WEALTH SECURITIES INC

Equity Research
Market/Strategy

PSEi Recomposition
EMP may replace PX

25 July 2014

EMP may replace PX in next index rebalancing. Emperador Inc (EMP) may be
replacing Philex Mining Corp (PX) in the PSEi when the index gets rebalanced in
September. This is based on our computations that take into account the parameters
set in the PSE policy for inclusion in the PSEI.
Higher market cap, liquidity qualifies EMP in the PSEi. EMP has been in the top
quartile in terms of median daily trade per month in 9 out of the 12 months covered by
the ongoing review. Also, EMPs latest public free float data of 12.45% or more than the
12% hurdle. After satisfying these parameters, EMP being a non-index stock needs
to be in the top 25 in terms of full market capitalization based on VWAP. EMP will be
th
ranked 20 as per our computation, making it eligible for PSEi inclusion.

Analyst : Ricardo Puig

T: 634.5038 local 8128
E: rpuig@wealthsec.com

Analyst : Jason Lee

T: 634.5038 local 8165
E: jason.lee@wealthsec.com

PX does not make the grade on lower market cap ranking. While we believe PX has
met the other parameters, it is in danger of getting excluded from the PSEi as it ranked
th
40 in terms of VWAP-based full market capitalization. The PSEi rules require that
current index members should be in the top 35 to remain in the index.
Higher weights for SMPH, PCOR, JFC; lower for JGS, AGI: Due to changes in their
free float levels and based on 24 Jul prices, our computations show that SM Prime
(SMPH) Petron Corp (PCOR) and Jollibee Foods Corp (JFC) may see their index
weights rise, while JGS and AGI may have lower index weights (see Fig 2).
Fig 1. Rank based on full market capitalization

TEL*

VWAP-based full
market
capitalization (Pb)
607.82

GLO*

VWAP-based full
market
capitalization (Pb)
218.24

15

EDC*

VWAP-based full
market
capitalization (Pb)
107.51

SM*

602.46

ICT*

205.98

16

PNB

94.97

30

SMPH*

446.86

LTG*

187.93

17

RLC*

87.95

31

ALI*

407.10

SMC*

178.54

18

COSCO

72.89

32

BPI*

353.34

JFC*

177.64

19

SECB

68.57

33

AC*

351.81

EMP**

171.69

20

RCB

60.36

34

MER*

316.32

DMC*

165.31

21

FGEN*

58.79

35

JGS*

308.11

GTCAP*

140.17

22

NIKL

54.51

36

AEV*

295.30

MPI*

124.95

23

BEL

54.27

37

BDO*

290.54

10

MEG*

124.00

24

MCP

53.26

38

URC*

282.50

11

PCOR*

120.15

25

MWC

52.91

39

AGI*

276.22

12

PGOLD

116.02

26

PX***

48.99

40

AP*

265.88

13

SCC*

115.49

27

VLL

47.31

41

MBT*

224.34

14

BLOOM*

111.44

28

PF

39.44

42

Stock

Rank

Stock

*
Current component of PSEi
** Eligible for inclusion in the PSEi
*** Eligible for exclusion from the PSEi
Source: Wealth Research estimate, Phil Stock Exchange

Rank

Stock

Rank
29

25 Jul 2014

PSEi recomposition

Fig 2. Potential changes index weighting

(based on 24 Jul prices)

Stock
TEL
SM
ALI
BPI
URC
AC
BDO
AEV
JGS
MBT
ICT
SMPH
AGI
JFC
GTCAP
EDC
MPI
DMC
AP
GLO
MEG
LTG
MER
RLC
BLOOM
SCC
SMC
FGEN
PX***
PCOR
EMP**

Current
index
weight
(%)
11.29%
9.47%
7.57%
5.99%
5.29%
5.12%
4.80%
4.65%
4.61%
4.02%
3.94%
3.92%
3.85%
2.65%
2.08%
1.98%
1.97%
1.93%
1.87%
1.72%
1.61%
1.59%
1.27%
1.26%
1.17%
1.17%
0.98%
0.85%
0.71%
0.68%
0.00%

