Daily Edge Summary - 18 February 2014
Core Content Overview
This document is a financial report summarizing market performance and analyst insights for various companies, focusing on the property and conglomerate sectors. It includes barometer data, key company updates, and valuation analysis.
Barometers
- PSEi: 6,167.82 (0.89% increase)
- Turnover (PHPm): 6,594.71 (33.59% increase)
- PLDT ADR (USD): 59.35
- PLDT ADR (PHP): 2,636.92 (-0.68% change)
- Ave interbank rate: 2.06 (6.25 bps increase)
- PHP/USD rate: 44.52 (0.55% increase)
Analysts
- Head of Research / Economist: Luz Lorenzo
- Analysts: Laura Dy-Liacco, Rommel Rodrigo, Lovell Sarreal, Katherine Tan, Ramon Adviento
Top Idea
- ALI (PHP26.35): Strong finish in 2013
- Sustained net income growth of 30% YoY due to top-line growth across all business lines
- Strong momentum is expected to continue in 2014
- Reaffirm BUY with a target price of PHP37.80
Market Talk
Conglomerates
- SM Investments Corp: Acquired 34% of CityMall Commercial Center Inc (CMCCI), with the remaining 66% held by Doubledragon Properties Corp (a 50/50 joint venture between Injap Investments Inc and Honeystar Holdings Inc)
- SM also announced: Approval for PHP10b fixed rate retail bonds with an option for oversubscription of another PHP5b
- Cosco Capital Inc: Acquired 100% of Office Warehouse Inc, a retailer with 47 stores
Utilities
- Manila Water Co (MWC - HOLD): Pre-qualified for an Indonesia bulk water supply project
Property Sector: ALI
What's New
- ALI reported FY2013 net profit: PHP11.7b, up 30% YoY
- Total Revenues: PHP81.5b, up 36.03% YoY
- Residential segment: 4Q13 revenue surged to PHP13.8b from an average of PHP9.5b
- Rental income: Increased 12.2% YoY to PHP14.0b due to office space performance
- Additional 53k sqm GLA: On-stream, with average lease price up 8%
- Malls: Steady performance amid expansion and redevelopment
What's Our View
- ALI's FY2013 net income: 3.9% less than the forecasted PHP12.2b
- Success attributed to: Decentralization strategy, treating each brand as a separate company
- Partial realization of 5-10-15 target: Achieved PHP10b income and 15% ROE in five years ahead of schedule
Outlook
- 2014 residential launch: 30k units, focusing on middle and affordable segments
- Reaffirm ALI as top pick: Due to clear strategy, successful execution, and strong earnings visibility
Key Financial Data (Figure 3)
| Metric |
2011 (PHPm) |
2012 (PHPm) |
2013F (PHPm) |
2014F (PHPm) |
2015F (PHPm) |
| Net profit |
7,141 |
9,038 |
12,203 |
15,139 |
18,384 |
| EPS (P) |
0.55 |
0.68 |
0.92 |
1.14 |
1.38 |
| EPS growth (%) |
30.9 |
23.6 |
35.29 |
23.91 |
21.05 |
| PER (x) |
47.7 |
38.8 |
28.7 |
23.2 |
19.1 |
| BVPS (P) |
4.78 |
6.31 |
7.37 |
8.30 |
9.41 |
| P/BV (x) |
5.5 |
4.4 |
3.5 |
3.1 |
2.7 |
| Yield (%) |
0.6 |
0.8 |
1.1 |
1.1 |
1.4 |
| ROE (%) |
10.4 |
11.0 |
11.8 |
12.3 |
13.1 |
| ROA (%) |
5.2 |
4.7 |
4.7 |
5.0 |
5.4 |
The Week Ahead
- 18 Feb: Manila Water Company
- 19 Feb: Roxas Holdings, Inc.
- 24 Feb: Island Information & Technology, Inc.
- 25 Feb: Del Monte Pacific Limited
- 26 Feb: Roxas and Company, Inc.
