Alerts

   George Ching

July 30, 2024. Maintaining BUY rating. In light of the increase in our earnings forecast, we are raising our FV estimate on MER by 8.8% to Php513.4/sh. We like MER given its predictable and stable cash flow from its power distribution business. We also like MER as its profitability is least vulnerable to the risks facing the power industry (volatility in WESM and commodity prices and unplanned outages) because bulk of its profits come from the distribution business. MER’s is currently trading at 12X 2024 P/E, below its 10-year historical average of 17.5X. Based on the actual 2023 cash dividend of Php19.55/sh, this translates to a dividend yield of 5.1%. Based on MER’s current market price of Php385/sh, upside to our FV estimate is significant at 33.3%.

   Denise Joaquin

July 09, 2024. Reiterate BUY. We reiterate our BUY rating on URC with FV estimate of Php148/sh. We continue to like the company given its strong core branded business where it has continued to hold market share leadership in most consumer goods categories. 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. At current prices, we estimate that URC is trading at 16.7X 2024E P/E, below its 5-year historical average of 24.0X. Upside potential relative to our FV estimate is also significant at 33%.

   Denise Joaquin

May 28, 2024. We reiterate our HOLD rating on EMI with an FV estimate of Php14.2/sh. While we like EMI for its strong track record of profitability and its prospects in its fast growing whisky space, we think the stock is already fairly valued at its current price.

   Paolo Miguel Manansala

May 28, 2024. We are increasing our FV estimate to Php30.5/sh as we account for lower-than-expected expenses. Notably, we are reducing our forecast for tax, professional fees and repair and maintenance costs, while increasing our estimate for interest expense. Meanwhile, we have slightly decreased our revenue estimate for 2025 (-1.2%). This is to account for the slower growth expected from the changes in average tariffs. Recall that MWC’s rate rebasing exercise stipulates only an increase of Php3.25 for 2025, lower than the Php5 increase this quarter. Overall, we’ve raised our net income forecast for 2024 and 2025 by 4.6% and 3.3%, respectively. Despite the stock’s price appreciating by 48.0% YTD, we maintain our BUY rating for MWC. We think that the increase in earnings from the rate rebasing exercise along with the continued domestic and international developments will provide further growth for the company moving forward.

   Charmaine Co

May 23, 2024. We currently have a BUY rating on SECB with a FV estimate of Php104.0/sh, based on 0.55x 2024E P/B. we expect SECB to be one of the beneficiaries of the country’s economic growth as it continues to grow its intermediation business. The bank’s high capital ratios and liquid balance sheet will allow it to pursue such opportunities for growth in the medium term. Furthermore, investments that the bank is currently making in people and technology are expected to come online within the next few years, potentially leading to improved profitability.

   Denise Joaquin

May 23, 2024. We currently have a BUY rating on PIZZA with a FV estimate of Php11.8/sh. We like PIZZA for its strong top-line growth, driven by expansion efforts for brand portfolio, especially Potato Corner and PeriPeri. While margins are expected to remain challenged in the near-term due to elevated raw material costs and the ramp up in store expansion, we expect that gradual margin recovery and operating leverage in 2H should support an improvement in profitability.

   Denise Joaquin

May 23, 2024. We reiterate our BUY rating on JFC with a FV estimate of Php296/sh. We expect continued growth should the international segment see sustained improvement in profitability, underpinned by JFC’s leadership in the PH. At its current price, we believe the stock presents an attractive upside potential relative to our FV estimate at 29%. Based on our forecasts, JFC is trading at 27.3X 2024E P/E, below its five-year historical median of 35.9X and our target multiple of 35.3X.

   Denise Joaquin

May 23, 2024. We are lowering our FV estimate on DNL to Php8.8/sh from Php9.2/sh previously as we account for the weaker-than-expected first quarter results, partly offset by our more favorable outlook on Chemrez in light of the higher biodiesel blend mandate. Overall, we reduced our net income forecasts to Php2.8Bil (-14.8%) and Php3.6Bil (-9.6%) for FY24 and FY25, respectively. This was driven by our lower revenue forecasts and higher finance cost assumptions. Despite the cut in our estimates, we maintain our BUY rating on the stock. We find DNL’s long-term growth prospects attractive owing to the significant capacity expansion from its Batangas facility, which is poised to scale its export business over the coming years.

   Denise Joaquin

May 22, 2024. We currently have a BUY rating on MAXS with a FV estimate of Php8.80/sh as we continue to like the company for its portfolio of strong brands in the Philippine casual dining space. Based on our estimates, MAXS is trading at 4.0X 2024E P/E, lower than its five-year historical average of 14.7X and our target multiple of 10.6X.

   Richard Lañeda, CFA

May 22, 2024. We maintain our HOLD rating on VLL with a fair value estimate of Php2.04 given the current high interest rate environment. VLL targets the low-end of the real estate market, and this is the most sensitive to interest rates as most buyers in this segment avail of bank financing.