ACCORD CAPITAL EQUITIES CORPORATION

COMPANY REPORT: Lopez Holdings Corporation [pse: LPZ]

Outlook: BUY on Weakness

PRICE (trade date) Price Range (52-wk) PHP PE Ratio (TTM) Dividend Payout (3 yr average) Outstanding Shares % Free Float

Php5.70 (10/26/10) 2.65 – 6.60 1.14x 0.00% 4,581.54M 47.00%

COMPANY PROFILE:
Incorporated and listed at the PSE in 1993 under the name Benpres Holdings Corporation [ticker symbol: BPC] to serve as the holding company of the Lopez family's
various investments, it effected a change in corporate name to Lopez Holdings Corporation and trading symbol to LPZ this year. It has interests in media (ABS-CBN
Broadcasting Corporation [pse: ABS]), telecommunications (Bayantel), information services (Bayanmap), power generation and Distribution (First Philippine Holdings
Corporation [pse: FPH]) and Cable Television (SkyCable.) Over the last few years, it has divested of its interests in banking, toll roads, I.T., property development and
health care delivery. (source: SEC Form 17A 2009)

OVERVIEW:
ALTHOUGH the Company's balance sheet remains weak, we are looking into a turn-
around story that continues to unfold.

Based on its 2009 balance sheets, the firm faces a sustained challenge in its short-
term liquidity position, with current assets just barely enough to meet current
liabilities through the first semester 2010. Improving numbers on its ACP [average
collection period] which had narrowed down to 73 days at end-h1 2010 from 94 days
in 2006, provide some encouragement in this area of concern. This has translated
into a similar improvement in LPZ's short-term liquidity position from 2006's 0.30 to
an almost even 0.99 after the first six months of 2010. It's Debt Ratio of 40% is
below the Holding Firm sectors' 83%. Of course, this leverage works both ways –
even as it pushes the insolvency issue away, it tempers the magnification of
earnings. At this point of the firm's business history, we are more concerned about
its ability to sustain itself, on which bets on a subsequent strong surge in growth
rates are pegged.

Profit margins, helped by a 92x surge in equity in net earnings in associates (e.i.
FPH's sale of 6.7% stake in MER) in q1 2010, and ROE have risen significantly,
reversing a two-year downtrend. ROA, alhtough continuing to be erratic over a
three-year period, registers at its highest since 2006. This supports the developing
story argument.
PER SHARE DATA
2010 (1h) 2009 2008 2007
Based on immediately preceding year earnings, the Company's stock has ended
each of the last four years (2006 to 2009) at an average PE range of 1.4x to 5.3x. BOOK VALUE 8.990 6.470 3.630 3.540
Given annualized earnings, the price range for the issue translates to php7.00 to
EARNINGS 2.5000 2.6000 0.6400 1.1700
php26.50. The latter may require extraordinary events, both internal and
extraneous, to achieve. However a target range of php7.00 to it's book value of Dividend Payout 0.00% 0.00% 0.00% 0.00%
php9.00 is reasonable.
PE (based on 2.5x 6.5x 3.9x 5.6x
(Technical considerations, next page) trailing year EPS)
1.0x 1.5x 0.8x 2.0x

INCOME DATA ( in millions PHP)

Year Ended Revenues/ Sales EBIT Net Income NPM %

2010 (1h) 16,839.000 13,382.000 11,435.000 67.91%

2009 24,849.000 13,379.000 11,901.000 47.89%

2008 22,307.000 4,541.000 2,920.000 13.09%

2007 19,940.000 6,925.000 5,365.000 26.91%

BALANCE SHEET DATA ( in millions PHP)

Year Ended Current Ratio Quick Ratio Debt Ratio Basic Earning Power ROA ROE

2010 (1h) 0.990 0.860 0.400 19.64% 16.78% 27.75%

2009 0.880 0.720 0.450 24.76% 22.03% 40.17%

2008 0.600 0.490 0.700 8.16% 5.24% 17.57%

2007 0.420 0.300 0.660 14.33% 11.10% 33.05%

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR
MADE AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY
SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE
AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD
CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.
ACCORD CAPITAL EQUITIES CORPORATION
COMPANY REPORT: Lopez Holdings Corporation [pse: LPZ]
Outlook: BUY on Weakness

Technical Considerations:

At first glance, the weekly charts above appear to leave no room for doubt for an action quite dissimilar to our assumed stance on the issue.
• The price has dropped off a 10-year high of php6.60 [10/6/2010]
• STO offers an initial signal of this movement, but awaits confirmation [a reaction high to at, near or above the 80-line, followed by a
sustained decline under such line, worse, below a previous low: the SELL signal is made even more evident if price moves in a contrary
direction.]
• MFI, a weighted version of the RSI, is likewise trading above 80 – an indication of an overbought condition
• MACD line appears to be poised in making a downward penetration of the trigger/signal line with the positive spread thinning and
threatening to drop into the negative zone.

The daily view (below), however offers a completely divergent picture:

• Price is at a gradual downtrend, but with volume evidently
thinning vis-a-vis the build up seen in August, leading to the
run up through early this month;
• STO is grossly under the oversold line, albeit moving almost
flat
• MFI is likewise at same oversold levels
Over-all, both time-frames considered posits a residual strength in the
downtrend. Thus we may see a sustained drop in the price over the next
one or two weeks. At relatively depressed volumes, we are looking at a
possible entry level at the php5.30-5.50 range wherein an intial position
may be taken, on the per chance support develops, builds and holds.
Otherwise, a breach of the indicated support, puts an overperform at
the long-term php4.70 support – beyond which all bets are off.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR
MADE AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY
SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE
AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD
CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.