WEALTH RESEARCH

A Product of Wealth Securities Inc

DAILY WEALTH TAKE

Company Update - BDO: BDO Unibanks (BDO) 9M16 results were in line with our expectations
and accounted for 74% of our 2016E forecast. We thus reiterate our BUY rating on BDO and TP of
P127/sh, equivalent to 2x 2017E P/BV. The current market weakness can provide some room to pick
up the shares. We would also note that the bank is looking to conduct its P60b stock rights offer late
this year or early next year, and thus will provide investors the opportunity purchase the shares at
lower levels. The fresh capital from the prospective SRO will support BDOs business expansion and
balance sheet growth while enabling it to comply with stricter capital requirements in light of the
impending implementation of DSIB surcharges. ND Fernandez
Company Update - MBT: Metrobank (MBT) netted P12.6b in 9M16, down 5% YoY. 3Q16 net
income came in at P3.5b, below the banks P4.5b quarterly average income in 1H16. MBTs 9M16
earnings came in below our expectations, accounting for only 65% of our 2016E forecast. The impact
of strong loan and deposit growth was offset by lower interest earnings from investment securities
and higher than expected provisioning. We thus downgrade our 2016E/2017E earnings forecasts by
~10% each to reflect these trends. Accordingly, our 2017E BVPS is now at P67.92. Applying a lower
target 2017E P/BV multiple of 1.4x (from 1.5x previously) would give us a new target price of P95.
While the recent share price fall may have already priced in the disappointing interim results, we
believe there is ample room to pick up the shares amid the markets weakness. In this light, we are
keeping our BUY rating given the implied 23% upside. ND Fernandez
GLO posts 7.5% drop in 9M16 core earnings: In a press statement last Friday, Globe Telecom Inc
(GLO) announced 9M16 core net income of P11.75b, down 7.5% YoY. Reported net income fell
17.2% to P11.72b largely due to the slowdown in consolidated revenue growth, higher opex and
subsidy costs that cut EBITDA margin to 42.1% (vs. 41.7% in 9M15), and some P684m in nonoperating charges arising from its share in the losses and accelerated depreciation of the telco
companies GLO jointly acquired with PLDT Inc (TEL) from San Miguel Corp. Without such losses,
reported net income would have still declined 1.5% after growing by 3% in 1H16 while core net
income would have fallen 2.5% after posting a 2.4% growth in 1H16.

Consolidated service revenues was at P89.09b, up 6.9%, but indicates a slowdown from the
10.7% growth in 1H16. This also implies that service revenues were flat YoY in 3Q16 owing to
the 2.3% decline in mobile service revenues. While the respective declines in legacy mobile
voice and SMS have eased to just 6% and 14.1% (from the sharper 11.2% and 16.4% declines
in 1H16), mobile data growth also slowed to just 13.6% in 3Q16 after growing 46.1% in 1H16.
GLO did not offer any explanation for the mobile data slowdown in its press statement.
Meanwhile, fixed line and broadband revenues grew 31.5% in 9M16 to P20.83b but this was
tempered by the 8.1% growth in 3Q16 on account of the steep slowdown in corporate data
revenues (+4% in 3Q16 vs. +54.6% in 1H16) and the 10% decline in 3Q16 fixed line voice
revenues (after growing 28.5% in 1H16). Home broadband revenues also grew just 17.1% in
3Q16 after growing 49% in 1H16.

Our take: Aside from the non-operating charges booked from the acquisition of SMC telco
assets, GLO's interim results were weighed by the slowdown in revenue growth in 3Q16.
While the weakness can be partly seasonal, stiff competition amid aggressive moves by
PLDT may have also contributed to the slowdown in revenue growth. GLO's overall core
net income accounted for just 70% of our full-year estimate. Excluding the additional nonoperating charges would bring the number to 75% of our 2016E estimate of P16.5b.
However, we would also note that prospective earnings will be weighed by higher interest
costs and possible tail-ended booking of operating costs. Thus, without any significant
rebound in revenue growth, GLO is bound to trail our estimates. On a brighter note, GLO's
recent declaration of another P22/sh in cash dividend would bring the total to P88/sh which
is slightly higher than our P85/sh estimate. We will write more on the results pending more
details in today's briefing. Ricardo Puig

MONDAY 7 NOV 2016

TAKING STOCK
PSE Index (4 Nov 2016)
7,227.37
Value T/O - net (Pb)
52wk
High
52wk
Low
Foreign Buying (Pb)
Foreign Selling (Pb)

+66.46
7.266
8,118.44
6,084.28
3.885
4.907

Index Movers
AEV
JGS
GTCAP
TEL
MBT

+12.66
+7.48
+7.16
+6.88
+6.25

Index Gainers
MEG
GTCAP
AEV
MBT
SECB

3.61%
3.21%
3.08%
2.39%
2.15%

Index Losers
AGI
EDC
ALI
URC
RLC

-1.74%
-1.25%
-0.29%
-0.17%
-0.17%

World Indices
S&P
2,085.18
500
FTSE
6,693.26
100
Nikkei
16,905.36
225
Key Peso Cross Rates
USD-PHP
JPY
EUR
CNY
GBP

