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Daily Edge Summary - July 9, 2015

Core Content

The document provides an overview of the Philippine stock market performance on July 9, 2015, including key financial indicators and insights from analysts on various sectors. It highlights the performance of specific companies and their strategic moves in the market.

Market Overview

• PSEi Index: Closed at 7,363.43, down by 1.06%.
• Turnover: Increased to PHP7,981.58 million, up by 21.80%.
• PLDT ADR (USD): Closed at 61.67, down by 0.42%.
• PLDT ADR (PHP): Closed at 2,785.02, down by 0.45%.
• Ave interbank rate: 2.50%, down by 3.13 bps.
• PHP/USD rate: 45.23, up by 0.20%.

Analysts

The document lists several analysts from Maybank ATR Keim Eng, including:

• Luz Lorenzo
• Ramon Adviento
• Michael Bengson
• Rommel Rodrigo
• Lovell Sarreal
• Katherine Tan

Top Idea: Consumer Sector

RRHI (PHP71.60): Expanding Retail Portfolio

• Recommendation: Maintain BUY with unchanged forecasts.
• Expansion: RRHI is expanding into coffee shops and home furnishings with the opening of the first Costa Coffee and True Home stores.
• Costa Coffee: A globally recognized brand, expected to be grouped under the specialty segment. RRHI plans to open up to 5 stores this year and at least 70 outlets within five years.
• True Home: A sub-format of True Value, focusing on home furnishings. Expected to add 15-20 DIY stores per year.
• Community Malls: RRHI continues to build and operate community malls with GFA of 5-10k sqm. These malls are being rebranded as Robinsons Townville.
• GFA Growth: Estimated to increase by 11.3% this year and 11.7% next year, leading to a total of 1,593 stores by year-end.

Market Talk

Consumer: PGOLD's Remittance Venture

• PGOLD launched PurePadala, a remittance program allowing users to specify amounts for groceries and other services.
• Target Market: USD24b annual cash remittance by overseas Filipino workers.
• Performance: PGOLD has already remitted about PHP100m since 2014, using the Gcash platform.

Telecoms: Free Promos by Smart and Globe

• Smart launched free Instagram access for pre-paid and post-paid plans.
• Globe introduced free Facebook access with new in-app features.
• Smart: Prepaid users get up to 30mb free data, postpaid users get 30 days of free Instagram.
• Globe: Offers "Free Facebook for 7 Days" and "Free Facebook with GoSURF" subscriptions.
• Usage: Instagram ranks among the top five most used apps in the Philippines, and Facebook has 43 million active users.

Utilities: TA's Power Barge Acquisition

• TA purchased power barges 101, 102, and 103 from PSALM for PHP420 million.
• Capacity: Each barge has a rated capacity of 32MW, with four units each.
• Location: Barges 101 and 102 are in Iloilo City, while barge 103 is in Subic, Zambales.
• Portfolio Growth: This adds to TA's existing power generation portfolio, which includes diesel plants, a wind farm, a geothermal plant, and a coal power plant.

Conglomerates: San Miguel's Power Plant Financing

• San Miguel Corp plans to borrow USD400 million to build a 300MW coal-fired power plant in Bataan.
• Financing: Split into a USD300 million 7-year term loan and a USD100 million 7-year working capital facility.
• Banks Involved: DBS Bank, Mizuho Bank, and Standard Chartered.

Earnings and Valuations

A table of earnings and valuations for various stocks is provided, with the following highlights:

• RRHI: Target price at PHP85, with a 19% upside. Core EPS growth expected at 13.7% for FY15E and 13.8% for FY16E.
• PGOLD: Target price at PHP47.50, with a 32% upside. Expected to add 266 new stores in FY15, increasing GFA by 11.3%.
• Consumer Sector: Several companies such as JFC, EMP, and VLL are recommended with BUY ratings, showing growth in net profit and EPS.
• Property Sector: Companies like ALI, FLI, and VLL are noted for their growth in EPS and valuations.
• Utilities Sector: Companies like EDC and FGEN are highlighted with BUY ratings, showing positive EPS growth and target price increases.

The Week Ahead

The document lists upcoming annual stockholders' meetings for various companies in the following dates:

• July 9: Top Frontier Investment Holdings, Inc.
• July 10: Steniel Manufacturing Corporation, 2GO Group, Inc.
• July 13: National Reinsurance Corporation of The Philippines
• July 14: Coal Asia Holdings, Inc.
• July 15: Easycall Communications Phils., Inc., Concepcion Industrial Corporation
• July 16: Robinsons' Retail Holdings, Inc., RFM Corporation, Petroenergy Resources Corporation, Island Information and Technology, Inc.
• July 17: Iripple, Inc., Macroasia Corporation

Key Insights

• Consumer Sector: RRHI's expansion into new retail formats is expected to drive growth and maintain its BUY rating.
• Telecoms: Free promotions by Smart and Globe are aimed at increasing user engagement and data usage.
• Utilities: TA's acquisition of power barges and San Miguel's new power plant are significant developments in the sector.
• Market Trends: The remittance business and free data promotions are seen as growth drivers for respective companies.

Summary

The report covers market performance, analyst insights, and company-specific updates across multiple sectors. It emphasizes the expansion strategies of RRHI in the retail and consumer sectors, PGOLD's entry into the remittance business, and TA and San Miguel's developments in the utilities sector. The data highlights expected growth in GFA, revenue, and EPS for several companies, supporting their BUY ratings.