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6 November 2014
BUY
BPI Sec. Price Target: Php16
Price: Php14.80 (as of 11/06/2014)
Cons Price Target: Php13.87*
Perf
1MO
2MO
1YR
DNL
12%
23%
127%
PSEi
0%
-1%
11%
SUMMARY POINTS:
BUY on DNL: We reiterate our BUY recommendation on DNL as the
company has matched our 9M14 forecasted net income. Net income for
9M14 reached Php1.3B, growing 24.1% yoy and in-line with our forecast.
Sales for the period exceeded our expectations by a large margin (more
than 24%) and growing more than 38.3% yoy. Margins, however, were
lower than we had expected due to the larger than expected sales of low
margin commodity products. We will adjust our GPM expectations of DNL
after our meeting with company.
*Source: Bloomberg
CODE: DNL PM
MKT CAP: Php48.9B/(US$1.1B)
T/O (1-WK AVE.): Php80.1M/(US$1.8M)
KEY FIGURES
5
0
10/9/2013
FY13A
FY14F
FY15F
FY16F
1,012
1,399
1,788
2,410
2,814
0.49
0.39
0.50
0.67
0.79
29.1%
-20.6%
27.8%
34.8%
16.8%
0.50
0.61
P/E (x)
8.9
16.1
29.6
21.9
P/B (x)
1.0
1.5
3.7
3.3
2.9
17.5%
4.1%
1.4%
1.2%
1.6%
EPS (Php/Shr)
15
10
FY12A
17
16
14
10/9/2014
Bull Case
Base Case
Bear Case
18.8
10/9/2015ROE (%)
Net Debt/Equity (%)
14.2%
15.8%
12.5%
15.0%
15.6%
-27.8%
-20.1%
19.9%
9.8%
0.5%
19.8
37.4
23.7
23.8
27.6
EV/EBITDA (x)
10.6
12.4
23.5
15.9
13.5
9.6%
0.8%
-6.8%
3.8%
4.6%
996
107
(3,616)
2,028
2,450
See Appendices for Analyst Certification and important disclosures. BPI Securities may seek to do business with companies covered in its reports. As a result, investors must be
aware that the firm may have a conflict of interest that could affect the objectivity of its research. Investors should consider this report as only a single factor in making their
1
investment decision.
DNL
FY12A
FY13A
FY14F
FY15F
FY16F
Sales
6,375
10,766
12,849
18,969
20,432
82.0%
68.9%
19.3%
47.6%
7.7%
Gross Profit
1,196
2,001
2,510
3,652
4,181
EBITDA
1,260
1,853
2,372
3,423
3,925
Operating Expense
(34)
(359)
(361)
(573)
(615)
Operating Profit
1,163
1,642
2,149
3,079
3,567
businesses.
D&L
supplies
its
substitutes,
and
PT:
Php162),
relationships.
We
corporate
view
DNLs
125
27
(2)
(129)
(129)
1,288
1,669
2,147
2,950
3,437
(146)
(270)
(359)
(540)
(623)
1,012
1,399
1,788
2,410
2,814
51.3%
38.3%
27.8%
34.8%
16.8%
0.49
0.39
0.50
0.67
0.79
29.1%
-20.6%
27.8%
34.8%
16.8%
Outstanding Shrs
1,750
2,050
3,571
3,571
3,571
FY12A
FY13A
FY14F
FY15F
FY16F
1,142
1,399
1,788
2,410
2,814
98
211
223
344
358
51
(1,322)
(402)
(625)
(623)
EPS
and
Pretax Income
908
264
1,538
2,258
2,679
(169)
(154)
(5,227)
(230)
(229)
(110)
(5,227)
(230)
(229)
(1,351)
(536)
(715)
(626)
(843)
3,563
(1,795)
2,581
(755)
(973)
996
107
(3,616)
2,028
2,450
Net Debt
(2,231)
(1,776)
2,844
1,571
94
(2,382)
454
4,621
(1,273)
(1,477)
FY12A
FY13A
FY14F
FY15F
FY16F
5,071
3,438
2,765
4,038
5,515
Trade Receivables
1,473
1,969
3,099
3,357
3,617
1,909
2,609
6,157
6,644
7,129
1,678
1,619
2,674
2,560
2,431
1,730
1,767
6,857
6,857
6,857
11,861
11,403
21,552
23,456
25,548
2,840
1,662
5,609
5,609
5,609
960
839
1,582
1,703
1,824
37
42
42
42
42
Total Liabilities
3,837
2,543
7,233
7,354
7,475
Total Equity
8,024
8,860
14,319
16,103
18,074
11,861
11,403
21,552
23,456
25,548
4.59
4.32
4.01
4.51
5.06
FY13A.
Total Assets
Short-Term Debt
20
0
12/27/2013
*Source: Bloomberg
FIGURE 3: P/B CHART (X)
10
5
0
11/4/2013
*Source: Bloomberg
Book Value/Share
*Source: BPI Securities, Company Information
KEY RATIOS
FY12A
FY13A
FY14F
FY15F
FY16F
14.4%
18.4%
15.0%
19.1%
19.7%
18.8%
18.6%
19.5%
19.3%
20.5%
19.8%
17.2%
18.5%
18.0%
19.2%
18.2%
15.2%
16.7%
16.2%
17.5%
11.3%
16.2%
16.7%
18.3%
18.1%
15.9%
13.0%
13.9%
12.7%
13.8%
DNL 3Q14A
% Diff.
DNL 3Q13A
% Yoy
3,039
4,399
44.8%
2,746
60.2%
Gross Profit
608
675
11.1%
506
33.3%
Operating Income
524
541
3.2%
429
26.2%
Net Income
450
494
9.8%
387
27.7%
DNL 9M14A
% Diff.
DNL 9M13A
% Yoy
Sales
8,508
10,624
24.9%
7,685
38.3%
Gross Profit
1,701
1,765
3.7%
1,430
23.4%
Operating Income
1,468
1,444
-1.6%
1,189
21.4%
Net Income
1,260
1,293
2.6%
1,042
24.1%
Sales
in Php Millions
stock offers share price upside of > 15% vs. price target over the next 6 to 12 mos
O/P (outperform)
stock offers share price upside of > 0% to 15% vs. price target over the next 6 to 12 mos
U/P (underperform)
stock offers share price downside of >0% to 15% vs. price target over the next 6 to 12 mos
SELL
stock offers share price downside of > 15% vs. price target over the next 6 to 12 mos
NOT RATED
no recommendation
Key investment metrics
EPS
P/E
EPS cons
EPS consensus
P/B
Price-to-book multiple (x) = Current mkt price divided by book value per share
Div yield
ROE
ROA
FCF
FCFE
Free Cash Flow to Equity = Net Income Capital Expenditures Change in Working Capital - Net Debt
FCFF
Free Cash Flow to Firm = EBIT Taxes + Depreciation & Amortization Capital Expenditures Change in Working Capital
PEG
PV
Present Value
NPV
EV
Enterprise Value
EBIT
EBITDA
WACC
CoE
Cost of Equity
Beta
Risk associated with the equity; 1 being average risk of the market while numbers above are riskier and below less so
Net Debt
All Interest-bearing Debt Less Cash and Cash Equivalents / Shareholders Equity
ROCE
Operating Margin
EBITDA Margin
CAGR
Cons
Consensus
EPS
L-T
Long-term
Growth
GR
Growth Rate
Million
Mkt Cap
M-T
Medium-term
NR
Not Rated
PM
Bloomberg code
S-T
Short-term
Shr
Share
T/O
Market Turnover
Yoy
Year-on-year
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