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September 16, 2019

PCOMP faces headwinds from oil Calendar of Events


Week in review Date Event
 The PCOMP ended at 7,992.32, up 0.7% w-w, buoyed by some optimism on Sept 16 July OFW Remittances
US-China trade talks and European Central Bank’s monetary easing. Foreign
funds turned net buyers (USD8mn) for the first time in five weeks. Sept 17 Cash dividends ex-date: SMC
 An attack on an important Saudi oil facility over the weekend however, as per
reports could disrupt almost half of Saudi oil capacity. A spike in oil prices could Sept 19 August overall BOP position
reverberate across markets, and the focus will now be on how quickly lost
production can be restored and the geopolitical implications. Sept 26 BSP Monetary Board meeting

Market analysis Sept 30 Cash dividends ex-date: GTCAP


 The Philippines is a net energy importer and is historically poorly positioned to
deal with rising oil prices. Based on Nomura’s estimates, it would take an
Best Performers w-w %
average of USD90/barrel for oil prices to become a threat to inflation. Philippines
also underperforms EM when oil prices rise. AP PM 7.0%
 Investors looking into longer term, secular growth story may consider buying into
infrastructure-related conglomerates (MPI, AC, AEV) and property names (ALI, BPI PM 6.0%
MEG and SMPH) which are also beneficiaries of improved infrastructure.
Stocks to watch TEL PM 5.2%
 AP was the top gainer for the week. The stock continues to be our top pick in
the utilities space as defensive and yield characteristics are complemented by JGS PM 4.9%
growth potential resulting from a pipeline of new genco developments.
DMC PM 4.2%
 TEL was up 5.2% w-w as investors remain optimistic that sustained data trends
can translate healthy earnings growth. Moreover, company’s dominant position Source: Bloomberg
in the fixed-line segment (~50% of revenues) should help manage competitive
pressure from third telco player. Our DCF-determined TP of PHP1,420 still
Worst Performers w-w %
implies 18% upside potential. Maintain Buy.
 We upgraded DMC to a Buy last week as we feel that value has emerged
following its 28% YTD sell-down. We expect better performance from DMCI LTG PM -3.7%
Homes and its construction arm moving forward as it benefits from more project
launches and the ongoing ramp up in infrastructure spending, respectively. The
CHP PM -3.2%
two segments constitute 31% of DMC NAV in aggregate. JFC PM -3.0%
 LTG pulled-back last week (-3.7% w-w) as the market pared gains from the week
prior. We believe this presents a buying opportunity for the stock as it only trades SM PM -3.0%
at 8.9x FY19F PER (vs 15.4x peer ave) with discount to NAV at 35%. The
company recently instituted tobacco selling prices which should allow it to pass- PGOLD PM -2.7%
on the excise taxes that are slated for next year.
 We expect SM to continue being range-bound barring any new catalysts. The Source: Bloomberg
stock continues to be expensive at a 26.8x FY19F PER. We believe SMPH offers
better upside as the developer continues to benefit from increasing urbanization Blo Actively Traded (PHPbn)
Most
trends across the country.
 We expect CHP (-3.2% w-w) to continue to be volatile until details over its
SM PM 2.02
pursued stock rights offering are definite. We remain Neutral on the stock due to
continued uncertainties over its balance sheet and its planned plant expansion. ALI PM 1.72
 The sell-off in JFC (down 3% w-w) appears warranted, in our view. The stock is
still trading at steep valuations of 42x FY19F PER despite poor earnings visibility SMPH PM 1.62
in FY19/20F. Maintain Reduce with TP of PHP230.50.
 The share price weakness of PGOLD (-2.7% w-w) provides a buying BPI PM 1.34
opportunity, in our view. We think falling inflation trends should bode well for the
retailer given that its flagship Puregold format accounts for ~59% of profits. At JFC PM 1.31
16x FY20F PER, the stock still trades at an attractive 20% discount to ASEAN
retailers (20x FY20F PER) despite a similar EPS growth outlook vs peers. Source: Bloomberg

Visit https://www.bdo.com.ph/bdonomura/home to access Nomura Philippine Research.

