Alerts

   George Ching

As a result of the reduction in our operating expense estimates, we are raising our 2019E earning forecast by 16.1% to US$296Mil, and our 2020E forecast by 15.7% to US$327Mil. We are also raising our FV estimate on ICT by 7.8% to Php117.8/sh. We are maintaining our HOLD rating on ICT. With the exception of its port in Argentina, we believe the success of ICT’s greenfield ports (Australia, Congo, Papua New Guinea and Colombia) will be the key earnings growth driver for the company in the next few years as these new ports will have a combined capacity of 3Mil TEU, equivalent to 30% of ICT’s total volume in 2018. However, in terms of valuation, ICT is relatively expensive, trading at 22.4X 2019E P/E, a premium to its global peer average of 16X 19E P/E. Based on its current market price of Php131/sh, there is no more upside to our FV estimate.

   Justin Richmond Cheng, CFA

   Frances Rolfa Nicolas

We currently have a BUY rating and FV estimate of Php99.0/sh on CEB. We continue to like CEB given the relatively lower jet fuel prices and its fleet/capacity expansions. Moreover, valuations remain attractive. At its current price of Php82.3/sh, the stock is currently trading at 5.5X 2019E EV/EBITDA, a discount compared to the regional average of 8.7X.

   George Ching

Maintaining BUY rating. We have a BUY rating on FGEN with a FV estimate of Php26.8/sh. We believe that the approval of the San Gabriel contract and the delisting of EDC will improve investor sentiment in the near term. Based on FGEN’s market price of Php20.70/sh, upside to our FV estimate is significant at 29.3%.

   Frances Rolfa Nicolas

In light of the better-than-expected 1Q19 results, we are increasing our revenues estimate by 8% to Php20.7Bil in 2019, and by 10.3% to Php24.7Bil in 2020. Moreover, we are slightly decreasing our GP margin estimate to 44.0% (from 44.5%) in 2019 and 2020. We are also increasing our interest income estimates by 16.7% to Php566Mil in 2019, and by 23.6% to Php517Mil in 2020. We are also lowering our tax rate forecast to 18% (from 23%) in 2019, and to 18% (from 21%) in 2020. Factoring these, our earnings estimate increased by 15.5% to Php6.1Bil in 2019, and by 15.1% to Php7.4Bil in 2020. Accordingly, our FV estimate increased to Php17.5/sh. At its current price of Php15.9/sh, upside to our new FV estimate is limited at 10%. In addition, EAGLE is trading at 9.1X EV/EBITDA, at par with the regional median of 9.0x. Hence, we are maintaining our HOLD rating on EAGLE.

   April Lynn L. Tan, CFA

1st quarter GDP for the year increased by 5.6%. This registered below the consensus of 6% which was not a surprise given the delayed passage of the government’s budget and the higher interest rate environment which caused government spending, capital formation and exports to slow down. Despite the disappointing results, we should turn our focus on the improving growth outlook for the 2nd half of the year as the government has finally passed the 2019 budget last month. Furthermore, inflation is continuously slowing down which should boost consumer spending and BSP’s liquidity easing.

   George Ching

Maintaining BUY rating. We have a BUY rating on FGEN with a FV estimate of Php26.8/sh. We believe that the approval of the San Gabriel contract and the delisting of EDC will improve investor sentiment in the near term. Based on FGEN’s market price of Php20.0/sh, upside to our FV estimate is significant at 34%.

   George Ching

Reducing estimates, downgrading to HOLD. Due to the reduction in our revenue forecast, we are reducing our 2019E earnings forecast for NIKL by 24.4% to Php3.06Bil. We are also reducing our FV estimate for NIKL by 12.5% to Php2.80/sh, and downgrading our rating to HOLD. NIKL’s share price has declined by 15.2% in the past 12 months, underperforming the PSEi’s 5% rise during the period. At its current price of Php2.40/sh, there is an upside of 16.7% to our FV estimate. However, we believe that near term sentiment will likely remain negative as the relaxation of Indonesia’s ore export ban will likely continue to put a downward pressure on negotiated contract prices, while the weaker than expected LME prices will also cap the earnings of its HPAL investments.

   George Ching

The Supreme Court (SC) rules that all Power Supply Agreement (PSA) application submitted by the power generation company filed with Energy Regulatory Commission (ERC) on or after June 30, 2015 are required to comply with the Competitive Selection Process (CSP) rule. This means that affected companies (MER, AP, and SCC) will have to submit new PSAs for their projects to push through. However, we believe that these projects will likely be significantly delayed as new PSAs will need to go through the CSP in order to be approved by the ERC. We are reducing the FV estimates after removing affected projects.

   George Ching

The Supreme Court (SC) rules that all Power Supply Agreement (PSA) application submitted by the power generation company filed with Energy Regulatory Commission (ERC) on or after June 30, 2015 are required to comply with the Competitive Selection Process (CSP) rule. This means that affected companies (MER, AP, and SCC) will have to submit new PSAs for their projects to push through. However, we believe that these projects will likely be significantly delayed as new PSAs will need to go through the CSP in order to be approved by the ERC. We are reducing the FV estimates after removing affected projects.