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报告摘要

Daily Edge Summary - July 29, 2015

Core Content

This document provides a financial summary and analysis of the Philippine stock market and selected companies for July 28, 2015. It includes key financial metrics, analyst insights, and market developments, focusing on the utilities sector and other notable companies.

Main Points

Market Overview

PSEi Index: Closed at 7,479.03 with a -0.91% change.
Turnover: Increased by 24.14% to PHP6,848.81 million.
PLDT ADR (USD): Closed at 63.74 with a 0.08% increase.
PLDT ADR (PHP): Closed at 2,900.17 with a -0.05% change.
Ave Interbank Rate: Remained at 2.53% with no change.
PHP/USD Rate: Increased by 0.07% to 45.50.

Analysts

Luz Lorenzo, Ramon Adviento, Michael Bengson, Rommel Rodrigo, Lovell Sarreal, and Katherine Tan are the analysts providing insights.

Top Idea

Utilities Sector

Manila Electric Co. (MER):
- Raised dividends; maintained HOLD rating.
- 2Q15 core income grew 11% YoY after excluding a one-off gain.
- The company guided for a full-year net income of PHP18.5 billion for 2015, in line with forecasts.
- Approved cash dividends of PHP6.76/share, raising total dividends declared this year to PHP15.25/share.
- Expected further reduction in provisions in 2H15 to offset decline in distribution revenue.
- Distribution rate was reduced by 11% as approved by the Energy Regulatory Commission.
- Earnings are expected to decline in 2016 due to the full-year impact of the interim rate and further expected cuts.

Market Talk

Conglomerates

SMC's Acquisition of LIB: San Miguel Corp completed the acquisition of Liberty Telecoms Holdings Inc, involving PHP5.7 billion in cash.
Ayala Corp's Acquisition of UNC: Ayala Education Inc acquired a 60% stake in the University of Nueva Caceres for PHP450 million, making it AEI's flagship university.

Utilities

TA-BUY's 1H15 Net Income: PHP377 million, a 70% YoY increase, attributed to the commercial operation of the first 135MW unit of SLTEC.
MWC-led Consortium for Tagum Bulk Water Supply: The project includes a water treatment plant, pipeline, reservoir, booster pumps, and metering systems.
MGen's Equity Investment: USD1.2 billion for three coal power projects with a combined capacity of up to 2,255MW, using a 30-70 equity and debt structure.

Economy

Government Spending Growth: 2Q15 saw a 12.4% YoY increase, compared to 4.5% in 1Q15, indicating improved GDP performance.
Infrastructure Acceleration: The government is expected to accelerate spending ahead of elections, with Secretary Abad stating the intent to show progress.

Key Information

MER Financial Highlights

2Q15 Core Net Income: PHP7,224 million (24.9% YoY growth).
Core EPS (PHP): PHP13.86 for 2Q15.
Net DPS (PHP): Increased to PHP15.25 in 2Q15.
Core P/E (x): 21.4 for 2015.
Net Dividend Yield (%): 5.1 for 2015.
ROAE (%): 23.8 for FY13A.
EV/EBITDA (x): 8.5 for FY13A.
Net Debt/Equity (%): Net cash for all periods.
ROAA (%): 7.1 for FY13A.

2Q15 and 1H15 Results Summary

Volume Sales (GWh): 9,661 for 2Q15 (up 2.9% YoY).
Revenues (PHPm): 71,419 for 2Q15 (down 7.3% YoY).
Operating Income (PHPm): 9,756 for 2Q15 (up 17.7% YoY).
EBITDA (PHPm): 11,466 for 2Q15 (up 15.9% YoY).
Core EBITDA (PHPm): 11,403 for 2Q15 (up 14.6% YoY).
Core Net Income (PHPm): 7,224 for 2Q15 (up 24.9% YoY).
Income Before Tax (PHPm): 10,365 for 2Q15 (up 27.7% YoY).
Income Tax (PHPm): 3,013 for 2Q15 (up 22.0% YoY).
Reported Income (PHPm): 7,326 for 2Q15 (up 30.1% YoY).

The Week Ahead

July 29: Global Ferronickel Holdings, Inc., DMCI Holdings, Inc.
July 30: Easycall Communications Phils., Inc., Philippine Seven Corporation, Macay Holdings, Inc., Makati Finance Corporation.
July 31: Leisure & Resorts World Corporation, Anglo Philippine Holdings Corporation, and several Annual Stockholder's Meetings.

Earnings and Valuations Table

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)	Gearing (%)	ROA (%)	ROE (%)
BDO	98.60	123.00	25	BUY	2014	22,466	6.27	0.9	15.7	2.10	2.1	48.56	2.0	1.3	13.5	14.0
BPI	94.10	101.00	7	HOLD	2014	18,039	4.62	-10.9	20.4	0.91	1.0	36.64	2.6	1.4	14.5	14.0
CHIB	45.90	51.00	11	HOLD	2014	5,116	3.08	-5.9	14.9	1.00	2.2	32.09	1.4	-	1.3	1.3
EW	20.20	29.00	44	BUY	2014	2,073	1.84	-	11.0	-	-	12.38	3.0	-	12.5	12.5
MBT	88.50	105.00	19	BUY	2014	19,614	7.15	-	12.4	0.01	0.0	29.02	2.7	-	9.2	9.4
PBB	167.90	285.00	70	BUY	2014	2,685	16.11	-	10.4	0.30	0.8	116.44	1.4	-	12.0	12.0
PGOLD	37.10	47.50	28	BUY	2014	4,520	1.63	-	22.7	0.30	0.8	12.38	3.0	-	13.9	13.9
EMP	9.00	13.00	44	BUY	2014	6,204	0.36	-	24.7	0.15	1.7	2.70	3.3	-	16.2	16.2
ALI	37.45	48.60	30	BUY	2014	14,803	1.04	24.5	35.9	0.29	0.8	7.04	5.0	89.8	4.1	14.4
FLI	1.89	2.40	27	BUY	2014	4,602	0.19	15.8	10.0	0.05	2.6	2.02	0.9	23.6	4.5	9.1
MEG	4.60	7.10	54	BUY	2014	9,399	0.29	17.1	15.7	0.02	0.5	3.17	1.1	6.3	8.1
RLC	28.45	31.00	9	HOLD	2014	4,735	1.16	1.8	24.6	0.36	1.3	12.03	2.2	0.3	5.9	9.3
VLL	6.90	8.40	22	BUY	2014	5,710	0.67	12.7	10.3	0.10	1.7	5.68	1.1	66.9	6.0	11.2
SMPH	20.85	22.00	6	BUY	2014	19,035	0.69	8.5	30.4	0.18	1.0	5.88	2.9	41.7	5.3	10.5

Conclusion

The document highlights the performance of key financial indicators and provides insights into the utilities sector, particularly focusing on MER's financials and dividend policy. It also outlines recent market activities and economic trends, offering a comprehensive view of the financial landscape in the Philippines for the week of July 29, 2015.

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