Alerts

   George Ching

April 29, 2021. In line with the passage of the CREATE Bill, we are increasing our FY21E earnings forecast by 2.8% to Php14.8Bil, and our FY22E forecast by 2.1% to Php22.2Bil. We are also raising our FV estimate by 6.3% to Php42.7/sh. We are maintaining our BUY rating on AP. Despite the poorer earnings outlook for 2021 due recent unplanned outage of GNPower Mariveles, we believe that bulk of the negatives have been priced in. AP’s share price has declined by 14.7% in the YTD period, underperforming the PSEI’s 9.4% decline. AP’s valuation has also become increasingly attractive with the stock trading at 11.2X 2021 P/E, below its 10-year historical average of 12.7X. Based on AP’s current market price of Php22.65/sh, upside to our FV estimate is at 88.4%.

   George Ching

April 28, 2021. In line with the passage of the CREATE Bill, we are increasing our FY21E earnings forecast by 2.8% to Php14.8Bil, and our FY22E forecast by 2.1% to Php22.2Bil. We are also raising our FV estimate by 6.3% to Php42.7/sh. We are maintaining our BUY rating on AP. Despite the poorer earnings outlook for 2021 due recent unplanned outage of GNPower Mariveles, we believe that bulk of the negatives have been priced in. AP’s share price has declined by 14.3% in the YTD period, underperforming the PSEI’s 10.5% decline. AP’s valuation has also become increasingly attractive with the stock trading at 11.3X 2021 P/E, below its 10-year historical average of 12.7X. Based on AP’s current market price of Php22.75/sh, upside to our FV estimate is at 87.5%.

   John Martin Luciano, CFA

April 27, 2021. We currently have a BUY rating on PNB with a FV estimate of Php51.2/ sh. We expect PNB to benefit as the economy gradually recovers amidst the arrival of the vaccines. Although we believe provisions will remain elevated in light of its low NPL cover of ~43%, we believe it has the room to book these provisions given its plan to monetize its three prime properties. In addition, we believe that the negatives have already been priced in. At its current price, the bank is only trading at 0.28X 2021E P/V.

   George Ching

April 27, 2021. In light of the passage of the CREATE Bill, we are increasing our FY21E earnings forecast by 6.5% to Php22.2Bil, and our FY22E forecast by 4% to Php23Bil. We are also raising our FV estimate by 3.3% to Php381/sh. We are maintaining our BUY rating on MER. We continue to like MER despite the temporary impact on earnings primarily brought about by the Covid pandemic. MER’s share price has increased by 5.4% in the YTD period, outperforming the PSEI’s 10.5% decline, mainly due to the relatively defensive nature of MER’s distribution business compared to the overall market. MER’s valuation has also become increasingly attractive with the stock trading at 14X 2021 P/E, below its 10-year historical average of 17.5X. Based on MER’s current market price of Php275/sh, upside to our FV estimate is at 38.6%.

   John Martin Luciano, CFA

April 26, 2021. We currently have a HOLD rating on UBP with a FV estimate to Php75.7/ sh based on a 0.95X 2021E P/ BV (adjusted for goodwill). We expect net interest margin to be pressured as loans re-price following the aggressive monetary easing conducted last year and excess liquidity in the system. In addition, we expect asset quality to continue deteriorating amidst the impact of the pandemic. Note that its consumer loans account for higher portion of its total loans (~32%) compared to most banks. As previously mentioned, we believe this segment is the most at risk in asset quality deterioration.

   John Martin Luciano, CFA

April 26, 2021. We currently have a BUY rating on BDO with a FV estimate of Php158/ sh based on a 1.65X 2021E P/BV. We continue to like BDO as we expect it to be one of the major beneficiaries of the recovery of economic growth as the government eases restrictions amidst the arrival of the vaccines. Moreover, while NPLs have not yet peaked, we believe that the uncertainty on asset quality caused by the loan moratoriums and lockdowns last year have gradually waned over the past several months. Although net interest margin is expected to be pressured as loans gradually re-price amid the low interest rate environment and excess liquidity in the system, we believe most of the negatives have already been priced in.

   Richard Lañeda, CFA

April 23, 2021. We are maintaining our BUY rating on VLL as we expected them to continue capitalizing on the current demand trends for horizontal projects. We also like VLL for the resiliency of its leasing revenues during the pandemic. We have a fair value estimate of Php5.87 for VLL based on a 40% discount to our NAV estimate of Php 9.78.

   George Ching

April 23, 2021. We are maintaining our BUY rating on MPI with a FV estimate of Php7.88/sh. While near term sentiment on MPI will most likely remain negative due to the uncertainties on Maynilad, we believe that concerns are overblown given MPI’s depressed valuation. Based on MPI’s current market price of Php3.88/ sh, the company is trading at a 57% 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 137% 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 80% to Php7.0/sh.

   Adrian Alexander Yu

April 21, 2021. We reiterate our BUY rating on GLO with an FV estimate of Php2,470/sh. We continue to like GLO because of its a) strong position in the wireless business; b) strong growth of its fixed line business; and c) the relatively resilient demand for data despite the COVID-19 pandemic. At its current price of Php1,864/sh, capital appreciation potential is very attractive at 32.5% while dividend yield is high at 5.7%.

   Richard Lañeda, CFA

April 20, 2021. The recovery of revenues, especially on the real estate and mall leasing segments have been slower than expected due to the ongoing pandemic. Nevertheless, MEG’s relatively high exposure to the office leasing segment has given the company a large and resilient recurring income base which we believe also supports its valuation. We maintain our BUY rating on MEG with a fair value estimate of Php4.90.