Alerts

   Sheila Andanar-Maghari

The shares of Melco Resorts and Entertainment (Philippines) Corporation ( MRP ) shall be delisted from the official registry of the Exchange effective on Tuesday, June 11, 2019. Please refer to CN-NO. 2019-0030 and DN00048-2019 dated June 3, 2019 for the details.

   John Martin Luciano, CFA

Fitch Ratings said on Friday that it affirms the credit rating of the Philippines (BBB with a stable outlook) based on prospects of strong sustainable growth, as well as lower overheating risks. Fitch expects the economy to grow at 6.1% this 2019 and is expected to grow at more than 6% per annum over the medium term. Still, despite the back-to-back rate hikes last year which relieved fears that the economy might be expanding at an unsustainable level, Fitch warns that external headwinds like the ongoing US-China trade war could still weigh on the domestic economy.

   John Martin Luciano, CFA

According to the Bangko Sentral ng Pilipinas, inflation in May 2019 likely remained manageable as it is seen to land between 2.8% and 3.6%. Although higher transportation cost and prices of some food items provided upward price pressures within the month, lower rice, oil, and electricity rates are expected to temper the said upward price pressures. The forecasted May 2019 inflation is within the government’s target of 2% to 4% range.

   Charles William Ang, CFA

PNB’s stock rights offering has been approved by the PSE with plans of raising up to Php12 Billion by issuing up to 300 Million shares. The proceeds will also be used to strengthen CET1 ratio and enable it to sustain its strong asset growth. Final offer price will be determined on June 11; ex-rights date is set on June 17, while the offer period will run from June 25 to July 5. The additional capital from the offering is expected to boost the bank’s capital ratios. We are maintaining our BUY rating with a FV estimate of Php62/sh.

   Sheila Andanar-Maghari

Please be informed that our Board of Directors, at its meeting held today, approved the change of our Company’s stock trading symbol with the Philippine Stock Exchange to “ALLHC".

   Andy dela Cruz

URC expects a high single-digit topline growth for 2019 on the back of the recovery of its coffee business alongside the expansion of its other food and agro-industrial businesses. In particular, the company is looking at a 7-9% y/y increase in sales, as its instant coffee business shows very strong growth momentum. Furthermore, the company launched three new instant coffee products on January to address gaps in the market. (Source: Businessworld)

   Andy dela Cruz

URC is allocating up to Php9Bil in capital expenditures for 2019 with a huge portion being used for the increase in the company’s manufacturing capacity. URC is also looking at new sites for expansion to set up new manufacturing plants. For example, last March a new sugar mill was inaugurated in Negros Occidental. This new mill can crush up to 6,000 MT of canes per day, increasing the total milling capacity of its subsidiary to 14,000 tons of canes per day. Meanwhile, this brought URC’s total capacity to 40,000 canes. (Source: Philstar)

   George Ching

Maintain HOLD rating. We have a HOLD rating on AEV with a FV estimate of Php46.8/ sh. We continue to like AEV given the expansion plans of its power subsidiary AP. AEV is also well positioned to participate in the government’s infrastructure projects owing to its investment in republic cement as well as its strong balance sheet and excellent track record in acquiring businesses. However, we are recommending a HOLD as AEV is currently priced at a premium to the fair value of its subsidiaries. Based on its current market price of Php54.8/sh, there is no more upside to our FV estimate.

   George Ching

San Miguel Brewery is looking to spend US$70Mil or ~Php3.5Bil for the construction of a new brewery In Vietnam. Management said they are still conducting a market study for the facility, but noted that if they construct a facility it should be able to produce at least two million hectoliters. SMB President, Mr. Huang, said that the per capita consumption in Vietnam is quite attractive at 44 liters, and this is also higher than the Philippines at 19 liter.

   George Ching

MPI said yesterday that it is pushing through with plans to divest part of its take in the toll road and hospital businesses. For toll roads, MPI said it is looking to sell up to a 20% stake, but no details on the price and timetable were given. For the hospital group, MPI said it is looking to sell up to a 9% stake in order to maintain majority control in the business. MPI expects the sale of the hospital group stake to be completed before the year. The plan to sell a partial stake in the toll road and the hospital businesses is in line with MPI’s strategy to further expand its toll road business without incurring too much debt in the parent company level. Recall that in 2014, the private equity arm of Singaporean sovereign wealth fund GIC acquired a 40% stake in the hospital group for Php10.2Bil, setting the equity value of the business at ~ Php26Bil. The sale of a 9% stake in the hospital business could raise ~ Php2.3Bil based on the previous valuation, but management has indicated that the current valuation should be higher considering its earnings growth in the past 5 years. Furthermore, base on the MPI’s internal valuation estimate on its toll road business of Php147Bil, a 20% stake sale could potentially raise up to Php30Bil for MPI. This should be able to raise enough equity to finance MPI’s investment plans for its toll roads of ~ Php100Bil for the next 5 years.