Alerts

   George Ching

March 08, 2021. In light with the reduction in our estimates for SCC, we are lowering our FY21E earnings forecast for DMC by 11.2% to Php9.8Bil. We are also reducing our FV estimate for DMC by 0.6% to Php9.28/sh. We are maintaining our BUY rating on DMC. Despite the poorer FY21 earnings outlook of the company, we believe that much of the negative news is already priced-in. The stock is trading at only 7.3X 21E P/E based on our earnings forecast. Capital appreciation is also significant at 72% based on our fair value estimate.

   Justin Richmond Cheng, CFA

March 05, 2021. We reiterate our BUY rating on DNL with a FV estimate of Php9.2/sh. We believe DNL is in a 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. Moreover, valuations are attractive. At Php7.4/sh, DNL is trading at 21X 2021E P/E, which is 0.7 standard deviations below its historical average P/E. Upside to our FV estimate is still significant at 24%.

   John Martin Luciano, CFA

March 05, 2021. In light of the changes in our forecasts, we are maintaining our BUY rating and raising our FV estimate to Php40.3/sh based on a 0.95X 2021 P/BV. We expect its lending business and fee-based revenues to pick up in 2021 as economic growth rebounds. We continue to like the bank’s low exposure to consumer loans at 20% of total loans vs the median exposure of smaller banks at 30%. Recall that we view auto, credit cards, and SME segments to be the most at risk in asset quality during this pandemic. Although we expect net interest margin to be pressured this year 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. At its current price, the bank is only trading at 0.6X 2021E P/BV, below its historical average of 1.3X.

   Justin Richmond Cheng, CFA

March 05, 2021. After factoring in the changes in our forecasts, we reduced our FV estimate by 3% to Php97/sh. RRHI experienced a challenging performance in 2020 amid the COVID-19 pandemic. Nevertheless, this is only expected to be temporary as we expect foot traffic and demand in RRHI’s stores to steadily recover amid the gradual reopening of the economy. In the medium-to-long term, RRHI remains well positioned to capitalize on retail growth opportunities with its diversified portfolio of store formats. Furthermore, growing e-commerce trends bode well for the company given its increased focus on building its online presence. In light of these factors, we are maintaining our BUY rating on RRHI with a FV estimate of Php97/sh.

   George Ching

March 05, 2021. In light of the reduction in our net income estimate for SCPC, we are lowering our FY21 earnings forecast for SCC by 26% to Php5.6Bil. We are also reducing our FV estimate of SCC by 1.5% to Php28.6/sh. Despite the downgrade in our estimates, we are maintaining our BUY rating on SCC. Despite the poor outlook of its power generation business due to unplanned outages, we believe that much of the negative news is already priced-in. Meanwhile, the selling price of coal have already recovered. If the higher coal price is sustained, this will improve the earnings outlook of SCC’s coal mining business going forward. The stock is the trading at only 9.8X 21E P/E, below the industry average of 17.5X. Capital appreciation is also significant at 121.5% based on our fair value estimate.

   George Ching

March 05, 2021. We have a HOLD rating on ICT with a FV estimate of Php133.4/ sh. We continue like ICT given the success of ICT’s greenfield ports in Australia, Congo, and Papua New Guinea as these ports will be the key earnings growth driver for the company in the next few years. Despite the negative impact brought about by the COVID-19 pandemic on 2020 earnings, we believe that the company’s earnings is set to rebound in FY21 following the recovery in global trade and the company’s cost reduction initiatives. However, ICT’s share price has increased by 12.4% in the past 12 months, outperforming the PSEi’s 0.2% increase during the period. Based on its current market price of Php118.8/sh, upside to our FV estimate is at 12.3%.

   Adrian Alexander Yu

March 05, 2021. We increased our FV estimate on TEL slightly by 1.1% to Php1,820/sh from Php1,800/ sh and reiterate our BUY recommendation. At TEL’s current price of Php1,290/sh, capital appreciation potential is attractive at 41.1%. The stock also provides a very attractive dividend yield of 6.3%. We continue to like TEL due to the strong growth of its mobile data business and its dominant position in the home broadband business.

   Adrian Alexander Yu

March 04, 2021. After factoring in our earnings adjustment, we raised our FV estimate on WLCON by 2.7% to Php18.8/sh from Php18.3/sh. However, we are maintaining our HOLD rating on WLCON due to valuations. At its current price of Php17.9/sh, capital appreciation potential is limited. Moreover, WLCON is already trading at 31.9X 21E P/E, in line with its historical average P/E of 32.8X. We recommend investors to wait for pullbacks below Php16/sh before accumulating shares.

   George Ching

March 04, 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 Php4.09/ sh, the company is trading at a 54% 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 130% 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 71% to Php7.0/sh.

   Justin Richmond Cheng, CFA

March 4, 2021. We reiterate our BUY rating on DNL with a FV estimate of Php9.2/ sh. We believe DNL is in a 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 highmargin specialty products. DNL is also a beneficiary of the growing popularity of health, wellness, and sanitation trends brought about by the pandemic. Moreover, valuations are attractive. At Php7.4/sh, DNL is trading at 21X 2021E P/E, which is 0.7 standard deviations below its historical average P/E. Upside to our FV estimate is still significant at 24%.