Alerts

   Richard Lañeda, CFA

MER had a slower sales volume growth of 2% for the 1st quarter of 2019 due to the high base effect and lower temperature we had for the past 2 months. This ended below our forecast of 3.5% but we believe sales volume will pick up in the succeeding quarters as we expect warmer temperature to increase power demand. We have a HOLD rating with an estimated fair value of Php325/sh. We like MER since it will be the main beneficiary of rising power demand in the country brought about by faster GDP growth. But based on its current price, there is no more upside to our FV estimate.

   Richard Lañeda, CFA

We are reducing our coal production forecast in light with SCC’s decision of cutting their operational expense and capex by operating only 1 coal mine instead of 2. We will also lower our revenue forecast by 5% and 8.2% in 2019 and 2020, respectively. On the other hand, we are maintaining our average selling price for coal given that SCC has shown improvements in the recent months. Given the adjustments, we are lowering our FV estimate to Php33.80/sh but maintaining a BUY rating. We believe that the negatives are already priced-in as stock prices have gone down by 26.3% in the past 12 months. SCC is currently trading the cheapest among all power companies making potential capital appreciation significant at 47%.

   Richard Lañeda, CFA

We are reducing our coal production forecast in light with SCC’s decision of cutting their operational expense and capex by operating only 1 coal mine instead of 2. We will also lower our revenue forecast by 5% and 8.2% in 2019 and 2020, respectively. On the other hand, we are maintaining our average selling price for coal given that SCC has shown improvements in the recent months. Given the adjustments, we are lowering our FV estimate to Php33.80/sh but maintaining a BUY rating. We believe that the negatives are already priced-in as stock prices have gone down by 26.3% in the past 12 months. SCC is currently trading the cheapest among all power companies making potential capital appreciation significant at 47%.

   Richard Lañeda, CFA

BEL reported a 4.1% drop on their core net income during the 1st quarter due to a decline on their equipment rental and instant scratch sales. Results missed our expectations. We currently have a BUY rating with an FV estimate of Php3.15 for BEL however due to its recent performance, earnings and our FV estimate could be adjusted downwards.

   Richard Lañeda, CFA

Full year profits performed well at 18.4% growth meeting both COL and consensus estimates. Breaking down, Solaire was able to book a 13.4% recurring income growth from all its gaming segments. Meanwhile, Jeju Sun’s loss narrowed by 47.4% due to lower cash opex and income tax provision. We are maintaining a BUY rating with a target price of Php13.74/sh. We favor BLOOM for being the operator of the biggest integrated resorts in the country which is a clear beneficiary of the growing demand in the gaming industry.

   Richard Lañeda, CFA

RWM’s net profit for the full year 2018 jumped 5-fold to Php1.44 Billion driven primarily by a one-time gain from insurance claim for the June 2, 2017 incident. Also, Gross Gaming Revenue (GGR) jumped 45.12% due to higher gaming capacity as they opened the ground floor gaming area of Grand Wing. Despite this, the company still underperformed expectations as expenses grew faster than revenues, resulting in an operating net loss during the year. Following its disappointing 2018 earnings, we maintain our negative outlook on RWM and reiterate a SELL rating with a FV estimate of Php3.57.

   Adrian Alexander Yu

WLCON jumped 64.6% for their 4th quarter as they continue to register a strong sales growth and higher margins bringing their full year performance up by 32.5% which is within COL estimates but ahead of consensus. We continue to like the company for its dominant position in the industry, strong growth track record and aggressive expansion plan. However, WLCON is currently trading above its global peers. With its target price of Php12.50, valuations are unattractive hence, a HOLD rating.

   Andy dela Cruz

We are upgrading URC to a HOLD despite our recent downward adjustment after factoring in the underperformance in the last quarter. We believe that their more concrete strategies for a long-term sustainable growth. Its 1st quarter earnings should paint us a better picture of whether their new strategies are bearing fruits.

   Justin Richmond Cheng, CFA

SSI’s core income exceeded COL and consensus estimates with an increase of 11.2% driven by lower operating expenses. Likewise, revenues grew 9.6% due to strong same store sales growth of its luxury and bridge, casual, and fast fashion categories. Also, Shake Shack, SSI’s newest addition to its food portfolio will open on the 1st half on 2019. We reiterate a BUY rating on SSI and increasing our FV estimate by 5.2% to Php3.37/sh. We like SSI given its ongoing turnaround amid healthy SSSG and the completion of its store rationalization program.

   Richard Lañeda, CFA

ALI plans to raise Php25-26 Billion by listing a REIT despite the current guidelines which set a minimum public ownership level of 40% upon listing to be increased to 67% in 3 years. However, there are plans of coming up with a more relaxed set of rules by the 2nd half of the year. Although it’s still too early, we believe this will be positive as it allows the company to raise capital for its next leg of growth and even acquire third-party assets. We currently have a BUY rating with a FV estimate of Php49.33.