Alerts

   Richard Lañeda, CFA

November 09, 2023. We reiterate our BUY rating on SM given its robust earnings growth despite global headwinds. There is strong momentum in consumer spending which will benefit SM Retail and the malls of SMPH. Meanwhile, banks continue to have strong balance sheets and delivered strong core business growth. Meanwhile, its portfolio investments continue to improve and are generating meaningful income (9% of total) to the company.

   George Ching

November 19, 2023. We have a HOLD rating on AEV with a FV estimate of Php57.6/sh. We are maintaining our HOLD rating on AEV. We continue to like AEV given the prospects of its power subsidiary AP. AEV is also well positioned to benefit from the country’s growing infrastructure programs owing to its investment in republic cement as well as its strong balance sheet and excellent track record in acquiring businesses. However, key business units such as Food and Cement continue to be negatively affected the weakness in overall demand, cost inflation as well as rising interest rates.

   Charles William Ang, CFA

November 08, 2023. We currently have a HOLD rating on UBP with an FV estimate of Php70.0/sh, based on 1.5x 2023E P/BV ex-goodwill (or 0.95x 2023E P/BV inclusive of goodwill). We expect that UBP will continue to grow its lending business as it continues to unlock value from cross-sell opportunities to newly-acquired Citi clients. As the bank completes the transition of former-Citi products and data onto its own platforms, operating expenses should also decrease by an estimated Php2.5-3Bil, providing a boost to net income.

   George Ching

November 08, 2023. We have a BUY rating on AP with a FV estimate of Php50/sh. We like AP as we believe that the earnings recovery from 2021 to 2022 can be sustained this year with overall power demand expected to remain strong. Furthermore, valuation is also cheap, trading at 8.3X FY23 P/E, compared to AP’s 10 year historical P/E of 13.7X. Based on its 2023 cash dividend of Php1.87/sh, this provides a decent dividend yield of 5.1%. The upside to our FV estimate is significant at 37%.

   Richard Lañeda, CFA

November 07, 2023. We maintain our BUY rating on SMPH with a fair value estimate of Php41.90. We maintain our BUY rating on SMPH for its dominance in the mall segment, which has capitalized on the strength of the consumer sector. The mall segment has so far been very resilient in the face of higher interest rates and high inflation. Meanwhile, SMPH’s residential revenues are holding up well and cancellations seem to have normalized. Nevertheless, we are keeping an eye on this space given that take-ups are showing signs of weakness.

   Carlos Matthew De Leon

November 07, 2023. After factoring in the said changes, we are maintaining our BUY rating with a new FV estimate Php57.3/sh from Php55.0/sh previously. We view CEB to be positioned to benefit from the recovery of travel and reopening of borders. However, we see key risks to our view including (1) continued strength of the US dollar against the peso, (2) elevated oil prices amid supply and geopolitical issues, (3) clouded capacity outlook amid Pratt and Whitney engine recalls.

   George Ching

November 07, 2023. We have a BUY rating on MER with a FV estimate of Php436.7/sh. We continue to like MER as the power demand is expected to continue to expand in line with the country’s GDP growth and as the country fully recovers from the impact of the Covid-19 pandemic. MER’s is currently trading at 12X 2023 P/E, below its 10-year historical average of 17.5X. Based on the actual 2023 cash dividend of Php19.55/sh, this translates to a dividend yield of 5.6%. Based on MER’s current market price of Php356/sh, upside to our FV estimate is significant at 24%.

   Denise Joaquin

November 06, 2023. We are further downgrading our earnings forecasts on WLCON following the weaker- than-anticipated 9M23 results. In particular, we trimmed our topline forecasts by 3.1% for FY23 and 5.4% for FY24 as we account for store expansion delays and as we reign in our expectations on topline recovery given the lackluster performance of the retail segment. After factoring in our adjustments, our net income forecasts decreased by 4.2% to Php3.6Bil for FY23 and 6.7% to Php4.0Bil for FY24. As a result, we lowered our FV estimate to Php22.3/sh from Php25.1/sh previously and maintain our HOLD rating on the stock. Although we continue to like WLCON for its market leadership in the home improvement space and its long-term store network expansion strategy, we think that sentiment on the stock could remain subdued until there is a visible recovery in demand from the consumer market. At its current price, we estimate that WLCON is trading at 23.0X 2023E P/E, a premium relative to the 16.7X median of industry peers.

   Denise Joaquin

November 06, 2023. We are reducing our earnings estimates on RRHI to factor in the wider-than-expected losses from GoTyme, expected impairment loss for BeautyMNL, and higher-than-expected tax expenses. After factoring in our adjustments, our net income forecasts declined by 10.3% to Php4.6Bil for FY23 and 8% to Php5.7Bil for FY24. As a result, our FV estimate decreased by 3.8% to Php85.6/sh from Php89.0/sh previously. Despite the cut in our estimates, we maintain our BUY rating on RRHI as we continue to like the company given its well-diversified portfolio of retail formats in the staples and consumer discretionary categories. We also expect RRHI to benefit from improving mobility trends in malls and pent-up demand for its discretionary formats. Despite the weaker-than-expected results, we believe that negatives have been largely priced in at current valuations, with the stock trading at only 13.4X 2023E P/E based on our estimates.

   George Ching

November 06, 2023. We have a BUY rating on SCC with a FV estimate of Php51.74/sh. SCC is trading at 3.6X FY23 P/E compared to 11.1X FY23E P/E of domestic peers and its 10 year historical P/E of 11.6X. Based on its actual 2023 cash dividend of Php7/sh, this provides a very high dividend yield of 24%. Upside to our FV estimate is also very high at 78%.