20140414-Maybank_KERPL-DAILY_EDGE_13页_404kb

Daily Edge Summary - 14 April 2014

Core Content

This report provides an overview of the stock market performance and analyst insights for various Philippine companies as of 14 April 2014. It includes updates on key stocks, earnings growth, price targets, and market outlooks.

Key Market Indicators

Top Ideas

Mining Sector - Nickel Asia Corp (NIKL)

• Stock Price: PHP22.00
• Target Price (TP): PHP27.62
• Upside Potential: 25.5%
• New Information:
  • 1Q14 shipments up 52% YoY to 2.65m WMT, with revenues growing 21% to PHP1.45b.
  • ASPs decreased by 15.7% YoY to USD6.59/lb but increased 3.9% QoQ.
  • NIKL renegotiated long-term contracts to reflect higher Chinese buyer prices.
• Analyst View:
  • Nickel prices are expected to average USD10.30/lb in 2014, USD15 in 2015, and USD12 in 2016.
  • Prices are likely to normalize in 2017-18 due to global shortage and production delays in Indonesia.
  • Maintain BUY rating.

Media Sector - ABS-CBN Corp (ABSP)

• Stock Price: PHP34.80
• Target Price: PHP42.50
• Upside Potential: 22.1%
• New Information:
  • 2013 net income grew 25% to PHP2b, slightly below the estimate.
  • Total net revenue increased 15% to PHP33.4b.
  • Operating income jumped 69% to PHP3.1b.
• Analyst View:
  • Advertising revenue was PHP18.9b in 2013, up 16% YoY.
  • Excluding election-related ads, regular ads grew 9% to PHP17.7b.
  • Core businesses (free-to-air TV, ABS-CBN international, Star Cinema, SkyCable) contributed significantly to earnings.
  • Maintain BUY rating.

Conglomerates - Ayala Corp (AC)

• Stock Price: PHP619.00
• Target Price: PHP769
• Upside Potential: 24.2%
• New Information:
  • AC issued USD300m exchangeable bonds into ALI common shares.
  • Bonds are exchangeable at PHP36.48 per ALI share, representing a 20% premium.
  • The bonds will mature on 2 May 2019 unless exchanged, redeemed, or repurchased.
• Analyst View:
  • The offering is positive for AC, allowing it to monetize its ALI investment.
  • Minimal dilution at 2.6%.
  • Maintain BUY rating.

Consumer Sector - Concepcion Industrial Corp (CIC)

• Stock Price: PHP34.00
• Target Price: PHP36.50
• Upside Potential: 7.4%
• New Information:
  • 2013 net income grew 20% to PHP511m, slightly higher than the estimate.
  • Full-year net sales increased 9% to PHP7.6b.
  • Operating margins improved by 2.6 ppts to 15.7%.
• Analyst View:
  • Growth in residential segment and replacement market drove higher net sales.
  • Maintain BUY rating.

Market Highlights

NIKL (PHP22.00): Higher contract prices raise TP

• Reason: Successful renegotiation of contracts to reflect higher prices paid by Chinese buyers.
• Target Price: PHP27.62
• Upside: 25.5%
• Analyst: Ramon Adviento

ABSP (PHP34.80): Healthy core business highlighted

• Reason: Strong core business performance and attractive long-term potential.
• Target Price: PHP42.50
• Upside: 22.1%
• Analyst: Luz Lorenzo

The Week Ahead

Several companies are set to hold their annual stockholder meetings, including:

• Del Monte Pacific Limited
• SM Prime Holdings, Inc.
• Lepanto Corporation
• Central Azucarera De Tarlac
• BDO Leasing & Finance, Inc.
• A. Soriano Corporation
• Asian Terminals, Inc.

Key Data Tables

Figure 1. Key Data - NIKL

Figure 2. Forecast Changes

Analysts

• Luz Lorenzo: Head of Research / Economist, Maybank ATR KE
• Laura Dy-Liacco: Analyst, Maybank ATR KE
• Rommel Rodrigo: Analyst, Maybank ATR KE
• Lovell Sarreal: Analyst, Maybank ATR KE
• Katherine Tan: Analyst, Maybank ATR KE
• Ramon Adviento: Analyst, Maybank ATR KE

Conclusion

The report highlights the positive performance of several key stocks in the mining and media sectors, emphasizing the potential for growth and the impact of market dynamics on earnings and price targets. It also outlines upcoming stockholder meetings and provides detailed financial data for key companies. Overall, the analysts maintain BUY ratings for several stocks due to strong fundamentals and growth prospects.