Alerts

   John Martin Luciano, CFA

February 24, 2021. After factoring in the changes in our earnings forecasts, the company’s higher debt level and capital expenditures, our FV estimate increased to Php210/sh. We are also upgrading our recommendation to a BUY. We are encouraged by JFC’s sequential improvement in sales, driven by its international segment. We believe that this will be the main driver of growth over the next few years. The company is also confident that Smashburger and CBTL will already be profitable this year. Meanwhile, JFC’s domestic business, which accounted for ~58% of system-wide sales in 2020 will likely remain weak given prevailing quarantine restriction and the negative impact of the high unemployment rate and rising inflation on the purchasing power of consumers. Nevertheless, we expect recovery to continue as the restrictions are gradually eased.

   Frances Rolfa Nicolas

February 22, 2021. Factoring in the convertible preferred shares rights offering and the downgraded earnings estimates, we are reducing our FV estimate on CEB from Php73 to Php55.0/sh. We expect demand for travelling to remain sluggish due to the emergence of new COVID variants, and persisting travel restrictions in the near term. Accordingly, we think that 2021 would still be a difficult year for the company given the slow re-opening of the economy. As such, we are maintaining our HOLD rating on CEB common stock.

   Justin Richmond Cheng, CFA

February 22, 2021. We are maintaining our BUY rating on CNPF with a FV estimate of Php23.3/sh. We continue to like CNPF given its strong brand equity, successful new product launches, and proven track record of growing revenues and profits. It is also one of the most resilient companies amidst the COVID-19 pandemic due to its basic, shelf-stable food products, which have enjoyed resilient demand despite the more challenging economic backdrop.

   Justin Richmond Cheng, CFA

February 22, 2021. We are maintaining our BUY rating on CNPF with a FV estimate of Php23.3/sh. We continue to like CNPF given its strong brand equity, successful new product launches, and proven track record of growing revenues and profits. It is also one of the most resilient companies amidst the COVID-19 pandemic due to its basic, shelfstable food products, which have enjoyed resilient demand despite the more challenging economic backdrop.

   John Martin Luciano, CFA

We reiterate our BUY rating on MBT with a FV estimate of Php92.7/sh based on 1.20X 2021E P/BV. We continue to like MBT as it has a) lower exposure to riskier segments, with consumer accounting for 21% of total loans (vs the median exposure of smaller banks at 30%), b) high NPL coverage ratio at 163%, c) and better access to liquidity given its large CASA deposit. The bank has also been front loading its provisions in 2020 which should allow the bank to resume its growth faster once the economic growth resumes. At its current price, the bank is trading at a steep discount vs its peers at 0.6X 2021E P/BV (vs BDO’s 1.1X and BPI’s 1.3X) despite being better capitalized and having higher NPL coverage ratio.

   George Ching

MPI today announced that its toll road subsidiary MPTC has entered into a share purchase agreement with several parties for the sale of its effective 24.95% stake in DMT for US$149.25Mil. DMT is the operator of a major toll road facility in Bangkok, Thailand, which holds the concession for a 21.9 kilometer elevated toll road facility in Bangkok. Management said that the transaction will allow improve the group’s overall liquidity and the proceeds will be used to fund MPTC’s other projects. The transaction price of US$149.25Mil (~Php7.2Bil) is 12% higher than our NAV estimate for DMT of Php6.4Bil. We estimate that this transaction will boost MPI’s FV estimate slightly by 0.65% to Php7.78/sh. We are maintaining our BUY rating on MPI with a FV estimate of Php7.73/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 Php4.20/sh, the company is trading at a 52% discount to its NAV which implies that Maynilad and its toll road business are already worthless. MPI is trading nearly at par to its 46% stake in Meralco(equivalent to 120% 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 60% to Php6.70/sh.

   Justin Richmond Cheng, CFA

Feb. 5, 2021. Maintain BUY rating. We currently have a BUY rating on SSI with a FV estimate of Php3.3/sh. While SSI earnings remain challenged amid the COVID-19 pandemic, we believe this is already priced in by the market. Furthermore, the challenging earnings situation is only expected to be temporary, and sales are already gradually returning to pre-pandemic levels. At its current price of Php1.39/sh, upside to our FV estimate is also quite significant at 137%.

   John Martin Luciano, CFA

February 2, 2021. We currently have a BUY rating on BPI with a FV estimate of Php106/sh based on a 1.60X 2021E P/BV. Although net interest margin will be pressured next year as loans gradually re-price, we believe most of the negatives have already been priced in. We like BPI as we expect it to be one of the major beneficiaries of the economic growth after the effect of pandemic eases.

   George Ching

February 02, 2021. We currently a BUY rating on GTCAP with an FV estimate of Php1020/ sh. At its current price of Php534, it is trading at 8.2X 2021E earnings, significantly below its historical average of 15X. While the provisional safeguard duty might delay the recovery in TMP’s car sales, we believe that the current valuations of GTCAP provide enough buffer going forward.

   John Martin Luciano, CFA

February 02, 2021. We are maintaining our BUY rating on MPI with a FV estimate of Php7.73/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 Php4.08/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 nearly at par to its 46% stake in Meralco(equivalent to 120% 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 68% to Php6.70/sh.