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Daily Edge Summary - August 4, 2015

Core Content

The Daily Edge report from August 4, 2015, provides an overview of the Philippine stock market performance and key insights into various sectors and companies. It includes financial metrics, analyst views, and upcoming events for the week.

Market Performance

• PSEi Index: Closed at 7,573.26, with a 0.31% increase.
• Turnover: PHP6,563.77 million, with a -21.47% change.
• PLDT ADR (USD): Closed at 63.48, with a -1.35% change.
• PLDT ADR (PHP): Closed at 2,899.39, with a -1.49% change.
• Ave interbank rate: 2.50%, no change.
• PHP/USD rate: 45.67, with a 0.02% increase.

Analysts

The report lists several analysts from Maybank ATR Kim Eng, including:

• Luz Lorenzo – Head of Research / Economist
• Ramon Adviento
• Michael Bengson
• Rommel Rodrigo
• Lovell Sarreal
• Katherine Tan

These analysts provide insights and recommendations for various stocks and sectors.

Top Idea – Conglomerates

MPI (PHP5.00): Strong Results Despite Challenges

• 2Q15 Core Net Income: Increased by 38% YoY to PHP3.3 billion.
• 1H15 Core Earnings: Up by 27% to PHP5.9 billion, 68% of full-year forecast.
• Reasons for Growth: Higher stakes in power and toll road businesses, strong traffic growth, and higher volume in water utility business.
• Recommendation: Maintain BUY and Target Price (TP) of PHP6.70.

Market Talk

Property: SMPH

• Core Income Growth: 15% YoY to PHP5.8 billion in 2Q15, bringing 1H15 to PHP11.2 billion.
• Consolidated Revenues: Rose 8% to PHP19.4 billion due to malls, residential projects, and offices.
• Rental Revenues: Up 10% to PHP19.4 billion due to new malls and increased office space.
• Residential Sales: Grew 3.4% to PHP12.3 billion, supported by project completions and reservation sales.
• Cinema Ticket Sales: Increased 2.1% YoY to PHP2.4 billion, recovering from a decline in 1Q15.

Banks: PNB

• Net Income: Up 26% YoY to PHP2.4 billion in 2Q15.
• Core Lending: Rose 10%, and non-interest income (excluding trading gains) climbed 19%.
• Net Earnings (1H15): Reached PHP3.6 billion, 75% of FY15 forecast and 57% of consensus.
• Loans: Grew 25% YoY to PHP331.9 billion.
• NPL Ratio: Improved to 2.87%, and NPL cover stood at 119.9%.
• Capitalization: CAR at 19.6%, CET at 16.6%.
• Recommendation: Maintain HOLD.

Media: SMC

• Legal Issue: SMC's Ang sued Gozon group for syndicated estafa over PHP1 billion down payment.
• Impact: The cases were filed against Gozon and other officers in their personal capacity, which is not expected to affect GMA7's forecasts and valuation.

Telcos: GLO

• Core Net Profit (2Q15): PHP4.45 billion, up 5% YoY.
• 1H15 Core Net Profit: PHP8.63 billion, up 14%.
• Revenue Growth: Sustained with service revenues up 13%, driven by mobile data (+50%), broadband (+29%), and fixed line data (+22%).
• Offsetting Factors: 6% decline in SMS revenue and 13% increase in opex and subsidies.
• Recommendation: Maintain BUY.

Utilities: Meralco

• Project: Commissioning of a PHP1.16 billion Pagcor substation in Sep 2015.
• Purpose: To ensure capacity for consumers in Manila Bay and Parañaque City.
• Status: Necessary permits and clearances have been secured.

Earnings and Valuations Table (as of 03 August 2015)

The Week Ahead

Key Highlights

• MPI: Strong results with core profit growth, but higher interest expenses expected in 2H15.
• SMPH: Achieved 15% core income growth in 2Q15, contributing to 52% of full-year estimates.
• PNB: Net income up 26% YoY, with improved NPL ratio and substantial capitalization.
• GLO: Core net profit growth in 2Q15, driven by mobile data and broadband.
• Legal Issues: SMC's Ang filed estafa charges against Gozon, but it's not expected to affect GMA7's valuation.
• Meralco: Plans to commission a new substation to ensure sufficient capacity in Manila Bay and Parañaque City.

This summary encapsulates the main financial highlights, analyst recommendations, and upcoming events for the week, providing a clear overview of the market and key players.