Alerts

   Frances Rolfa Nicolas

The Tariff Commission announced that it will defer the schedule of the public hearing for the imposition of the safeguard duty on imported cement at a later date. This is to give the commission time to complete its plant visits and data verification. Recall that the Tariff Commission was scheduled to conduct the public hearing on May 6-10 to determine whether there is a need to impose the safeguard duty on imported cement. Nevertheless, the safeguard duty is still in effect starting Feb 8 for 200 days.

   Richard Lañeda, CFA

BLOOM recorded higher gross gaming revenues driven by the mass market segment (mass table and slots). We have adjusted our estimate to account the good performance from the above mentioned and to account the underwhelming VIP segment brought by Okada’s presence. After adjustments, our new FV estimate is at Php15.62 with a BUY rating. We continue to have a positive outlook on the gaming industry given the strength of the mass market.

   Richard Lañeda, CFA

BLOOM recorded higher gross gaming revenues driven by the mass market segment (mass table and slots). We have adjusted our estimate to account the good performance from the above mentioned and to account the underwhelming VIP segment brought by Okada’s presence. After adjustments, our new FV estimate is at Php15.62 with a BUY rating. We continue to have a positive outlook on the gaming industry given the strength of the mass market.

   Justin Richmond Cheng, CFA

COSCO trailed behind our full year expectations mainly due to PGOLD’s results. The subsidiary reported a drop on their profits from lower supplier support caused by the high inflation rate. Nonetheless, inflation has already subsided. As such, we believe that there will be an improvement in advertising and promotional spending after cutting spending to address the inflation issue. However, in light with the weaker than expected 2018 results, we are downgrading our earnings forecast for COSCO. Our target price for COSCO has also been reduced to Php11/sh but we are maintaining our BUY rating as valuations remain attractive.

   Frances Rolfa Nicolas

ABS Chief Financial Officer Aldrin Cerrado said that the company’s 2019 capex of around Php6Bil would mostly be allotted to its digital and broadband business. Mr. Cerrado noted that the company wants to be positioned in the event that most viewers migrate to digital from analog television, which is the trend in other countries. The company intends to produce more content for digital platforms to attract more users.

   Frances Rolfa Nicolas

We initially assumed that the company will only be implementing a partial plant shutdown, wherein the Bataan refinery’s utilization will only be reduced, this year. A total plant shutdown means that the company would have to import more products to compensate for lost production, thus lowering margins. According to management, the shutdown would last approximately one month. Moreover, depending on the result of PCOR’s assessment, any damages found and needing repairs would further increase costs. In light of these, we will be reviewing our estimates on PCOR for possible downward adjustments in our forecasts. We currently have a BUY rating and FV estimate of Php9.6/sh on PCOR.

   Frances Rolfa Nicolas

In a disclosure to the PSE, PCOR announced that it has temporarily suspended the operations of its Bataan refinery as a result of the recent earthquake that struck Central Luzon. The company also said that it will then proceed to implement a total plant shutdown to perform regular maintenance and repair for all process units, as well as to assess any possible damage caused by the earthquake.

   Adrian Alexander Yu

TEL made a 3% improvement on their 2018 full year revenues which ended in line with our estimate. This was attributable to the strong performance of the consumer individual, home and enterprise business but partly offset by the government’s regulations mandating lower interconnection fees. In addition, outlook has improved due to 1) The mobile business is gaining momentum; 2) With Voyager’s sale, this should help reduce TEL’s share of loss; 3) TEL sets a strong 2019 guidance. We are upgrading the company to a BUY rating with an FV estimate of Php1360. We believe that the concerns looming over the company are overblown. TEL expects that the number portability law will have greater impact on the post-paid, which only accounts for 4.1% of the total subscriber count, rather than the pre-paid subscribers whom have never been loyal to any carrier even without the law.

   George Ching

AP has now set their 2019 capex at Php50billion from which 80% will be allocated to coal power generation projects namely, the Cebu coal project and Dinginin Project. We are maintaining a BUY rating with an FV estimate of Php42.05/sh. Potential upside remains significant at 19% and with the company’s vertically integrated nature (it owns both power and distribution facilities), it has the ability to expand its power generation portfolio despite concern of oversupply in the market.

   George Ching

Full-year 2018 net income for FGEN increased by 64.4%, higher than COL and consensus forecasts. This was mainly driven by the outperformance of FGEN’S gas plants which earnings rose 55%. As per FGEN, the increase in earnings was primarily due to a surge in the net income contribution from the San Gabriel gas plant. The growth was also buoyed by EDC’s contributed attributable recurring earnings of Php3.9 Billion in 2018. We currently have a BUY rating on FGEN with a FV estimate of Php26.8/sh as we believe that the approval of the San Gabriel contract and the delisting of EDC will improve investor sentiment in the near term.