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Daily Edge Summary - 28 April 2014

Core Content Overview

This document provides an analysis of stock performance and market insights for various sectors in the Philippines, focusing on financial metrics, earnings reports, and analyst views. It includes data from the Philippine Stock Exchange (PSEi), key financial indicators, and specific insights on selected companies such as First Gen Corp (FGEN), BDO Unibank Inc, and Holcim Philippines Inc (HLCM), among others.

Main Points and Key Information

PSEi and Market Indicators

• PSEi Index: 6,685.10, down 0.69%.
• Turnover: PHP6,600.99, up 2.57%.
• PLDT ADR (USD): 62.93, down 0.30%.
• PLDT ADR (PHP): PHP2,809.51, down 0.45%.
• Ave interbank rate: 2.00%, no change.
• PHP/USD rate: 44.71, down 0.04%.

Analysts

• Head of Research / Economist: Luz Lorenzo (632) 849 8836, luz_lorenzo@maybank-atrke.com.
• Analysts: Laura Dy-Liacco, Rommel Rodrigo, Lovell Sarreal, Katherine Tan, Ramon Adviento.

Top Idea: Utilities Sector

• FGEN (PHP19.30): Downgraded to HOLD from BUY due to limited upside.
• Reasons: Near-term drag from gas plants, revised forecasts for 2014 show a 2% increase but imply a 25% YoY decline due to new gas projects.
• New Projects: Avion (USD125m) to be completed in 4Q14; San Gabriel (USD600m) to be commissioned in 1H2015.
• Preferred Dividends: Assumed to be 70% debt-financed.
• Outage at Sta Rita Plant: Led to a 9% drop in contribution from gas plants.
• Hydro Capacity: Expected to decline due to El Niño in 2H14, leading to a 33% reduction in estimates for First Gen Hydro Power Corp.
• Target Price (TP): Revised to PHP20.94 from PHP20.35, implying an 8.5% upside.
• EPS Growth: Estimated at 25.8% for 2013, down to 25.8% for 2014F, and 26.2% for 2016F.

Market Talk

BDO Unibank Inc

• 1Q14 Net Income: PHP5.5b, down 46% YoY but in line with expectations.
• Treasury Gains: Fell 76% to PHP2.2b from PHP9.2b in 1Q13.
• Core Operations: Strong performance from core businesses supported the bottom line.
• Net Interest Income: Rose 27% to PHP12.2b.
• Fee Income: Increased 16% to PHP3.9b.
• Special Dividend: PHP0.90 per share, bringing annual dividend to PHP2.10/sh, dividend yield 2.4%.
• Earnings Target for FY14: PHP22.8b, only 0.8% higher YoY, close to Maybank ATRKE forecast.
• Guidance: Near Maybank's projected PHP22.65b profit, so HOLD rating is unchanged.

Union Bank of the Philippines (UBP)

• 1Q14 Net Income: PHP1.5b, down 61.5% YoY.
• Treasury Income: Fell 87.5% to PHP422m from PHP3.4b in 1Q13.
• Loans: Expanded 45% YoY to PHP142.5b, boosting net interest income by 25%.
• Fee-Based Earnings: Surged 73% to PHP882m.
• Thrift Bank Unit: City Savings Bank contributed PHP400m in net profit.
• Rating: HOLD, based on a target price of PHP127/sh.

Holcim Philippines Inc (HLCM)

• 1Q14 Profit Growth: 17% YoY to PHP1.67b.
• Recurring Revenues: Up 25%.
• Total Revenues: Up 12.4% to PHP8b.
• Operating Income: Up 25% to PHP2.4b.
• Operating Margin: Improved by 3ppt due to efficiency.
• Rating: BUY.

Trans-Asia Oil and Energy Development Corp (TA)

• 10-Year Note: Signed a PHP500m corporate notes facility with CHIB and BDO.
• Purpose: Fund projects and working capital.
• Rating: BUY.

Marcventures Mining and Development Corp (MARC)

• Mine Operations Suspension: Responded to MGB's order, stating it has valid permits.
• MPSA No. 016-93-XI: Covers 4,799 ha, with DMPF not limiting the 300-ha portion to Cantilan.
• Environmental Compliance Certificates: Issued in 2008 and 2013.
• Stance: Reiterates good faith and compliance with MGB, plans to pursue remedies.

Key Financial Metrics

Market Highlights

• BDO: Maintains HOLD rating with a target price of PHP93.50.
• UBP: Maintains HOLD rating with a target price of PHP127/sh.
• HLCM: Maintains BUY rating with a 17% YoY profit growth.
• TA: Maintains BUY rating with a new 10-year note.

The Week Ahead

• 28 April: Philippine Savings Bank, Manila Mining Corporation, Manila Electric Company.
• 29 April: Security Bank Corporation, iRipple, Inc., Citystate Savings Bank, Inc., Boulevard Holdings, Inc., Atlas Consolidated Mining & Development Corporation, Philippine Trust Company.
• 30 April: Primetown Property Group, Inc., Nextstage, Inc., SM Investments Corporation, Metropolitan Bank & Trust Company, Republic Glass Holdings Corporation.

Upcoming Events

• Annual Stockholder's Meeting: Multiple companies listed.
• Analysts' and Investors' Briefing: Scheduled for several firms.

Summary of Ratings and Target Prices

This summary outlines the key financial and market insights, analyst ratings, and updates for selected companies and the overall market as of 28 April 2014.