Earnings and Valuations Table (as of 17 Feb 2014)
Banks
| Stock |
Share Price (PHP) |
Target Price (PHP) |
Upside (%) |
Rec |
Year |
Net Profit (PHPm) |
EPS (PHP) |
EPS Growth (%) |
PE (x) |
DPS (PHP) |
Yield (%) |
BV/share (PHP) |
P/BV (x) |
Net Gearing (%) |
ROA (%) |
ROE (%) |
| BDO |
80.95 |
88.00 |
9 |
BUY |
2012 |
13,953 |
4.46 |
17.4 |
18.2 |
- |
- |
42.29 |
1.9 |
- |
1.2 |
11.5 |
| BPI |
88.50 |
93.50 |
6 |
HOLD |
2012 |
16,291 |
4.58 |
27.1 |
19.3 |
2.30 |
2.6 |
27.30 |
3.2 |
- |
1.8 |
17.5 |
| CHIB |
57.70 |
57.75 |
0 |
HOLD |
2012 |
5,049 |
3.54 |
0.8 |
2.3 |
1.20 |
2.1 |
29.46 |
2.0 |
- |
1.7 |
12.5 |
Property
| Stock |
Share Price (PHP) |
Target Price (PHP) |
Upside (%) |
Rec |
Year |
Net Profit (PHPm) |
EPS (PHP) |
EPS Growth (%) |
PE (x) |
DPS (PHP) |
Yield (%) |
BV/share (PHP) |
P/BV (x) |
Net Gearing (%) |
ROA (%) |
ROE (%) |
| ALI |
26.35 |
37.80 |
43 |
BUY |
2013 |
11,744 |
0.83 |
29.66 |
28.7 |
- |
- |
7.37 |
3.5 |
- |
1.1 |
11.8 |
| FLI |
26.35 |
31.80 |
21 |
BUY |
2013 |
2,277 |
1.55 |
(56.9) |
17.0 |
- |
- |
4.78 |
3.3 |
- |
1.2 |
13.3 |
| RCB |
57.70 |
57.75 |
0 |
HOLD |
2013 |
5,456 |
3.82 |
30.1 |
15.1 |
- |
- |
5.11 |
3.2 |
- |
1.8 |
12.6 |
Consumer
| Stock |
Share Price (PHP) |
Target Price (PHP) |
Upside (%) |
Rec |
Year |
Net Profit (PHPm) |
EPS (PHP) |
EPS Growth (%) |
PE (x) |
DPS (PHP) |
Yield (%) |
BV/share (PHP) |
P/BV (x) |
Net Gearing (%) |
ROA (%) |
ROE (%) |
| JFC |
157.90 |
191.00 |
21 |
BUY |
2013 |
3,103 |
18.62 |
2.6 |
15.6 |
- |
- |
11.04 |
3.3 |
- |
1.6 |
15.9 |
| PIP |
232.00 |
310.00 |
34 |
BUY |
2013 |
3,125 |
18.75 |
0.7 |
17.0 |
- |
- |
142.91 |
1.6 |
- |
1.4 |
13.3 |
| DMPL |
23.15 |
35.20 |
52 |
BUY |
2013 |
2,784 |
18.15 |
(5.6) |
12.8 |
- |
- |
6.74 |
3.4 |
- |
1.6 |
15.3 |
Telcos
| Stock |
Share Price (PHP) |
Target Price (PHP) |
Upside (%) |
Rec |
Year |
Net Profit (PHPm) |
EPS (PHP) |
EPS Growth (%) |
PE (x) |
DPS (PHP) |
Yield (%) |
BV/share (PHP) |
P/BV (x) |
Net Gearing (%) |
ROA (%) |
ROE (%) |
| GLO |
1,760 |
1,582 |
(10) |
HOLD |
2013 |
10,242 |
77.10 |
2.4 |
22.8 |
65.00 |
3.7 |
350.81 |
5.0 |
117.7 |
7.3 |
21.5 |
| PLDT |
2,718 |
3,090 |
14 |
HOLD |
2013 |
37,333 |
174.53 |
(15.4) |
15.6 |
171.00 |
6.3 |
689.94 |
3.9 |
52.3 |
8.7 |
24.0 |
Utilities (continued)
| Stock |
Share Price (PHP) |
Target Price (PHP) |
Upside (%) |
Rec |
Year |
Net Profit (PHPm) |
EPS (PHP) |
EPS Growth (%) |
PE (x) |
DPS (PHP) |
Yield (%) |
BV/share (PHP) |
P/BV (x) |
Net Gearing (%) |
ROA (%) |
ROE (%) |
| AP |
36.90 |
37.30 |
1 |
HOLD |
2013 |
19,720 |
2.68 |
(16.8) |
13.8 |
1.66 |
4.5 |
11.04 |
3.1 |
92.7 |
5.5 |
15.9 |
| EDC |
5.40 |
5.73 |
6 |
HOLD |
2013 |
5,409 |
0.29 |
(33.9) |
18.7 |
0.22 |
4.0 |
1.78 |
2.9 |
65.48 |
3.9 |
15.4 |
| MWC |
24.70 |
23.40 |
(5) |
HOLD |
2013 |
17,601 |
2.39 |
(10.7) |
15.4 |
1.45 |
3.9 |
13.00 |
2.8 |
72.8 |
1.0 |
26.0 |
Summary
The report highlights ALI's strong financial performance in FY2013, with a 30% YoY net income increase and a 36% revenue growth. It attributes this success to effective decentralization and rational project execution. ALI is reaffirmed as a top pick for the property sector with a target price of PHP37.80. Other notable updates include SM's acquisition of CityMall and Cosco's full acquisition of Office Warehouse Inc. Manila Water Co is pre-qualified for an Indonesia bulk water project. The report also provides a comprehensive overview of other stocks across various sectors, including banks, consumer goods, and telcos, with their respective financial metrics and analyst recommendations.
