Alerts

   Charmaine Co

February 05, 2025. Maintain HOLD. We currently have a HOLD rating on UBP with an FV estimate of Php43.0/sh, based on 0.95x 2025E P/B. While we continue to expect growth in UBP’s lending business as it pursues cross-sell opportunities within its client base and taps into underserved markets, it has been facing challenges in asset quality. We expect that the build-up of provisions to cover unexpected losses from riskier assets will continue to weigh on earnings growth.

   Denise Joaquin

November 22, 2024. Reviewing estimates. We will be reviewing our forecasts following the weaker-than-anticipated 9M24 results. We currently have a BUY rating on PIZZA with FV estimate of Php11.20/ sh. We remain positive on the stock given PIZZA’s long-term growth prospects and leading brand positioning in the fast casual dining space. We see additional runway for growth through PIZZA’s aggressive store network expansion of its core Shakey’s brand and franchise-led growth of Potato Corner.

   Denise Joaquin

November 22, 2024. Reiterate BUY. We reiterate our BUY rating on SSI with FV estimate of Php3.9/sh. Although fourth quarter profits could still reflect the impact of tough y/y comparables given the company’s higher opex base as the post-pandemic business environment normalizes, we believe that this is largely priced in. We continue to like SSI for its unique growth prospects in fashion and specialty retail and still think that its core customer base should provide some cushion against the broader weakness in discretionary retail spending.

   Denise Joaquin

November 21, 2024. Reducing estimates; maintain BUY. We are trimming our earnings forecasts on PGOLD following the weaker-than-expected 9M24 results. In particular, we cut our EBIT margin assumptions by 50bps and 40bps for FY24 and FY25 to account for higher-than-expected operating costs partly attributable to the new store openings. We also tempered our GPM assumptions by 10bps for FY24 and 20bps for FY25 as we see limited room for margin expansion given increased competition. Hence, our net income estimates declined to Php9.7Bil (-7.8%) and Php11.1Bil (-5.9%), respectively. As a result of the changes in our forecasts, we are lowering our FV estimate on the stock to Php51.1/sh from Php53.4/sh previously. Despite the cut in our forecasts, we maintain our BUY rating on the stock as valuations are deeply discounted. We estimate that PGOLD is trading at 8.9X 2024E P/E (7.8X 2025E P/E), compared to our target multiple of 15.2X 2024E P/E (13.3X 2025E P/E).

   Charmaine Co

November 20, 2024. Maintaining HOLD rating. We currently have a HOLD rating on GMA7 with an FV estimate of Php6.50/sh. While we expect GMA7’s dominance in the free-to-air space to allow it to capture advertising placement revenues for both television and radio broadcasts, the company faces stiff competition in the form of digital advertising. As the company has noted, airtime/advertising revenues (which takes the lion’s share of its business) continues to be challenged by changing viewer and advertiser preferences.

   Richard Lañeda, CFA

November 20, 2024. We are reducing our net income forecast for AGI after factoring in the reduction in forecast of EMI. The revenue forecast for EMI was but by 16.6% for FY24 and 15.4% for FY25 amid soft demand across the global spirits industry and shifting consumer preferences in key markets. EMI’s GPM forecast was also reduced by 500bps and 400bps, respectively, due to persistent cost pressures including elevated raw material costs and the shift toward lower-margin products impacting profitability. This brought EMI’s net income forecasts down to Php6.8Bil (-40.5%) for FY24 and Php8.9Bil for FY25 (-33.7%).

   Paolo Miguel Manansala

November 20, 2024. Upgrading estimates amid convincing beat Due to CNVRG’s recent performance, we are raising our net income forecast for FY24 and FY25 to Php11Bil (+23.1%) and Php12.8Bil (+31.7%), respectively. This was primarily due to the adjustments in expenses, namely a decrease in provisions (-41.2%) and other losses. As a result of the increase, we are upgrading our FV estimate by 16.1% to Php22.3/sh. We are also maintaining our BUY rating on the stock as we see further growth brought on by FiberX, Surf2Sawa, and BIDAFiber. Moreover, with the implementation of its dividend policy, CNVRG would have an estimated dividend yield of ~2.0% at current prices.

   Paolo Miguel Manansala

November 20, 2024. As a result of these revisions, we are decreasing our FV estimate to Php43/sh (-18.9%). Despite this, we still maintain our BUY rating on CEB as capital appreciation is still significant at 40.3%, given current market prices. We believe that with the new additions to capacity and further improvement in demand, CEB will remain as the industry leader and benefit from the increase in travel activity. However, some potential headwinds include the weaker peso against the dollar, fuel cost volatility amid tensions in the Middle East and heightened finance costs due to continuous fleet expansion.

   Denise Joaquin

November 19, 2024. Reducing FV estimate to Php1.3/sh We are cutting our FV estimate on HOME to Php1.30/sh from Php2.0/sh previously as we account for HOME’s weaker-than-expected 9M24 results. In particular, we trimmed our revenue forecasts by 13.6% and 19.3% for FY24 and FY25, respectively, given the weaker-than-expected recovery of the consumer market for home improvement. Our forecasts assume flattish SSSG and no new store additions next year, given the delay in HOME’s store network rollout amid the muted demand environment. This brought our net income forecasts to Php496Mli (-31.7%) for FY24 and Php534Mil (-39.2%) for FY25. Despite the cut in our estimates, we maintain our BUY rating on the stock given the steep discount to our FV estimate at its current price. We estimate that HOME is trading at only 5.2X 2024E P/E (4.8X 2025E P/E), compared to our target 9.8X 2024E (9.1X 2025E P/E) multiple.

   Charmaine Co

November 19, 2024. Margins improve sequentially. Despite the lower revenues in 3Q24, core net income grew as margins improved. Based on our estimates, gross profit margin (adjusted for inventory gains/losses), expanded by ~85 bps y/y to 6.2%. This led to a similar increase (+75 bps) in operating margin during the quarter. Nevertheless, 9M24 gross and operating margins still declined 58 bps to 6.0% and 49 bps to 4.1%, respectively. According to the company, the year-to-date decline in margins resulted from weaker refining margins due to higher supply and weaker economic conditions in China, partly offset by higher marketing margins. Going forward, PCOR expects 4Q24 refining margins to increase sequentially after seeing some improvement in October. We currently have a HOLD rating on PCOR with an FV estimate of Php3.55/sh.