Estimated
new index
weight (%)
11.28%
9.47%
7.57%
5.98%
5.29%
5.12%
4.79%
4.65%
4.35%
4.02%
3.94%
4.06%
3.75%
2.71%
2.08%
1.98%
1.97%
1.93%
1.87%
1.72%
1.61%
1.59%
1.27%
1.26%
1.17%
1.17%
0.98%
0.85%
0.00%
0.88%
0.72%

Fig 3. % Free Float of Top 43 listed firms

(As of 30 Jun 2014)

FINANCIALS
BDO
BPI
MBT
PNB
RCB
SECB

42.76%
47.02%
48.71%
23.37%
33.36%
73.31%

SERVICES

INDUSTRIAL
AP
EDC
EMP
FGEN
FPH
JFC
MER

19.54%
49.76%
12.45%
32.50%
47.49%
41.52%
13.17%

MWC

58.52%
21.78%
14.60%
43.52%

BLOOM
GLO
ICT
MCP

28.12%
22.21%
51.45%
31.17%

PCOR
PF
URC

PGOLD
TEL

33.00%
53.85%

HOLDINGS
AC
38.19%
AEV
43.47%

PROPERTY
ALI
50.22%
BEL
42.96%
MEG
33.46%
RLC
38.59%
SMPH
26.82%
VLL
46.34%

AGI
COSCO
DMC
GTCAP
JGS
LTG
MPI
SM

40.14%
27.00%
27.68%
30.35%
33.76%
25.64%
44.08%
43.83%

MINING/OIL
PX
33.06%
SCC
27.43%
NIKL
23.81%

SMC

14.82%

Source: Wealth Research estimate, Phil Stock Exchange

** Eligible for inclusion in the PSEi

*** Eligible for exclusion from the PSEi
Source: Wealth Research estimate, Phil Stock Exchange

Wealth Securities, Inc.

Disclaimer: T h e

information and opinions in this report were prepared by Wealth Securities, Inc. The information herein is
believed to be reliable and has been obtained from public sources believed to be reliable. W ealth Securities makes no
representation as to the accuracy or completeness of such information.
Wealth Securities may engage in securities transactions, on a proprietary basis or otherwise, in a manner inconsistent with
the view taken in this research report. In addition, others within Wealth Securities, including traders and sales staff, may
take a view that is inconsistent with that taken in this research report.
Opinions, estimates and projections in this report constit ute the current judgment of the author as of the date of this report.
They do not necessarily reflect the opinions of Wealth Securities and are subject to change without notice. Wealth Securities
has no obligation to update, modify or amend this report or to otherwise notify a recipient thereof in the event that any
opinion, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. Prices and availability of
financial instruments are subject to change without notice. This report is provided for informational purposes only. It is not
an offer or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading
strategy. Target prices are inherently imprecise and a product of the analyst ju dgment.
All rights reserved. No part of this publication may be reproduced or duplicated, redistributed or posted on any website or
page, or further redistributed to any third party without the prior consent of Wealth Securities Inc.

Wealth Research Analysts

Rating System

Ricardo P. Puig
Research Head
Strategy, Conglomerates, Property,
Telecommunications
rpuig@wealthsec.com
Tel: (+632) 634-5038 ext 8128

Wealth Securities Research follows the following rating

definition

ND Fernandez
Banking
nd.fernandez@wealthsec.com
Tel: (+632) 634-5038 ext 8158

Buy

We expect total return of more than 12% in the

next 12 months

Hold

We expect total return of -12% to 12% in the

next 12 months

Sell

We expect total return of less than -12% in the

next 12 months

Jason Lee
Utilities
jason.lee@wealthsec.com
Tel: (+632) 634-5038 ext 8165
Russell Ong
Consumer
russel.ong@wealthsec.com
Tel: (+632) 634-5038 ext 8153
Matthew S. Tan
Gaming, Services
matthew.sytan@wealthsec.com
Tel: (+632) 634-5038 ext 8168
Sarah Maria D. Uy
Construction, Media
sarah.uy@wealthsec.com
Tel: (+632) 634-5038 ext 8160

Wealth Securities Inc

2103 A&B, East Tower, PSE Center
Exchange Road, Ortigas Center
Pasig City 1600
Tel: (+632) 634-5038
Fax: (+632) 634 5043
www.wealthsec.com