Alerts

   George Ching

September 01, 2020. We have a BUY rating on AP with a FV estimate of Php33.60/sh. Despite the poor 1H20 results, we believe that AP’s earnings already bottomed in 2Q20 as a result of the impact of the COVID-19 pandemic. We expect earnings to grow at a CAGR of 43% from 2020E-2022E. AP’s valuation has also become increasingly attractive with the stock trading at 10.8X 2021 P/E, below its 10-year historical average of 12.7X. Based on AP’s current market price of Php26.3/sh, upside to our FV estimate is at 28%.

   Frances Rolfa Nicolas

August 18, 2020. In light of the better-than-expected 1H20 results, we are reducing our production costs forecast by 10.8% to Php5.6Bil. We are also lowering our interest expense estimate by 20.4% to Php16Mil. Factoring these adjustments, our 2019 net income estimate increased by 7.2% to Php2.2Bil. Accordingly, we are increasing our FV estimate to Php6.35/sh. At its current price of Php5.09/sh, upside potential is significant at 25%. We continue to like GMA7 given its strong financial position and efficient operations. Hence, we are upgrading our rating on GMA7 to BUY.

   Frances Rolfa Nicolas

August 18, 2020. Consensus currently has a HOLD rating and FV estimate of Php19.4sh on SHLPH.

   Adrian Alexander Yu

August 18, 2020. Consensus currently has a BUY rating on MWIDE with a FV estimate of Php9.8/sh.

   Adrian Alexander Yu

August 18, 2020. Consensus currently has a BUY rating on MWIDE with a FV estimate of Php9.8/sh.

   Justin Richmond Cheng, CFA

August 20, 2020. We currently have a BUY rating on COSCO with a FV estimate of Php11.0/sh. COSCO remains severely undervalued with the market not valuing its other businesses (apart from PGOLD) like the liquor distribution and real estate business. In fact, if we only value COSCO (adjusting for parent net debt) for its 49% stake in PGOLD based on the latter’s market value, this still translates to a target price of Php9.9/sh.

   Richard Lañeda, CFA

August 20, 2020. Despite the disappointing performance of AGI during the first half of the year, we are maintaining our BUY rating given that the company’s valuations are very attractive, having priced in most of the downside risk. At AGI’s current price of Php6.20, upside to our fair value estimate of Php12.29 is quite significant at 98%. In addition, AGI’s stake in EMP is already worth more than AGI’s market cap. At EMP’s current price of Php10.10/sh, AGI’s stake is worth Php133.5 Bil. This is equivalent to Php13.21 per share of AGI. If we deduct parent level net debt, the value of AGI’s stake in EMP still comes out to Php112.51 Bil or Php11.13 per share, which is also 79.5% higher than AGI’s current price.

   Justin Richmond Cheng, CFA

August 19, 2020. Downgrading FV estimate. In light of the reduction in our 2020 and 2021 earnings forecast, we also reduced our FV estimate on SSI to Php2.4/sh from Php2.8/sh. Despite the downgrade in our estimates, we are maintaining our BUY rating on SSI. Note that our new FV estimate already assumes a more conservative recovery trajectory for SSI. In particular, we expect earnings to recover back to 2019 levels only by 2022.

   John Martin Luciano, CFA

August 19, 2020. Downgrading estimates; Maintain BUY. We are revising our earnings forecasts for MAXS following the weaker than expected first half results. We tempered our forecast on store network expansion and the pace at which dine-in sales would recover. This was partially offset by our lower operating expense forecast following several cost cutting initiatives. We also don’t expect the company’s revenues and profits to surpass 2019 level until 2023. A summary of the changes in our forecast is given below. Because of the changes in our forecast, we are downgrading our FV estimate on MAXS by 35% to Php7.8/sh. However, we are maintaining our BUY rating because of valuation. At its current price, MAXS’ market capitalization is only Php5.1Bil. It is also equivalent to only 7.8X MAXS’ average earnings the past 3 years. Upside to our FV estimate is also attractive. However, we are cautious on MAXS’s near-term earnings as we believe that its delivery and takeout sales will not be able to offset the absence of dine-in sales. Even if dine-in will already be allowed under modified general community quarantine, we believe consumers will still avoid eating out for fear of getting infected with the COVID-19 virus as well as shift their focus on spending on essential goods.

   John Martin Luciano, CFA

August 19, 2020. Revising estimates; Maintain BUY. We are revising our forecasts for PIZZA following the weaker than expected first half results. Overall, we tempered our margin assumptions in light of the higher than expected cost of sales and general administrative expenses during 1H20, partially offset by the slight increase in our revenues. We cut our operating income forecast by 51% to PHp229Mil in 2020 and by 15% to Php892Mil by 2021. We only forecast revenues and operating income to exceed 2019 levels by 2022. Because of the changes in our forecast, we are downgrading our FV estimate by 8% to Php7.1/sh but maintaining our BUY rating on PIZZA. We expect PIZZA’s near-term earnings to remain weak as we believe that consumption will remain lackluster given the high unemployment rate and poor consumer confidence. We believe dine-in sales will also remain weak as many consumers will most likely still avoid eating out given the rising number of cases and absence of a vaccine. Nevertheless, at its current price, PIZZA is only trading at 16.9X 2021 P/E, significantly below its historical average of 21.8X, despite our more conservative earnings forecast.