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报告摘要

Daily Edge Summary - 6 June 2014

Core Content

This report provides an overview of the stock market performance and analyst insights for the week of 6 June 2014. It includes data on stock indices, key financial metrics, and specific company analyses, particularly focusing on Phoenix Petroleum Phils (PNX). The report also covers upcoming events and financial forecasts for various stocks across different sectors.

Key Financial Metrics (as of 5 June 2014)

PSEi: 6,772.44, up 0.09%
Turnover (PHPm): 8,810.12, up 33.31%
PLDT ADR (USD): 66.23, down 0.39%
PLDT ADR (PHP): 2,901.87, down 0.54%
Ave interbank rate: 2.00, no change
PHP/USD rate: 43.81, up 0.19%

Analysts

Luz Lorenzo: Head of Research / Economist
Laura Dy-Liacco: Analyst
Bianca Solema: Analyst
Rommel Rodrigo: Analyst
Lovell Sarreal: Analyst
Katherine Tan: Analyst
Ramon Adviento: Analyst

Top Idea: Energy Sector

PNX (PHP6.30): Maintained as a BUY with a revised target price of PHP7.05
Key Points:
- 1Q14 net income dropped by 6% to PHP212m, mainly due to a 23% decline in volume sales
- Intense competition in the commercial, industrial, and airline (CIA) segment caused a 30% drop in volumes
- The retail segment saw 17% growth, driven by strong same-store sales and expansion
- Total stations increased to 385 from 325 in 1Q13
- The share of the higher-margin retail segment increased to 33%, raising EBIT per liter to PHP1.72 (up 26%)
- Overall EBIT increased by 2% to PHP385m, but higher finance costs led to a slightly lower bottom line
- Net income after preferred dividends forecast was downgraded by 16% to PHP901m in 2014 and 15% to PHP1.27b in 2015
- Despite the downgrade, profit growth is expected at 43% in 2014 and 79% in 2015

Market Talk

Economy

Headline inflation spiked to 4.5% in May, up from 4.1% in April
Food inflation rose to 6.7% from 6.2%, driven by a 12.9% surge in rice prices and miscellaneous food
Core inflation (excluding food and energy) was 3.1%, up from 2.9%
Housing and utilities inflation also increased
Upward pressure on inflation continues due to the impact of 4Q13 natural disasters
Central bank is showing a hawkish tone, reacting to the Federal Reserve's tapering of monetary policy

Utilities

MER: Distribution rates will drop by PHP0.0912/kWh starting July, as approved by the Energy Regulatory Commission
EDC: BacMan unit 2 completed reliability runs and is now delivering electricity to the grid, with a permanent fix expected in 1Q15
Ayala-MPI: Bids PHP9.35b for the LRT south extension project, aiming to build a 11.7km rail from Pasay to Cavite
Ayala Land Inc (ALI): Signs agreement with Mandarin Oriental to develop a Luxury Hotel in Makati by 2020, featuring 275 rooms

Earnings and Valuations Table (as of 5 June 2014)

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	90.20	93.50	4	HOLD	2012	14,153	4.52	16.2	19.9	-	-	42.29	2.1	-	1.2	11.7
BPI	86.80	93.50	8	HOLD	2013	18,811	5.29	37.5	14.5	2.30	2.6	27.19	3.2	-	1.8	17.8
CHIB	55.05	60.00	9	HOLD	2014	5,479	3.45	1.9	48.03	2.1	1.3	1.76	3.6	22.2	4.6	9.5
EW	31.20	31.80	2	HOLD	2014	3,384	2.48	23.3	28.8	0.02	0.5	2.73	1.7	(8.5)	5.5	9.8
MBT	85.40	92.00	8	HOLD	2014	5,011	1.22	5.6	12.85	0.43	1.9	11.32	2.0	13.2	6.3	10.0
PBB	24.00	27.00	13	BUY	2014	5,270	0.62	4.0	6.15	0.12	1.9	5.17	1.2	40.0	6.2	10.3
PNX	6.30	7.05	25	BUY	2014	1,071	2.47	26.2	10.63	0.59	1.3	6.74	3.1	46.2	4.7	12.5
PNB	93.50	109.00	17	BUY	2014	15,124	1.08	28.8	8.44	0.29	1.9	12.93	3.4	49.6	4.7	12.5
PGOLD	43.80	50.00	14	BUY	2014	10,179	0.34	21.4	3.74	0.02	0.5	2.73	1.7	(8.5)	5.5	9.8
ALI	30.85	37.80	23	BUY	2014	5,270	0.62	4.0	6.15	0.12	1.9	5.17	1.2	40.0	6.2	10.3
FLI	1.67	2.50	50	BUY	2014	4,492	0.19	13.0	43.1	0.05	2.9	1.89	0.9	4.7	6.3	10.0
MEG	4.65	5.29	14	BUY	2014	5,011	1.22	5.6	12.85	0.36	1.6	11.32	2.0	13.2	6.3	10.0
RLC	22.80	25.23	11	BUY	2014	5,270	0.62	4.0	6.15	0.12	1.9	5.17	1.2	40.0	6.2	10.3
VLL	6.35	6.80	7	HOLD	2014	5,270	0.62	4.0	6.15	0.12	1.9	5.17	1.2	40.0	6.2	10.3
EDC	6.23	7.25	16	BUY	2014	5,270	0.62	4.0	6.15	0.12	1.9	5.17	1.2	40.0	6.2	10.3

The Week Ahead

9 June: Annual Stockholder's Meetings for Asia United Bank Corporation, LT Group, Inc., Federal Resources Investment Group, Inc., and Agrinurture, Inc.
10 June: Annual Stockholder's Meetings for San Miguel Corporation, Pancake House, Inc., Empire East Land Holdings, Inc., and City & Land Developers, Inc.
11 June: Annual Stockholder's Meetings for Harbor Star Shipping Services, Inc. and Keppel Philippines Properties, Inc.

Summary

PNX is a top performer, maintaining a BUY rating with a revised target price of PHP7.05, reflecting its focus on retail and margin protection amid competition
Inflation remains a concern, with headline inflation at 4.5% in May, primarily due to food and housing price increases
MER is set to reduce distribution rates, with the permanent fix for BacMan unit 2 expected in 1Q15
Ayala-MPI is bidding PHP9.35b for the LRT south extension project
ALI is developing a luxury hotel in Makati with 275 rooms
Earnings and valuations for various stocks show a mix of BUY and HOLD ratings, with PNX, PNB, ALI, FLI, MEG, RLC, and VLL being highlighted as BUY recommendations
The central bank is showing a hawkish tone, but policy rate hikes are not expected in the short-term due to inflationary pressures and slow GDP growth