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Daily Edge Summary - August 28, 2015

Core Content

The Daily Edge report for August 28, 2015, provides an overview of the Philippine economy and stock market performance, highlighting key economic indicators and market events. It also includes insights from analysts and forecasts for the upcoming quarter and year.

Main Economic Highlights

• GDP Growth: The Philippine economy showed resilience with a 2Q15 GDP growth of 5.6% YoY, up from 5.0% in 1Q15.

  • Government Consumption: Increased to 3.9% from 1.7% in the previous quarter.
  • Public Construction: Reversed to 20.4% growth from a contraction of 24.0% in 1Q15.
  • Private Consumption: Continued to grow at 6.2%, showing robustness in the domestic market.
  • Net Exports: Had a negative drag of 2.5 percentage points, with goods exports declining 3.0% and imports growing 12.7%.

• Services Exports: Improved significantly, growing 31.1% in 2Q15, which helped offset the decline in goods exports.

  • BPO Industry: Played a key role in the services export rebound.
  • Industrial Sector: Grew at 6.1% in 2Q15, up from 5.5% in 1Q15.
  • Agriculture Sector: Slightly contracted in 2Q15.

• Economic Forecast:

  • 2015 GDP Growth: Revised down to 6.0% from 6.4% due to ongoing global market turmoil.
  • 2016 GDP Growth: Forecasted at 7.0%, with election-related spending expected to boost growth.

Key Market Updates

• Conglomerates:
  • AC and GLO will transfer their stakes in BPI Globe BanKO to BPI, resulting in BPI's full ownership by year-end.
• Telcos:
  • Globe Telecom partnered with Orange to launch the Libon app, an all-in-one communication application for international use.
• Utilities:
  • TA allocated PHP373.4 million for the purchase of NPC power barges.
• Banks:
  • EW plans to redeem PHP1.5 billion of Tier 2 debt, expected to reduce annual interest costs by PHP112.5 million.
• Construction:
  • EEI signed a contract to construct the New Bohol Airport and related projects.
• Mining:
  • AT reported a net loss of PHP611 million for 1H15 but showed improved performance in 2Q15, with revenues up 6% QoQ to PHP2.8 billion.

Analysts

The report features insights from the Maybank ATR Kim Eng team, including Luz Lorenzo, Ramon Adviento, Michael Bengson, Rommel Rodrigo, Lovell Sarreal, and Katherine Tan.

Upcoming Events

• August 28:
  • Vista Land and Lifescapes, Inc
  • Metro Alliance Holdings & Equities
  • Ever Gotesco Resources & Holdings, Inc will hold Annual Stockholders’ Meetings.
• September 4:
  • Federal Resources Investment Group, Inc
  • Acesite (Philippines) Hotel Corporation will hold Annual Stockholders’ Meetings.
• September 10:
  • IRC Properties, Inc
  • Mabuhay Holdings Corporation will hold Annual Stockholders’ Meetings.

Earnings and Valuations (as of 27 August 2015)

Figures and Charts

• Figure 1: Shows that domestic demand more than offset the drag from net exports.
• Figure 2: Highlights the rebound in public construction.
• Figure 3: Illustrates how strong services exports mitigated the weakness in goods exports.
• Figure 4: Provides details of national income accounts for different sectors.
• Figure 5: Indicates that GDP growth is typically higher in election years compared to the preceding year.
• Figure 6: Offers an earnings and valuations table for various stocks, including BDO, BPI, CHIB, EW, JFC, PIP, RFM, URC, PF, RRHI, CIC, PGOLD, and EMP.

Conclusion

The report underscores the resilience of the Philippine economy against external shocks, driven by domestic demand and services exports. Despite a revised GDP forecast for 2015, election-related spending is expected to boost growth in 2016. The market updates and stock recommendations provide insights into key players and their financial outlooks.