Alerts

   Justin Richmond Cheng, CFA

November 12, 2021. Maintain BUY rating. We are maintaining our BUY rating on DNL with a FV estimate of Php11.4/sh. We like DNL since it is in prime position to capitalize on the recovery of the economy given its diversified portfolio of products catering to different consumer groups. The company is relatively resilient to rising input costs thanks to its large portfolio of high margin specialty products. DNL is also a beneficiary of the growing popularity of health, wellness, and sanitation trends brought about by the pandemic.

   Adrian Alexander Yu

November 12, 2021- Realigning estimates but maintaining HOLD rating due to valuations We are realigning our earnings estimates due to CNVRG’s better-than-expected margins. We are maintaining our revenues forecast since 9M21 topline numbers were in line with our estimates. However, we are increasing our 2021 and 2022 EBITDA estimates by 2.8% and 1.1%, respectively, to account for the sustained margin expansion. These changes brought up our net income estimate by 7.0% for 2021 and 4.6% for 2022. After factoring in these adjustments, our FV estimate on CNVRG increased by 2.0% to Php31.0/sh from Php30.4/sh. Despite the increase, we are maintaining our HOLD rating on the company. At its current price of Php35.0/sh, the stock is already trading above our FV estimate.

   George Ching

November 11, 2021- Maintaining BUY rating on MPI We have a buy rating on MPI with a FV estimate of Php8.66/sh. We believe that while it is still uncertain how the new concession agreement will impact the outlook and value of Maynilad, investor sentiment on MPI could improve going forward as the new concession agreement will ease uncertainties on Maynilad, as well as concerns on MPI’s other regulated core businesses. Based on MPI’s current market price of Php4.02/sh, the company is trading at a 61% discount to its NAV which implies that Maynilad and its toll road business are already worthless. MPI is trading below its 46% stake in Meralco(equivalent to 150% of MPI’s current market capitalization). Even if we assumed the worst-case scenario where Maynilad would become worthless, capital appreciation potential based on MPI’s current price is still 89% to Php7.58/sh.

   Richard Lañeda, CFA

November 11, 2021. Maintain HOLD rating with FV estimate of Php1,014.00. We are maintaining our HOLD rating on SM with a fair value estimate of Php1,014.00. We are positive about the potential recovery in malls and retail as the government eases quarantine restrictions going into the holiday season. The relaxation of restrictions is underpinned by declining daily COVID-19 cases and increasing rate of vaccination. However, our fair value estimate on SM leaves little upside potential from its current market price of Php975 thus we maintain our HOLD rating on SM.

   John Martin Luciano, CFA

November 11,2021.Maintain BUY. We are maintaining our BUY rating on CHIB with a FV estimate to Php43/sh based on a 0.90X 2022 P/BV. We expect its lending business and fee-based revenues to pick up as economic growth rebounds. This will be supported by increasing vaccination rates, easing mobility restrictions, and declining COVID-19 cases. In addition, we continue to like the bank’s low exposure to consumer loans at 20% of total loans, bulk of which are mortgage loans. Recall that we view auto, credit cards, and SME segments to be the most at risk in asset quality during this pandemic.

   Richard Lañeda, CFA

November 11, 2021. FV estimate raised to Php4.54, BUY rating maintained. We are raising our fair value estimate from Php4.20 to Php4.54 after factoring the market value of MEG’s stake in MREIT. We maintain our BUY rating on MEG as we expect the company to benefit from the gradual reopening of the economy. Though MEG’s mall business is relatively smaller than that of SMPH and RLC, a recovery in the mall business would still be positive for the company. We could also see an increase in real estate sales as buyers gain more confidence on a sustained economic recovery.

   George Ching

November 10, 2021- Reiterate BUY rating on DMC In line with the increase in our net income forecast by SCC, we are increasing our FY21E earnings forecast by 13% to Php17.2Bil. We are also raising our FV estimate by 0.8% to Php11.34/sh. We are maintaining our BUY rating on DMC. We like DMC given that we believe that earnings have bottomed out in 2020(with 9M21 earnings increasing by 173% y/y following a 47% decline in 2020 due to the impact of the Covid-19 pandemic). DMC’s stock price has 45% in the YTD period, outperforming the PSEI’s 4.2% advance. DMC is trading at 2022E P/E of 7X, below its historical P/E of 11.2X. Based on its actual 2021 cash dividend of Php0.96/sh, this provides a very high dividend yield of 11.7%. Upside to our FV estimate is also very high at 39%.

   Richard Lañeda, CFA

November 10, 2021. BUY with a FV estimate of Php39.10. We currently have a BUY rating on SMPH with a fair value estimate of Php39.10. As the biggest mall operator, SMPH will be a major beneficiary of further relaxation of quarantine restrictions. We not only expect tenant sales to improve but SMPH will also be able to reduce the discounts given to tenants on their fixed rent. SMPH could also be a beneficiary of increased consumer spending from an election-related boost next year.

   Richard Lañeda, CFA

November 09, 2021. FV estimate increased to Php26.90. Following the increase in our mall, office, and hotel revenue forecast for 2021 and 2022, we also raised our fair value estimate from Php26.44 to Php26.90. We maintain our BUY rating on RLC. We believe RLC has the potential to outperform the index given that its shares are currently very undervalued based on our estimates. Moreover, being one of the most hurt by the pandemic, RLC will also be a major beneficiary of the recovery. If COVID-19 infections continue to trend lower with the rising administration of vaccines, the government could further relax quarantine restrictions, benefiting its mall operations. The national elections next year could also give consumer spending a boost which would be positive for mall operators such as RLC.

   Richard Lañeda, CFA

Nov. 9, 2021 FV estimate increased to Php26.90. Following the increase in our mall, office, and hotel revenue forecast for 2021 and 2022, we also raised our fair value estimate from Php26.44 to Php26.90. We maintain our BUY rating on RLC. We believe RLC has the potential to outperform the index given that its shares are currently very undervalued based on our estimates. Moreover, being one of the most hurt by the pandemic, RLC will also be a major beneficiary of the recovery. If COVID-19 infections continue to trend lower with the rising administration of vaccines, the government could further relax quarantine restrictions, benefiting its mall operations. The national elections next year could also give consumer spending a boost which would be positive for mall operators such as RLC.