Alerts

   Richard Lañeda, CFA

November 20, 2020. We are raising our FV estimate on VLL from Php4.64 to Php5.15 following the strongerthan-expected recovery of its residential sales and revenue, and the higher than expected rental revenues. 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 expect rental revenue to continue recovering going forward as quarantine restrictions ease in line with the declining number of new COVID-19 cases.

   Adrian Alexander Yu

November 19, 2020. Consensus currently has a HOLD rating on MWIDE with an FV estimate of Php7.1/sh.

   Richard Lañeda, CFA

November 19, 2020. We are maintaining our BUY rating on FLI with a fair value estimate of Php1.25, implying 21.5% upside from the current price. At its current price, FLI is also trading at a 67% discount to its NAV of Php3.13. FLI has the highest exposure to office leasing which we estimate accounts for 40% of its operating income prior to the pandemic. This is positive for the company during this health crisis as FLI continues to recognize revenues from office tenants, unlike retail tenants whose rents are waived during ECQ and are given rent concessions during GCQ. Downside risk to earnings would come from more preterminations of POGO tenants, which as of 3Q20 occupied around 16% of FLI’s office leasable portfolio. We note though that the exit of POGO tenants is already priced in as we have already stripped out the value ofPOGO-occupied office spaces in computing for our fair value estimate of Php1.25.

   John Martin Luciano, CFA

November 19, 2020. In light of the changes in our forecast, we reducing our FV estimate to Php164/sh based on 0.95X 2021E P/BV. However, we are maintaining our BUY rating as the upside to our target remains attractive. Although we remain cautious over the bank’s large exposure in consumer loans (27% of total loan portfolio), note that 43% of this segment are mortgage loans which are collateralized. In addition, the bank also has one of the highest CET1 ratio at 19.1%. This is substantially above regulatory minimum and can absorb potential losses. Furthermore, we believe that the negatives are already priced-in. At its current price, the bank is only trading at 0.60X 2020E P/BV, significantly below its historical average of 1.5X.

   Frances Rolfa Nicolas

November 19, 2020. Consensus currently has a HOLD rating and FV estimate of Php19.14sh on SHLPH.

   George Ching

November 19, 2020. In light of the increase in our earnings forecast for FGEN, we are raising our 2020E earnings forecast for FPH by 7.8% to Php8.3Bil. We are also increasing our FV estimate on FPH by 0.5% to Php115.3/sh. We are maintaining our BUY rating on FPH. Given FPH’s 68% ownership in FGEN, we view FPH as a cheaper way to own FGEN. FPH is trading at a huge 60% discount to its market based NAV of Php162/sh. Based on FPH’s market price of Php64.4/sh, upside to our FV estimate is significant at 79%.

   Adrian Alexander Yu

Nov. 17, 2020. Reducing our FY20 estimates; Downgrading to HOLD rating. We are reducing our earnings estimates on EEI for 2020 due to the larger than expected net loss in 3Q20. We decreased our FY20 gross profit forecast by 29.8% after factoring in higher costs as a percentage of its related revenues. This resulted in a net loss forecast of Php1.1Bil for 2020, which is wider than our previous net loss forecast of Php900Mil. After factoring in our earnings adjustments, we reduced our FV estimate for EEI by 1.9% to Php7.07/sh from Php7.21/sh. We also downgraded our recommendation on the stock to a HOLD due to valuations. Despite the reduction in our earnings forecasts and FV estimate, and the risks posed by the coronavirus pandemic, we continue to have a favorable view on EEI’s long term prospects given its a) dominant position in the construction industry, b) advantage in winning new projects from the government’s Build, Build, Build program, and c) the company’s healthy construction backlog. Pullbacks are opportunities to buy the stock.

   Consensus

Nov. 17, 2020. Consensus currently has a BUY rating and FV estimate of Php13.8/sh on LTG.

   John Martin Luciano, CFA

November 17, 2020. In light of the minimal change in our earnings, we maintain our BUY rating on PNB with a FV estimate of Php39/sh based on a 0.40X 2021E P/BV. PNB’s earnings will be hurt by the COVID-19 pandemic as these are expected to slow economic activity which will inevitably curtail loan demand and financial transactions. More importantly, asset quality will likely continue to deteriorate as the economic impact of the pandemic unfolds. Nevertheless, we believe that the negatives have already been largely priced in. At its current price, the bank is only trading at 0.3X 2021E P/V, below its 5-year historical average of 0.5X.

   Richard Lañeda, CFA

November 18, 2020. We are downgrading our recommendation for MEG from BUY to HOLD given that the recent rally in its share price has put it at par with our fair value estimate of Php3.70. Despite near term challenges, we continue to have a positive view on MEG over the medium term. Its low gearing ratio (0.22X net debt-to-equity) and high level of recurring income from the office leasing business will allow it to get past COVID-19-related challenges and position itself for future growth.