Alerts

   Richard Lañeda, CFA

August 06, 2024. BUY rating and FV estimate of Php43.20 maintained. We maintain our BUY rating on SMPH with a fair value estimate of Php43.20. We maintain our BUY rating on SMPH for its dominance in the mall segment, which has capitalized on the strength of the consumer sector. The mall segment has so far been very resilient in the face of higher interest rates and high inflation. Meanwhile, SMPH’s residential revenues are holding up well despite lower reservation sales since 3Q23. SMPH still has almost Php200 Bil of unbooked revenues which will sustain their residential revenues over the next four years.

   Charmaine Co

August 06, 2024. Realigning estimates; maintain BUY. We are realigning our estimates for MBT following 2Q24 results. The main changes made were to trading and FX gains (-22.4% to Php3.9Bil for FY24) and provisions (-15.9% to Php5.4Bil). Our net income forecasts for FY24 and FY25 remain unchanged at Php46.6Bil and Php49.3Bil respectively. We are maintaining our BUY rating on MBT with a FV estimate of Php84.6/sh, based on 1.0x 2024EP/B. With a strong and highly liquid balance sheet, we think that MBT is positioned for growth as economic activity increase and demand for loans goes up. MBT is also very well-capitalized, with one of the highest CET1 ratios among banks. This gives the bank flexibility, not only in growing its loan book, but also in distributing dividends. It currently has the highest yield among banks at ~7%. Furthermore, the stock is trading at a discount vs peers at 0.8x P/B (vs BDO’s 1.3x and BPI’s 1.5x).

   Denise Joaquin

August 05, 2024. Reviewing estimates. We will be reviewing our forecasts on URC following the weaker-than-expected 2Q24 earnings results. We currently have a BUY rating on URC with FV estimate of Php148/sh and remain positive on the stock given its strong core branded business. We expect earnings growth this year to be supported by sustained volume growth and margin recovery for the core business on the back of favorable raw material lock-ins coupled with deliberate actions to optimize operational efficiencies. Our outlook on demand recovery is also supported by expectations of peaking rice inflation in light of reduced import tariffs on rice.

   George Ching

August 05, 2024. Maintaining HOLD rating. We have a HOLD rating on AEV with a FV estimate of Php60.3/sh. We are maintaining our HOLD rating on AEV. We continue to like AEV given the prospects of its power subsidiary AP. AEV is also well positioned to benefit from the country’s growing infrastructure programs owing to its investment in republic cement as well as its strong balance sheet and excellent track record in acquiring businesses. However, key business units such as Food and Cement continue to be negatively affected the weakness in overall demand, cost inflation as well as elevated interest rates.

   George Ching

August 05, 2024. We have a BUY rating on AP with a FV estimate of Php51.8/sh. We like AP as we believe that it long term earnings growth outlook has improved following the ramp up of its renewable energy capacity expansion initiative. Furthermore, valuation is also cheap, trading at 9.8X FY24 P/E, compared to AP’s 10 year historical P/E of 13.7X. Based on its 2024 cash dividend of Php2.3/sh, this provides a decent dividend yield of 6.2%. The upside to our FV estimate is significant at 39.6%.

   George Ching

August 05, 2024. Maintaining BUY rating on SCC. We have a BUY rating on SCC with a FV estimate of Php52.1/sh. SCC is trading at 6.1X FY24 P/E, below its 10 year historical P/E of 11.6X. Based on its actual 2023 cash dividend of Php7/sh, this provides a very high dividend yield of 21%. Upside to our FV estimate is also very high at 55%.

   Denise Joaquin

August 02, 2024. Maintain HOLD rating. We currently have a HOLD rating on WLCON with FV estimate of Php20.20/sh. While we continue to like WLCON fundamentally for its market leadership in the home improvement space and its long-term store network expansion strategy, we think that sentiment on the stock could remain subdued without a visible recovery in demand from the consumer market for home improvement. We also note that results have repeatedly missed on top-line and bottom-line expectations, which could warrant WLCON’s depressed valuations.

   Charmaine Co

August 02, 2024. Maintain BUY. We currently have a BUY rating on BDO, with a FV estimate of Php164.0/sh (based on 1.5x 2024E P/B). We like BDO as we believe that it is well-positioned for growth, even amidst challenging economic conditions, with its liquid balance sheet and wide branch network. While interest rates remain elevated, BDO’s strong deposit franchise will play a key role in managing NIM and enhancing profitability. Meanwhile, in the face of impending rate cuts, we believe that BDO has implemented enough changes to defend against downward pressures on NIM.

   Charmaine Co

August 02, 2024. We currently have a HOLD rating on BPI with an FV estimate of Php118.0/sh, based on 1.50x 2024E P/B. We expect to see sustained growth in BPI’s portfolio as the economy continues to recover and grow. Growth in the bank’s core business should be fueled by its aggressive customer acquisition strategies and agency banking push, on top of synergies to be formed with the Gokongwei group. As interest rates stay higher for longer, BPI will benefit from its substantial low-cost base deposit. On the other hand, in event of a rate cut, we believe that the impact on the bank’s NIM will not likely be significant given the shift of its loan mix and the build-up of its investment securities portfolio while rates were high.

   Denise Joaquin

August 02, 2024. Reiterate BUY. We reiterate our BUY rating on RRHI with a FV estimate of Php85.3/sh. We continue to like the company given its well-diversified portfolio of retail formats in the staples and consumer discretionary categories. We also expect recovery this year to be driven by the impact of wage hikes that could alleviate tightened consumer spending.