Alerts

   Richard Lañeda, CFA

   John Martin Luciano, CFA

Maintain BUY. We currently have a BUY rating on MAXS with a FV estimate of Php21/sh. At its current price, the company is only trading at 11.5X 2020E P/E. We continue to believe that MAXS deserves to trade in line with its peers given its similarly attractive medium-term outlook, its strong brand portfolio, and proven track record of growing revenues. However, share price in the near term could be weighed down by the weaker than expected 9M19 results.

   George Ching

Maintaining HOLD rating. We have a HOLD rating on AP with a FV estimate of Php43.1/sh. We continue to like AP as its profits are still projected to grow by a CAGR of 7.8% from 2017 to 2020, the fastest in the power sector, even with lower contract prices and rising coal costs. AP’s vertically integrated nature (due to the fact that it owns both power generation and distribution facilities) also secures its ability to expand its power generation portfolio despite concerns of oversupply in the market. However, based on AP’s current market price of Php39.60/sh, upside to our FV estimate is limited at 8.8%. The stock is now trading at 15.2X 2019E P/E, a premium to its 10-year historical average P/E of 12.3X and the 12X average P/E of industry peers currently.

   George Ching

Maintaining HOLD rating. We have a HOLD rating on AP with a FV estimate of Php43.1/sh. We continue to like AP as its profits are still projected to grow by a CAGR of 7.8% from 2017 to 2020, the fastest in the power sector, even with lower contract prices and rising coal costs. AP’s vertically integrated nature (due to the fact that it owns both power generation and distribution facilities) also secures its ability to expand its power generation portfolio despite concerns of oversupply in the market. However, based on AP’s current market price of Php39.60/sh, upside to our FV estimate is limited at 8.8%. The stock is now trading at 15.2X 2019E P/E, a premium to its 10-year historical average P/E of 12.3X and the 12X average P/E of industry peers currently.

   George Ching

We have a HOLD rating on NIKL with a FV estimate of Php4.11/sh. While we believe that the long term outlook for nickel prices will remain positive due to rising EV battery demand and the looming Indonesian ore export ban, we believe that this has already been priced-in by the market. NIKL’s share price has risen by 75.4% YTD, outperforming the PSEi’s 8% rise during the period. At its current price of Php3.86/sh, upside to our FV estimate is limited at 6.6%.

   Adrian Alexander Yu

TEL is eyeing to sell its remaining 2% stake in Rocket Internet next year once there is a good opportunity to sell. Recall that in 2014, TEL invested EUR333Mil in Rocket Internet, a Berlin-based company that builds online startups and owns shareholdings in various models of internet retail businesses. TEL sold a portion of its 6.1% stake last year for Php10.5Bil. The amount raised from the disposal last year was used to fund TEL’s record CAPEX budget of Php58Bil in 2018. According to TEL President and CEO Manny Pangilinan, their investment in Rocket Internet turned out to be not so bad; it was a small misstep in a financial perspective, but a giant step towards realizing TEL investing in digital.

   John Martin Luciano, CFA

Maintain BUY. We reiterate our BUY rating on PIZZA and our FV estimate of Php13.9/ sh. At its current price of Php11.92/sh, PIZZA is trading at a 2020E P/E of 17.3X. We like PIZZA given its dominance in the chained full-service pizza restaurant industry as well as its favorable long-term earnings growth outlook.

   Justin Richmond Cheng, CFA

Maintain BUY rating. We are maintaining our BUY rating on RRHI with a FV estimate of Php98.0/sh. We continue to like RRHI given its well-diversified portfolio of retail formats. This puts the company at the forefront in benefiting from the favorable growth opportunities in the retail sector. In addition, RRHI has made good progress in integrating and rationalizing Rustan’s. Going forward, RRHI is still expected to unlock more efficiencies from realigning the operations of Rustan’s, and this bodes well for RRHI’s growth prospects for the years to come.

   Adrian Alexander Yu

Increasing Estimates, Maintaining HOLD. Although WLCON’s 3Q19 results largely came in line with estimates, we are increasing our estimates on WLCON given management’s commitment to a more aggressive store network expansion and sustainable gross profit margins. Management disclosed plans of reformatting stores in tier 2 and tier 3 cities to be roughly 30% smaller in size in order to improve efficiency which should result in quicker breakeven points for individual stores. We believe the more aggressive store network expansion into tier 2 and tier 3 cities would not only result in stronger topline growth, but should also improve gross margins with a higher sales contribution from inhouse brands.

   George Ching

Maintain BUY rating on DMC. We have a BUY rating on DMC with a FV estimate of Php11.09./sh. We like DMC as it is poised to benefit from its investment in SCC and its construction business will be the key beneficiary of the government’s rising infrastructure spending. At DMC’s current market price of Php8.05/sh, upside to our FV estimate is significant at 37.8%.