-0.17%
-1.43%
-1.34%

48.4540
0.4703
53.7715
7.1700
60.4606

Key Commodities
BRENT CRUDE OIL
(USD/bbl.)
-0.77

45.58

GOLD 100 OZ FUTR

(USD/t oz.)
+2.36

1,305.06

____________
Sources: Bloomberg, Technistock

MAXS reports 9M16 net income of P380m, up 3% YoY: In a press statement, Maxs Group announced 9M16 net income of
P380m, up 3% YoY. This was on the back of an 11% revenue growth to P8.09b that was in turn driven by an 8% growth in
restaurant sales to P6.72b as well as faster growth from franchise and royalty fees (+39% to P399m) and commissary sales (+19%
to P971m). EBITDA, however, fell 10% to P889m.

Our take: Earnings growth further slowed in 3Q16 vs the 1H16 net income growth of 4%. While details of MAXS'
quarterly results have yet to be released, the numbers in the press statement imply the margin pressure related to rising
input prices felt in the second quarter continued to persist. To recall, 2Q16 net income fell by 1% after growing 8% in the
first quarter, due to a 22% rise in cost of sales of food and beverages. Matthew Sy-Tan

Headlines Abroad

Asian futures show positive gains after FBI director reaffirms that Clintons e-mails were not a crime. Meanwhile, Bank of
Japans September meeting minutes will be out today. Australia and China update their foreign-currency reserve data. Indonesia
announces its GDP figure later.

Company Results/Briefing Schedule/Stockholders meeting

Company

Results

Date

Ayala Land Inc

9M16

07-Nov-16

Globe Telecom Inc (GLO)

9M16

07-Nov-16

Intl Container Terminal Services Inc (ICT) 9M16

08-Nov-16

Metro Pacific Investments Corp (MPI)

9M16

08-Nov-16

D&L Industries Inc (DNL)

9M16

08-Nov-16

8990 Holdings Inc (HOUSE)

9M16

08-Nov-16

Manila Water Co Inc (MWC)

9M16

09-Nov-16

Energy Development Corp (EDC)

9M16

10-Nov-16

PLDT Inc (TEL)

9M16

10-Nov-16

San Miguel Corp (SMC)

9M16

10-Nov-16

Petron Corp (PCOR)

9M16

10-Nov-16

Ginebra San Miguel Inc (GSMI)

9M16

10-Nov-16

Ayala Corp (AC)

9M16

11-Nov-16

Filinvest Land, Inc (FLI)

9M16

11-Nov-16

LT Group Inc (LTG)

Source: Phil Stock Exchange

9M16

11-Nov-16

Dividend Update
Company

Dividend/sh

Ex-date

Record date

Payment date

Security Bank Corp (SECB)

1.00

07-Nov-16

10-Nov-16

24-Nov-16

LBC Express Holdings Inc (LBC)

0.22

07-Nov-16

10-Nov-16

29-Nov-16

Chemical Industries of the Phil Inc (CIP)

17.236

11-Nov-16

16-Nov-16

17-Nov-16

Globe Telecom Inc (GLO)

22.00

15-Nov-16

18-Nov-16

02-Dec-16

First Philippine Holdings Corp (FPH)

1.00

15-Nov-16

18-Nov-16

02-Dec-16

First Philippine Holdings Corp-pref (FPHPC) 13.75

15-Nov-16

18-Nov-16

02-Dec-16

Anglo Philippine Holdings Corp (APO)

0.015

15-Nov-16

18-Nov-16

15-Dec-16

Republic Glass Holdings Corp (REG)

0.15

15-Nov-16

18-Nov-16

01-Dec-16

Globe Telecom Inc pref A (GLOPA)

Source: Phil Stock Exchange

PDST-R2+2% 15-Nov-16

18-Nov-16

02-Dec-16

Wealth Securities Research

Disclaimer: T h e i n f o r m a t i o n a n d o p i n i o n s i n t h i s r e p o r t w e r e p r e p a r e d b y W e a l t h S e c u r i t i e s , I n c . T h e i n f o r m a t i o n h e r e i n i s
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Wealth Research Analysts

Ricardo P. Puig
Research Head
Strategy, Conglomerates, Property,
Telecommunications
rpuig@wealthsec.com
Tel: (+632) 634-5038 ext 8128
Laura Dy-Liacco
Deputy Head of Research
Utilities, Conglomerates
ldyliacco@wealthsec.com
Tel: (+632) 634-5038 ext 8153
ND Fernandez
Banking
nd.fernandez@wealthsec.com
Tel: (+632) 634-5038 ext 8158
Matthew Sy-Tan
Consumer, Services, Mining
matthew.sytan@wealthsec.com
Tel: (+632) 634-5038 ext 8168
Jason Lee
Gaming, Construction, Media
jason.lee@wealthsec.com
Tel: (+632) 634-5038 ext 8165

Wealth Securities Research

Rating System
Wealth Securities Research follows the following
rating definition
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

Wealth Securities Inc

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