Disclaimer: The information, opinions and analysis contained herein are based on sources and data believed to be reliable but no representation,
expressed or implied, is made as to its accuracy, completeness or correctness. This material is only for the general information of the authorized
recipients. In no event shall BDO or its officers and employees, including the author(s), be liable for any loss/damage resulting from reliance, directly
or indirectly, or information found within this report.
September 16, 2019

Stock Coverage

Mkt Cap Last Price Target Upside/ P/E (x) EPS Grow th Div Yield P/B (x) ROE
Company (USD mn) Rating 13/9/2019 Price Dow nside FY19F FY20F FY19F FY20F FY19F FY19F FY19F
Aboitiz Equity Ventures 5,897 Buy 54.20 62.80 15.9% 14.0 12.9 -5.8% 9.0% 2.5% 1.6 12.0%
Aboitiz Pow er Corporation 5,535 Buy 38.95 41.75 7.2% 12.9 11.9 -6.5% 8.5% 3.8% 2.1 16.7%
Alliance Global Group, Inc. 2,439 Buy 12.68 17.00 34.1% 7.5 6.6 13.4% 13.6% 0.8% 0.7 9.6%
Ayala Corporation 11,001 Buy 908.00 1,070.00 17.8% 16.9 14.8 10.7% 14.5% 0.6% 1.7 18.4%
Ayala Land 14,200 Buy 49.90 57.00 14.2% 22.0 18.4 14.3% 19.7% 1.2% 3.5 16.7%
Bank of the Philippine Islands 8,208 Buy 94.30 106.00 12.4% 14.8 11.7 16.7% 26.6% 1.9% 1.5 10.7%
BDO Unibank 12,033 Not rated 142.60
Bloomberry Resorts Corporation 2,428 Buy 11.40 15.00 31.6% 14.6 12.2 25.6% 20.2% 1.3% 2.9 21.4%
Cebu Pacific 1,099 Buy 94.70 145.00 53.1% 6.8 6.3 89.8% 7.5% 12.7% 1.4 20.7%
Cemex Holdings Philippines 274 Neutral 2.73 2.80 2.6% NM NM NM NM NA 0.5 1.3%
Century Pacific Food 976 Buy 14.26 18.70 31.1% 16.5 15.0 10.4% 10.2% 1.6% 2.7 17.2%
Chelsea Logistics Holdings Corp. 256 Neutral 7.27 7.50 3.2% 24.3 21.2 21.9% 14.9% NA 0.8 3.9%
D&L Industries 1,259 Neutral 9.13 11.00 20.5% 19.1 17.2 7.2% 11.0% 2.9% 3.6 19.7%
DMC Holdings 2,357 Buy 9.19 11.50 25.1% 9.9 9.1 -11.2% 8.4% 5.1% 1.4 15.1%
Emperador Inc. 2,211 Neutral 7.20 8.00 11.1% 16.7 15.7 4.2% 6.2% 2.4% 1.8 11.1%
Filinvest Land Inc. 777 Buy 1.66 2.00 20.5% 5.9 5.2 17.6% 13.4% 3.7% 0.6 10.0%
Globe Telecom 5,063 Neutral 1,968.00 2,260.00 14.8% 12.2 11.6 16.1% 5.3% 5.0% 3.2 28.1%
GT Capital Holdings, Inc. 3,825 Buy 920.00 990.00 7.6% 12.7 11.1 8.2% 14.7% 0.5% 1.1 8.9%
Intl Container Terminal Services 5,110 Neutral 131.40 125.00 -4.9% 26.2 22.8 22.0% 15.8% 3.8% 5.0 20.5%
JG Summit Holdings, Inc. 10,306 Neutral 74.50 60.00 -19.5% 20.3 14.0 14.1% 45.4% 0.6% 1.8 9.8%
Jollibee Foods Corp 4,693 Reduce 222.20 230.50 3.7% 41.5 38.4 -30.2% 8.1% 1.3% 4.7 11.7%
LT Group, Inc. 3,018 Buy 14.44 20.00 38.5% 8.9 7.9 40.7% 12.6% 2.1% 0.9 10.4%
MacroAsia Corporation 601 Buy 19.64 26.00 32.4% 22.4 19.8 32.9% 13.4% 0.6% 4.8 23.2%
Manila Electric Company 7,975 Neutral 366.40 400.00 9.2% 17.9 18.8 3.1% -4.7% 3.6% 4.5 26.7%
