Alerts

   Richard Lañeda, CFA

   Andy dela Cruz

PIZZA acquires Peri-Peri Charcoal Chicken with 23 stores across Metro Manila in an asset purchase agreement. At the end of the deal, PIZZA will own all assets, intellectual property, as well as owning and operating all company-owned stores and serving as brand-owner and franchisor of stores being operated by franchisees. This will add around 10% to PIZZA’s current store network of 228 units. More details regarding the acquisition after the earnings briefing this afternoon. We reiterate a HOLD rating with Php13.10/sh.

   Justin Richmond Cheng, CFA

PGOLD recorded an increase of 11.6% on their full year net income. Excluding the one-time gain from the divestment of Lawsons booked early 2018, results underperformed both COL and consensus forecast caused by lower margins. We’ll release more details after the briefing today. We currently have a HOLD rating with an FV estimate of Php47/sh.

   Andy dela Cruz

Due to the deferred tax benefit in 2017, 4th quarter net income slipped by 13.1%. Nonetheless, full year recurring profits still grew by 30.7% performing within our expectations. Net income trailed behind our estimates due to the 35.6% effective tax rate and higher interest expenses booked in the 4th quarter. We don’t think this is a cause of concern as higher interest rates affects all companies and that it should already be priced in. We are maintaining a BUY rating with an FV estimate of Php19.90. MAXS is currently trading below the historical average of its peers. We believe that the company is fundamentally attractive given its medium-term outlook, strong brand portfolio, proven track record of growing revenues, and the recovery of margins from 2017 and finally, its resiliency amidst cost pressure in 2018.

   Andy dela Cruz

JFC’s 4th quarter revenues grew by 18.2% mainly due to the healthy domestic and international sales and first-time contribution of Smashburger. This brings full-year net income up by 17.1% and ahead of both COL and consensus estimate. JFC disclosed that it will be raising its capex budget for 2019 to Php17.2 Billion, much higher than last year’s as it plans for a combination of new stores, renovation of existing stores, and investments in manufacturing plants. We are maintaining our HOLD recommendation since the stock is already trading above our fair value estimate and reducing our FV estimate Php286/sh to account the higher capex.

   Andy dela Cruz

EMP reported a drop of 17.8% for the 4th quarter earnings. For the full year, earnings only grew by 8% missing both COL and consensus estimates on higher spending on marketing for its brandy products. We are improving our estimates to account its good revenue performance, but lower margins. Nonetheless, we are maintaining a BUY rating with a new FV estimate of Php8. At the current market value, it’s still trading at an attractive rate. In addition, the company’s buy back program shows their confidence in its long-term growth prospects.

   Andy dela Cruz

Slightly below COL and consensus estimates, DNL’s full-year 2018 earnings were up by 9.7% which was mainly due to the sudden 6% decline in its high margin specialty product volume which they believe was due to negative sentiment arising from peak inflation concerns, higher interest rates and weak peso. Despite the disappointments in DNL’s results, management affirms that the problem is not present this 2019 and should be rosy again. Fundamentally, we like DNL for its steady sales volume growth and its resilience to rising input costs. But, we advise investors to wait for pullbacks as valuations are not yet compelling. Hence, a HOLD rating is maintained with a fair value estimate of Php10.90/sh.

   Andy dela Cruz

CNPF’s profits for the year 2018 were in line with both COL and consensus estimates due to the healthy growth of revenues as its branded business showed a healthy increase in sales but was partly tempered by its OEM export business due to lower selling prices of tuna and coconut. Profits were also affected by financing costs and elevated operating expenses. Hence, management has set its earnings guidance for the year 2019 at low double-digit growth. But we expect its branded business to continue to support its revenues and its OEM business to start recovering from an ASP correction in 2018. With that, we are maintaining a BUY rating with a fair value estimate of Php17.80/sh.

   Justin Richmond Cheng, CFA

CIC expects higher demand on their air-conditioning business given the El Nino phenomenon. The same expectation goes to its refrigerator business after it has regained it market share earlier this year. CIC should also benefit from lower commodity prices and strong peso. Despite our better earnings expectation, we are maintaining a HOLD rating with an FV estimate of Php43/sh as valuations at this point is trading at an expensive rate.

   Richard Lañeda, CFA

2018 performance for SM jumped by 12.7% driven by the strong performance from SM Retail, SMPH and BDO. This ended in line with both COL and consensus estimates. We remain positive on SM’s fundamentals however given that it’s currently trading near our FV estimate of Php1,010, we are maintaining a HOLD rating. We advise the investors to wait for pullbacks at a more attractive level of Php880 or below before buying.