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Daily Edge Summary - July 22, 2015

Core Content

This document presents a summary of financial performance and market updates for various companies and sectors in the Philippines, as of July 22, 2015. It includes key financial metrics, analyst insights, and upcoming events for investors.

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Key Financial Highlights

PSEi Index

• Value: 7,627.96
• Change: 1.15%

Turnover

• Value: PHP6,604.16
• Change: -48.22%

PLDT ADR (USD)

• Value: USD64.42
• Change: -0.46%

PLDT ADR (PHP)

• Value: PHP2,916.94
• Change: -0.35%

Ave interbank rate

• Value: 2.50%
• Change: -3.13 bps

PHP/USD rate

• Value: 45.28
• Change: -0.05%

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Analysts

• Head of Research / Economist: Luz Lorenzo
• Contact: (632) 849 8836
• Email: luz_lorenzo@maybank-atrke.com

Other analysts:

• Ramon Adviento: (63) 28498845, ramon_adviento@maybank-atrke.com
• Michael Bengson: (63) 28498840, michael_bengson@maybank-atrke.com
• Rommel Rodrigo: (632) 849 8839, rommel_rodrigo@maybank-atrke.com
• Lovell Sarreal: (632) 849 8841, lovell_sreal@maybank-atrke.com
• Katherine Tan: (632) 849 8843, kat_tan@maybank-atrke.com

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Top Idea: Consumer Sector

RFM Corp. (RFM)

• Current Price: PHP4.22
• Target Price: PHP5.60
• Upside: 33%
• Rating: BUY

Key Points:

• 1H15 Net Income: PHP471m, up 10.6% YoY
• 1H15 Net Sales: PHP5.5b, up 10% YoY
• Consumer Sales: PHP3.62b, up 14.3% YoY
• Institutional Sales: PHP1.87b, up 2.8% YoY
• Gross Profit: PHP2.11b, up 11.3% YoY
• EBIT: PHP665m, up 17.5% YoY
• EBITDA: PHP773m, up 6.5% YoY
• Depreciation Expenses: Down 32.5% YoY to PHP108m
• 1H15 Net Income Forecast: On track to meet the full-year forecast of PHP951m
• Net Income Target for 2015: PHP1b
• Reasons for Growth: Stronger sales in 2H, election-related spending, margin improvements

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Market Talk

Telcos

• Globe Telecom Inc (GLO-BUY): Agreed to purchase PHP1.83b worth of equity in Bayantel
• Impact: Increases GLO's equity interest in Bayantel to 98.57% from 56.87%
• Shares Involved: Up to 70.76m Bayantel shares
• Transaction Basis: Conversion of Bayantel's debt into equity, approved by the National Telecommunications Commission on 2 Jul 2015

Conglomerates

• Ayala Corp (AC-BUY): Signed MOA for interoperability between MCX and SLEX

• MCX Details: PHP2B four-lane expressway, expected to reduce travel time from Cavite to Metro Manila to 45 minutes

• Launch Date: Fully operational on 24 Jul 2015

• San Miguel Corp (SMC): Issuing 446.667m Series "2" preferred shares

• Indicative Yields:

  • Callable on 5th year: 6.1114% - 6.6114%
  • Callable on 7th year: 6.3130% - 7.063%
  • Callable on 10th year: 6.8589% - 7.3589%

• Total Amount to be Raised: PHP33.5b at PHP75/sh

• Purpose: Refinance existing preferred shares worth PHP54b callable on 21 Sep 2015

Property

• Megaworld Corp (MEG-BUY): Plans to expand office portfolio in BGC
• New Towers: 12 new office towers (total 650k GLA) in BGC by 2018
• Current GLA: 300k
• Locations:
  • Uptown Bonifacio: 4 buildings (150k GLA)
  • McKinley West: 6 campus-type office towers (60k GLA)
  • BGC: 2 office towers (140k GLA)

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Earnings and Valuations Table (as of 21 July 2015)

Key Metrics for RFM

• Share Price: PHP4.22

• Target Price: PHP5.60

• Upside: 33%

• Rating: BUY

• 1H15 Net Profit: PHP471m

• Core Net Profit Forecast: PHP951m for FY15

• Core EPS Forecast: PHP0.27 for FY15

• Core EPS Growth: 13.4% for FY15

• Core P/E: 15.5x

• Net Dividend Yield: 1.9%

• ROAE: 11.3%

• ROAA: 7.7%

• EV/EBITDA: 8.5x

• Net Debt/Equity: 1.5%

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The Week Ahead

• July 22: Oriental Petroleum and Minerals Corporation
• July 27: Manila Electric Company
• July 28: F&J Prince Holdings Corporation, Centro Escolar University
• July 29: Global Ferronickel Holdings, Inc., DMCI Holdings, Inc.
• July 30: Easycall Communications Phils., Inc., Philippine Seven Corporation
• July 31: Macay Holdings, Inc., Makati Finance Corporation, Leisure & Resorts World Corporation, Anglo Philippine Holdings Corporation

Events:

• Annual Stockholder's Meetings
• Analysts'/Investors' Briefings

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Summary

This report highlights the financial performance of several key companies and the broader market trends in the Philippines. It includes updates on the PSEi index, turnover, and currency rates, along with insights from analysts on the consumer, conglomerates, and property sectors. RFM Corp. is noted for its strong first-half performance and its potential to exceed PHP1b in net income for the full year. Other companies such as Globe Telecom, Ayala Corp, and San Miguel Corp are also discussed with significant developments and financial forecasts. The document provides detailed financial metrics and target prices for various stocks, aiding investors in making informed decisions.