Manila Water Company, Inc. 885 Neutral 22.20 25.00 12.6% 10.3 9.6 -17.8% 6.9% 4.1% 0.8 10.0%
Megaw ide Construction Corp. 774 Buy 19.28 23.00 19.3% 38.1 28.3 2.3% 34.9% 0.3% 2.4 9.6%
Megaw orld 3,219 Buy 5.17 6.50 25.7% 9.9 8.9 11.2% 10.7% 1.1% 1.0 10.0%
Metro Pacific Investments 3,131 Buy 5.14 7.50 45.9% 10.1 9.2 13.4% 9.8% 1.5% 0.9 8.9%
Metropolitan Bank & Trust Company 5,377 Buy 69.95 88.00 25.8% 10.7 9.2 13.6% 16.2% 1.4% 0.9 8.9%
Petron Corporation 941 Buy 5.20 6.50 25.0% 29.6 18.2 -36.6% 62.6% 2.9% 0.7 3.7%
PLDT Inc. 5,024 Buy 1,204.00 1,420.00 17.9% 10.0 9.6 7.1% 4.0% 6.0% 2.1 22.3%
Puregold Price Club 2,384 Buy 42.80 57.75 34.9% 18.0 16.2 7.0% 10.6% 0.7% 1.9 11.4%
Robinsons Land 2,548 Buy 25.40 30.00 18.1% 13.7 11.8 17.4% 16.5% 1.4% 1.3 9.9%
Robinsons Retail Holdings, Inc. 2,439 Buy 80.10 95.00 18.6% 26.7 23.7 -16.9% 12.6% 0.9% 1.7 6.7%
San Miguel Corporation 8,029 Neutral 174.80 194.00 11.0% 20.1 18.7 -2.3% 7.4% 2.2% 1.2 6.2%
San Miguel Food and Beverage Inc. 10,317 Neutral 90.40 105.00 16.2% 32.1 29.2 -6.0% 9.8% 3.6% 5.6 21.7%
Security Bank Corporation 2,998 Neutral 206.00 192.00 -6.8% 15.3 13.2 17.7% 16.3% 1.5% 1.3 8.9%
Semirara Mining and Pow er Corporation 1,950 Buy 23.75 28.00 17.9% 9.4 8.3 -11.1% 13.7% 6.9% 2.3 25.6%
Shakey's Pizza Asia Ventures 358 Buy 12.10 16.10 33.1% 20.6 18.6 7.2% 10.4% 1.4% 3.6 18.4%
SM Investments Corporation 23,659 Neutral 1,017.00 1,080.00 6.2% 26.8 24.2 23.4% 10.7% 0.9% 3.2 12.5%
SM Prime Holdings 19,242 Buy 34.50 45.60 32.2% 29.9 25.3 18.3% 18.3% 1.2% 3.3 13.3%
SSI Group, Inc. 185 Buy 2.90 3.90 34.5% 11.3 10.0 17.0% 12.8% 0.4% 0.8 7.6%
Universal Robina Corporation 7,258 Neutral 170.50 182.50 7.0% 33.8 30.5 12.8% 10.7% 1.3% 4.2 12.5%
Vista Land & Lifescapes 1,886 Neutral 7.69 7.80 1.4% 8.6 7.5 15.0% 14.0% 2.1% 1.0 12.5%
Wilcon Depot, Inc. 1,324 Buy 16.72 19.30 15.4% 35.7 31.3 17.1% 14.1% 0.7% 4.7 14.2%

Source: BDO-Nomura estimates, share prices as of September 13, 2019

Disclaimer: The BDO Nomura rating system is a relative system indicating expected performance against the PSEi (PCOMP:IND) benchmark. "Buy”
indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months, “Neutral” in line with the Benchmark, “Reduce” to
underperform the Benchmark, and “Suspended” for a halt on company coverage to comply with applicable regulations and/or firm policies. An analyst’s
Target Price (TP), is an assessment of the current intrinsic fair value of the stock based on an appropriate valuation methodology determined by the
analyst. The achievement of any target price may be impeded by general market and macroeconomic trends, and by other risks related to the company
or the market.