Alerts

   Charles William Ang, CFA

SECB’s recorded 2018 earnings decreased by 16.2% mainly due to higher than expected effective tax rate. This resulted to an underperformance from both our estimate and the consensus’. Full year earnings translate to a ROE of 8%. We still have a BUY rating on the company with a target price of Php205/sh. The company is in a good position to take advantage of the favorable economic prospects; loan repricing should drive margin improvement and lastly, valuations are currently at an attractive level.

   Charles William Ang, CFA

PNB RISES 17.1% IN NET INCOME PNB disclosed a 43% decline on their 4th quarter earnings due to lower gains from the sale of ROPA during the quarter, bringing the full year forecast up by 17.1%. This ended above both COL and consensus expectations. Lending business and fee-based revenues continued to post solid results. We are maintaining a BUY rating with an FV estimate of Php62. Recent quarters show acceleration in the bank’s core income growth. We believe that its merger with Allied bank will result to profitability and cost synergies.

   Charles William Ang, CFA

MBT recorded a higher than expected provisions which resulted to an underperformance as compared to COL and consensus estimates. The higher provisions were because of the fraud incident that happened last year. However, ROE is still at 9.4%. We are reiterating our BUY recommendation with an FV estimate of Php93.50/sh. The bank is currently trading at an attractive level.

   George Ching

The transitional military council of Sudan said it has suspended the concession agreement for the South Port Container Terminal with ICTSI, until legal measures are completed to cancel the contract. No other details were disclosed. Note that ICT paid EUR410Mil for the concession. The EUR410Mil or ~ US$462Mil investment in the Sudan port represents 9% of ICT’s market capitalization and 9.8% of ICT’s total asset (21% of total equity). Given that suspension of the concession agreement and the potential cancellation of the contract, investors would be waiting for the details on how ICT will be able to recover the EUR410Mil upfront fees that were already paid to the previous government. Our earnings and FV estimates for ICT is under review in light of the recent development.

   Adrian Alexander Yu

GLO’s 4th quarter earnings grew by 62% making their full year performance exceed both our estimates and consensus’. This is attributable to the increase in service revenues, lower interconnection cost and lower subsidy expenses. For 2019, their management has increase their capex to ensure the quality given to network subscribers in light of higher data consumption through video streaming. Despite the better than expected result for 2018 and strong performance of its data, we are maintaining a HOLD rating with an FV estimate of Php1,800 given the potential threat of a third telco player and the higher capex could potentially affect the profitability through higher depreciation cost and interest expense. In addition, GLO is currently trading at an expensive rate.

   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.

   Charles William Ang, CFA

MBT allocates Php4.0Bil for its planned capital expenditures in 2019. 50% of the amount is estimated to be allocated for information technology spending. Note that last year MBT spent a total of Php4.5Bil for capex, 73% of which or Php3.3Bil went to other expenditures including IT spending.

   Charles William Ang, CFA

PNB is offering Php5.0Bil two-year peso fixed rate bonds, with an option to upsize. This is to support its lending activities as well as diversify its funding sources. The bonds will be offered until April 30 and carry an interest rate of 6.3% per annum to be paid quarterly until 2021. This also represents the first tranche of the bank’s Php100Bil bond program approved by its board of directors in January

   Charles William Ang, CFA

PNB has disclosed its plan to conduct a stock right offering (SRO) to raise approximately Php12billion in capital with the purpose of strengthening its CET1 ratio and to sustain its asset growth. Details of the offering hasn’t been finalized yet. We currently have a BUY rating with an FV estimate of Php32. We believe that this could put pressure on the company’s share price in the short term despite the minimal dilution from the SRO. We see that this might trigger some profit taking as the stock price has already rallied significantly.

   Adrian Alexander Yu

TEL announced that it is tapping Cisco Systems, Inc. for the digital transformation of its IP transport infrastructure to support TEL’s preparation for 5G network. The two companies signed the multimillion-dollar contract on Thursday and the investment will cover the threeyear implementation of the first phase of the program. Following this deal, TEL said that it expects to enter one to two more deals for 5G within the year.