20140530-Maybank_KERPL-Daily_Edge_13页_343kb

Daily Edge Summary - 30 May 2014

Core Content

The document provides an overview of the Philippine economy and stock market performance as of 30 May 2014, focusing on GDP growth, market highlights, and analysis of specific companies.

GDP Growth

• 1Q14 GDP Growth: 5.7% YoY, slightly below expectations of 6.4% and slower than the 6.3% growth in 4Q13.
• GDP Components:
  • Total Investment: Slowed due to inventory drawdowns, from 22.4% in 4Q13 to 7.7% in 1Q14.
  • Manufacturing: Growth decelerated from 12.0% to 6.8%.
  • Private Consumption: Stable at 5.8%, contributing to around 70% of GDP.
  • Government Consumption: Improved from a marginal decline to 2.0% growth.
  • External Demand: No longer a drag as exports outpaced imports.
  • Services Sector: Expanded at 6.8%, slightly better than 6.7% in 4Q13.
  • GNI Growth: Remained strong at 7.6%, driven by remittances from overseas Filipinos.

Inventory and Manufacturing

• Inventory drawdowns likely stemmed from damages caused by typhoon Yolanda in 4Q13.
• The underlying strength in domestic demand is expected to lead to inventory additions and boost future growth.

GDP Forecasts

• 2014 GDP Growth Forecast: Adjusted slightly to 6.7% from 6.8%.
• 2015 GDP Growth Forecast: Adjusted to 7.5% from 7.4%, considering the potential for inventory recovery.

Market Talk

Robinsons Retail Holdings Inc (RRHI)

• 1Q14 Performance:
  • Net sales grew 16.1% YoY to PHP17.4b.
  • Operating income increased 15.2% to PHP758m.
  • Net earnings rose only 5.6% to PHP562m due to lower equity earnings from Robinsons Bank.
• Segment Performance:
  • Supermarkets: Best performer with 19.4% growth.
  • Convenience and specialty segments: Underperformed.
• Store Expansion: RRHI opened 81 stores in 1Q14, ending the quarter with 1,145 stores.
• Valuation:
  • Target price remains at PHP77.50.
  • Implied earnings growth of 23% for 2014F and 20% for 2015F.
  • EV/EBITDA remains at 13.2x, slightly less than the regional average of 14.1x.

Property Sector

• MEG Plans: To build a PHP1.2b office tower in Davao, named Davao Finance Center.
• Davao Park District: A township project that will include office towers, commercial and retail strips, open parks, lagoons, and residential condominiums.
• Total Capex for Township: PHP15b.

Conglomerates

• AEV Acquisition: Acquired 70% stake in Vinh Hoan 1 Feed JSC of Vietnam for USD28m.
• Remaining 30%: To be purchased within five years at a pre-agreed price.
• Vinh Hoan 1 Feed JSC: Fourth largest aqua feed producer in Vietnam.
• Pilmico Foods Corp: Manages and sells flour, feeds, and by-products.

Key Figures and Tables

Table 1: Key Economic Indicators (30 May 2014)

Table 2: GDP and GNI Growth (2012–2014)

Market Highlights

• RRHI (PHP63.00): Maintains a BUY rating with an unchanged target price of PHP77.50.
• Growth Drivers: Strong same-store-sales growth and expansion in GFA.
• Gross Margin: Improved by 50bps to 21%.

The Week Ahead

• Events: Several companies are set to hold annual stockholder meetings, including:
  • Omico Corporation
  • Metro Alliance Holdings & Equities Corp.
  • Philippine Business Bank
  • Pepsi-Cola Products Philippines, Inc.
  • Filinvest Development Corporation
  • Metro Pacific Investments Corporation
• Market Outlook: A table is provided with key financial metrics and target prices for various stocks, including:
  • BDO
  • BPI
  • CHIB
  • EW
  • MBT
  • PBB
  • PNB
  • RCB
  • SECB
  • UBP
  • JFC
  • PIP
  • RFM
  • URC
  • PF

Summary of Key Points

• GDP Growth: 1Q14 GDP growth was lower than expected due to inventory drawdowns, but underlying domestic demand is expected to support future growth.
• Inventory Impact: Manufacturing growth slowed due to inventory drawdowns, likely caused by typhoon Yolanda.
• RRHI Performance: Strong 1Q14 results with 16.1% net sales growth and 15.2% operating income growth, but net earnings growth was modest.
• RRHI Valuation: Target price remains at PHP77.50, with healthy earnings growth and a reasonable EV/EBITDA.
• MEG Expansion: Plans to build a PHP1.2b office tower in Davao as part of the Davao Park District township project.
• AEV Acquisition: Acquired 70% stake in Vinh Hoan 1 Feed JSC, a major aqua feed producer in Vietnam.
• Market Outlook: The document outlines key financial metrics for various stocks, highlighting their performance and valuations for the upcoming week.