Alerts

   Charles William Ang, CFA

Upgrade to BUY- August 3, 2022 We are upgrading our rating to BUY on BDO with an FV estimate of Php142/sh based on a 1.35X 2022E P/BV given the increased upside to our FV estimate. Moving forwards, we continue to like BDO because we expect it to be one of the major beneficiaries of the recovery of economic growth with its strong deposit franchise and liquid balance sheet. The outlook for its intermediation has improved as loan growth is expected to rebound on the back of continued economic recovery. Furthermore, we expect net interest margins to expand, supported by sustained loan growth, normalizing interest rates, and high CASA ratio.

   Frances Rolfa Nicolas

Upgrading to BUY - August 3, 2022 Accordingly, we are reducing our FV estimate to Php0.95/sh on CHP. We think that the increasing input costs and intense industry competition would keep the company’s margins muted. Nonetheless, we think that this is already priced in given the recent decline in the company’s share price. At its current price of Php0.67/sh, upside potential to our new FV estimate is significant at 41%. Hence, we are upgrading our rating to BUY.

   Charles William Ang, CFA

August 02, 2022. Maintaining HOLD rating. We currently have a HOLD rating on UBP with an FV estimate of Php67/sh based on 1.0X 2022E P/BV. We expect loan demand and asset quality to continue recovering amid the reopening of the economy. In addition, we expect the acquisition of Citibank’s consumer business in the Philippines to complement the bank’s existing consumer portfolio as this would accelerate the bank’s growth in the credit card space. This would also widen its client base and enable the bank to cross sell its products. Nevertheless, upside potential to our FV estimate remains limited.

   Denise Joaquin

Maintain BUY rating- August 2, 2022 We maintain our BUY rating on URC with a FV estimate of Php144/sh. We continue to like URC for its market leadership position in several fast-moving consumer goods categories. Although the company could see margin volatility in the near-term, its pricing initiatives and structural cost improvements are seen to help mitigate the impact of elevated input costs. At its current price of Php120/sh, URC is trading at 22.5X 2022E P/E, below its historical average P/E of 28X.

   George Ching

August 01, 2022. Maintaining HOLD rating. We have a HOLD rating on AEV with a FV estimate of 53/sh. We continue to like AEV given the expansion plans 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, AEV’s share price has increased by 4.8% in the YTD period, outperforming the PSEI’s 11.3% declined. Based on its current market price of Php57.05/sh, there is no more upside to our FV estimate.

   George Ching

August 01, 2022. Maintaining HOLD rating. We have a HOLD rating on AEV with a FV estimate of 53/sh. We continue to like AEV given the expansion plans 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, AEV’s share price has increased by 4.8% in the YTD period, outperforming the PSEI’s 11.3% declined. Based on its current market price of Php57.05/sh, there is no more upside to our FV estimate.

   George Ching

Maintaining BUY rating- August 1, 2022 We have a BUY rating on AP with a FV estimate of Php41.9/sh. We like AP as we believe that the earnings recovery from the impact of the Covid-19 pandemic in 2021 can be sustained in 2022 with overall power demand expected to exceed pre-pandemic level. Furthermore, valuation is also cheap, trading at 11.2X FY22 P/E, compared to 17X FY22 P/E of domestic peers and AP’s 10 year historical P/E of 13.7X. Based on its 2022 cash dividend of Php1.45/sh, this provides a decent dividend yield of 4.6%. The upside to our FV estimate is significant at 31.8%.

   Denise Joaquin

July 29, 2022. We are increasing our forecasts to account for the stronger-than-expected 1H22 results relative to our estimates. We raised our topline estimates slightly by 3.2% for FY22 and 1.1% for FY23. Similarly, we raised our margin assumptions to factor in our stronger outlook on GPM and the slower-than-anticipated growth in opex. This raised our net income estimates for FY22 and FY23 by 12.5% and 10.2%, respectively. After factoring in our adjustments, our FV estimate increased by 5% to Php25.2/sh from Php24.0/sh previously. Despite our favorable outlook on WLCON, we maintain our HOLD rating on the stock on current valuations. At its current price of Php25.4/sh, WLCON is already trading above our FV estimate and at 28.5x 2022E P/E. We recommend investors to wait for prices to correct before buying the stock.

   George Ching

Maintaining HOLD rating- July 26, 2022 We have a HOLD rating on MER with a FV estimate of Php377.4/sh. We continue to like MER as its earnings is set to exceed pre-pandemic level this year as power demand continue to recover with the reopening of the economy. However, MER’s share price is up by 20% in the YTD period, outperforming the PSEI’s 13% decine. MER’s is currently trading at 16.8X 2022 P/E, close to its 10-year historical average of 17.5X. Based on MER’s current market price of Php354/sh, upside to our FV estimate is limited at 6.6%.

   Charles William Ang, CFA

July 25, 2022. Reiterate HOLD rating. We currently have HOLD rating with an FV estimate of Php94.7/sh based on a 1.30x 2022E P/BV. We expect BPI to be one of the major beneficiaries of the economic growth after the effect of the pandemic eases given its extensive branch network, substantial low-cost deposit, and high CET1 ratio. Moreover, the bank has front-loaded its provision which should allow the bank to move quicker this year as economic growth resumes. However, there is just minimal upside to our FV estimate.