Alerts

   Carlos Matthew De Leon

November 21, 2023. We have a HOLD rating on JGS with a FV estimate of Php52.8/sh. We like JGS as it is well positioned to capitalize on the favorable long term growth outlook of the Philippine economy given the market leadership position of its operating subsidiaries, the parent company’s strong balance sheet and the excellent track record of its management team. However, it is also sensitive to higher interest rates and rising inflation environment as vulnerable sectors accounted for 60% of NAV.

   Charmaine Co

November 21, 2023. We are also revising our FV estimate downwards to Php124.0/sh (based on 0.70x 2023E P/BV) from Php141.0/sh (based on 0.75x 2023E P/BV) previously. We are maintaining our BUY rating on the bank as we expect SECB to benefit from the country’s continued economic growth. We believe that the bank’s high capital ratios and liquid balance sheet will allow it to pursue opportunities to further grow its intermediation business in the medium-term. Furthermore, investments that the bank is currently making in people and technology are expected to come online within the next few years, potentially leading to improved profitability.

   Carlos Matthew De Leon

November 21, 2023. We currently have a BUY rating on PIZZA with a FV estimate of Php10.5/sh. We like PIZZA for its strong top-line growth, driven by expansion efforts for brand portfolio, especially Potato Corner and Peri-Peri. While margins are expected to remain challenged this year due to elevated raw material costs, gradual expansion seen in 3Q and operating leverage from higher sales in 4Q should allow for continued improvement in profitability.

   Carlos Matthew De Leon

November 21, 2023. We are maintaining our BUY rating on JFC with a FV estimate of Php293/sh. We expect continued growth should the international segment see sustained improvement in profitability, underpinned by JFC’s leadership in the PH. Favorable seasonality during the fourth quarter should also buoy results in the near-term. At current levels, JFC is only trading at 28.5X 2024E P/E, lower than its 5-year historical average of 31.9X

   Carlos Matthew De Leon

November 20, 2023. In light of the 3Q23 results, we reduced our revenue forecast for FY23E/24E by 4.5%/3.8% to account for the lower-than-expected top line. Likewise, we lowered our operating income forecast for FY23E (-17.7%) and FY24E (-15.9%) to account for the increase in production costs. This resulted in lower earnings forecasts for FY23E and FY24E. Our fair value also decreased to Php10.4/sh from Php12.2/sh. Despite the lower estimates, we are maintaining our BUY rating on GMA7. We expect GMA7’s dominance in the free-to-air space to allow it to capture advertising placement revenues for both television and radio broadcasts. Expectations of tapering inflationary headwinds could also prompt advertisers to ramp up advertising spending should consumer spending gradually recover.

   Carlos Matthew De Leon

November 20, 2023. In light of the weak 3Q23 results, we are reducing our top line forecasts for FY23E/24E by 9.1%/8.9%. This largely reflects the lower Industrial revenue forecast for the said years (-22.7%/-21.3%). We also reduced our operating income margin forecast for FY23E/24E by 10/30bps. This resulted in lower bottom line forecasts for both years and a new FV estimate Php5.90/sh. Despite the lower FV, we are maintaining our BUY recommendation. Increasing demand for electric vehicles should underpin the recovery of IMI’s automotive segment, which takes the largest share of the company’s revenues. Headwinds to note of, however, include continued underutilization leading to negative operating leverage and softening demand in China which dampened industrial revenues.

   Richard Lañeda, CFA

November 20, 2023. Maintain HOLD. We maintain our HOLD rating on VLL with a fair value estimate of Php2.04 given the continued lack of visibility in its real estate revenues despite third quarter’s performance. We will continue to monitor this space to see if the recovery in real estate sales is sustainable.

   Richard Lañeda, CFA

November 20, 2023. HOLD with FV estimate to Php0.90. We maintain our HOLD rating and FV estimate of Php0.90 on FLI given the challenging operating environment of both residential and office leasing sector. Demand for lower end residential projects is expected to be pressured by higher interest rates and risks on economic growth. Meanwhile, FLI continues to underperform in the office leasing segment with a higher-than-industry vacancy rate because of its previous exposure to the POGO segment. While economic activity has improved, the hybrid work-from-home set-ups has reduced overall demand for office space, making it harder to FLI to increase occupancy rate of its offices.

   Richard Lañeda, CFA

November 20, 2023. We have a BUY rating on AC with a fair value estimate of Php904.00, Our fair value estimate implies a huge 41.3% upside from the current price of Php640. AC’s earnings have exceeded pre-pandemic level (Php31 Bil in 9M23 vs Php23.5 Bil in 9M23) and 9M23 profit have already reach full-year profit level of 2019 (Php31.1 Bil). Meanwhile, AC’s share price is still 18.5% below 2019 and 29.3% below 2018. We view the disconnect in share price performance and earnings performance as an opportunity for investors.

   Charmaine Co

November 17, 2023. We maintain our BUY rating on PNB with a FV estimate of Php38.5/sh, based on 0.35x 2023E P/BV. We continue to view PNB as a deep value play, given that it is only trading at 0.2x 2023E P/BV (ex-goodwill) will an estimated ROE of ~9%. As interest rates stay higher for longer, we expect PNB to be a net beneficiary due to its substantial low-cost deposit base. The bank is also pushing forward with its endeavor to improve profitability by reducing low-earning assets and trimming down non-performing loans.