Alerts

   Richard Lañeda, CFA

FLI has broken ground for its latest residential property project in Trece Martires, Cavite. The latest project, New Leaf, will have unit sizes ranging from 45 sqm to 345 sqm, and the units will be offered for around Php1.2 to Php1.5Mil. This project will be under the company’s Futura brand and will have two housing units. Management said they are looking to tap the market of families that are moving out of Metro Manila and into the rural-urban fringe cities.

   John Martin Luciano, CFA

We currently have a BUY rating on BPI with a FV estimate of Php106/sh based on 1.65X 2020 P/BV. We continue to like BPI because it is poised to take advantage of the country’s healthy economic growth on the back of its strong and highly liquid balance sheet as well as its large branch network. We believe this gives the bank an advantage in growing its loan portfolio given its access to low-cost funding as seen in its high CASA ratio of 69.1% as of end-September 2019. Furthermore, the bank is operationally efficient as it has lowest cost to income ratio among its peers as it is quite prudent in expanding its branch network

   John Martin Luciano, CFA

With the changes in our forecasts, we are revising our FV estimate Php74/sh based on 1.0X 2020 P/BV. However, we are maintaining our BUY rating as the upside to our FV remains significant. Although we believe that the salary loans segment still faces headwinds as this could still be refinanced by the GSIS with more lenient loan terms, we believe that downside risks have already been priced in. At its current price, the bank is only trading at 0.8X 2020E P/BV (adjusted for good will), a discount to its 5-year historical average P/BV of 1.3X. Going forward, we expect the strong growth in the bank’s credit cards, mortgage, and commercial loans, coupled with declining funding cost, to drive the growth in the bank’s lending income

   Frances Rolfa Nicolas

CHP has obtained the approval of its shareholders to increase authorized capital stock from Php5.2Bil to Php18.2Bil. Recall that the rationale for this is to pave the way for the company to raise equity capital including, but not limited to a rights offering. CHP is looking to raise up to US$250Mil, which would allow it to improve its capital structure, fully fund the ongoing plan expansion and provide balance sheet flexibility. CHP noted that any unissued shared will be kept in the form of authorized but unissued share capital.

   George Ching

Maintaining HOLD rating on JGS. JGS has a 29.4% effective stake in MER. As a result of the changes in our earnings estimates for MER, our 2020E earnings forecast for JGS increased by 9.6% to Php33.4Bil. Our FV estimate for JGS is unchanged at Php66.2/sh.

   George Ching

Please be advised that the change in corporate name and stock symbol of PHINMA Energy Corporation ("PHEN" or the "Corporation") to AC Energy Philippines, Inc. ("ACEPH") will be reflected on the PSE systems effective on Wednesday, October 23, 2019. The Exchange shall inform the Trading Participants and the investing public of further developments on the matter, including the Corporation’s compliance with the Exchange's Policy on Updating of Stock Certificates.

   George Ching

In light of the changes in our assumption on MER’s tariff and after factoring in the write -back of provisions previously set aside, we are raising our 2020E earnings forecast by 76% to Php22.9Bil, and our 2021E forecast by 52% to Php23.1Bil. However, we are maintaining our FV estimate of Php342.7/sh as the increase in earnings was only due to the writeback of provisions which has no impact on our cash flow estimates. We are reiterating our HOLD rating on MER. While 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, we believe that investor sentiment will remained subdued in the near term due to several headwinds, the biggest of which is the looming distribution tariff cut in the next regulatory period. The earnings outlook for MER’s power generation business also suffered a setback after the supreme court recently ruled that its power projects will have to go through a competitive selection process in order to secure power supply contracts. MER’s valuation is also not attractive, as the stock is trading at a premium to our FV estimate based on its current market price of Php357.2/sh.

   Juanis G. Barredo

Travellers International Hotel Group, Inc. (RWM): Voluntary Delisting effective October 21, 2019. Please be informed that the Board of Directors of the Exchange, in its meeting held on October 9, 2019, granted the Petition for Voluntary Delisting filed by Traveller’s International Hotel Group, Inc. (the “Company”) and accordingly ordered the delisting of the shares of the Company from the Official Registry of the Exchange (electronic board and ticker) effective October 21, 2019. Subject to the payment of the required voluntary delisting fee, the Company’s shares shall no longer be tradable effective October 21, 2019, Monday. For your information and guidance.

   George Ching

As interest savings arising from the transaction will more than offset the reduction in the earnings contribution from MPHHI, we are increasing MPI’s 2020E earnings by 10.3% to Php13.6Bil, and 2021E earnings by 8.2% to Php16.3Bil. We are also raising our FV estimate on MPI by 6.6% to Php9.37/sh. We are maintaining our BUY rating on MPI. MPI’s share price has increased by 2.4% in the past 12 months, underperforming the PSEi which has risen by 12.6% during the same period. We believe that the underperformance was mainly due to regulatory concerns surrounding its water and toll roads businesses. However, we believe that these concerns are overblown. Maynilad has already won its second arbitration case against the government. Meanwhile, MPTC has already secured the first tranche of toll hike this year for the NLEX and SCTEX, and is awaiting approval for the toll hike application for its other toll roads. Moreover, valuations are already very attractive. Based on MPI’s current market price of Php5.06/sh, the company is trading at a 52% discount to its NAV. The toll road business and Maynilad are nearly worthless as investors are only paying for MPI’s 45.5% stake in Meralco (representing 96.2% of MPI’s market value). MPI is now trading at only 9.9X 2019E P/E, a discount relative to the 14.6X average P/E of its industry peers. Based on its current market price, upside to our FV estimate of Php9.37/sh is significant at 85.2%.

   Adrian Alexander Yu

For 2020, we forecast the PSEI’s EPS to grow by 8%, slower than the 13% EPS growth in 2019.