fact, if we only value COSCO (adjusting for parent net debt) for its 49% stake in PGOLD based on the latter’s market value, this still translates to a target price of Php8.9/sh, presenting a 29% upside to COSCO’s current price. COSCO also recognizes the severely low market valuation of its company. As such, the company has been more aggressively buying back their shares. Under their current buyback program, COSCO has repurchased 161,640,400 shares at an average price of Php6.7/sh.