20131216-Maybank_KERPL-Daily_Edge_11页_408kb

Daily Edge Summary - 16 December 2013

Core Content Overview

This report provides an analysis of the Philippine stock market as of 13 December 2013, covering key indices, company-specific updates, and market outlook. It highlights the performance of various sectors including Consumer, Banks, Property, Utilities, and Telcos, along with recommendations and financial projections.

Key Market Indicators

Analysts Contact

• Luz Lorenzo – Head of Research / Economist

  • Phone: (632) 849 8836
  • Email: luz_lorenzo@maybank-atrke.com

• Laura Dy-Liacco – Analyst

  • Phone: (632) 849 8840
  • Email: laura_dyliacco@maybank-atrke.com

• Rommel Rodrigo – Analyst

  • Phone: (632) 849 8839
  • Email: rommel_rodrigo@maybank-atrke.com

• Lovell Sarreal – Analyst

  • Phone: (632) 849 8841
  • Email: lovell_sarreal@maybank-atrke.com

• Katherine Tan – Analyst

  • Phone: (632) 849 8843
  • Email: kat_tan@maybank-atrke.com

• Ramon Adviento – Analyst

  • Phone: (63) 28498845
  • Email: ramon_adviento@maybank-atrke.com

Top Idea: JFC (PHP166.00)

• Rating Change: Upgraded from HOLD to BUY
• Reasoning: Share price corrected by 13% from a record high of PHP185, presenting a buying opportunity.
• Performance: JFC has been one of the best-performing stocks this year, up 59.3% YTD.
• Upside Potential: 15% to target price of PHP191.
• Fundamentals: Strong brand acceptance and affordable pricing give JFC an advantage in raising ASP.
• Same-Store Sales: Continued buoyancy in October to early December, at least matching the 8.5% YoY increase in 3Q13.
• Cost Inflation: YTD cost inflation at 0.5%, lower than expected 1.5%, and projected to rise to 2.5% in 2014F.
• Dividend Potential: Strong cash generation allows for potential special cash dividends.
• Forecasted Dividend: PHP1.81 per share in 2014F, which is about one third of current earnings.
• Key Financials (2013F vs. 2014F):

Market Talk Highlights

Banks

• BPI: Announced a rights issue of up to 395m shares, with an estimated PHP25b in proceeds.
  • Discount expected: 25%–30%
  • Issue price range: PHP63.75 to PHP68.30
  • Share expansion: 10.3%–11%
  • EPS dilution: ~6.8%
  • BVPS increase: 9%
  • ROE drop: from 17.7% to 16.4%
  • Capital adequacy: CET1 ratio may increase by more than 300bps to ~14% on a solo basis and ~15.7% on a consolidated basis.

Property

• Ayala and SM Rivalry: PRA will bid out a reclamation project, with Ayala Land Inc (ALI) and SM Prime Holdings Inc (SMPH) as potential bidders.
• ALI: Recommended as a BUY, with a target price of PHP39.50.
• SMPH: Under review, with a target price of PHP20.34.

Utilities

• MWC: Awarded a bulk water supply contract for MCWD, with a 20-year WPA for 18mld in the first year and increasing thereafter.
• Boracay Water: Approved rate hike for 2014, effective 15 days after publication in two national newspapers.
• AEV: Purchased 3.77m shares of AP at PHP31.70, raising its ownership to 76.88%.

The Week Ahead

Several companies are set to hold their Annual Stockholders' Meetings, including:

• Century Peak Metals Holdings Corporation
• Philcomsat Holdings Corporation
• Paxys, Inc.
• BHI Holdings, Inc.
• Geograce Resources Philippines, Inc.
• Dizon Copper Silver Mines, Inc.
• Calata Corporation
• Millennium Global Holdings, Inc.
• Cyber Bay Corporation
• Steniel Manufacturing Corporation

Earnings and Valuations (as of 13 December 2013)

Banks

Property

Consumer

Telcos

Key Takeaways

• JFC is upgraded to BUY due to strong fundamentals and the opportunity to accumulate during the share price correction.
• BPI is set to issue up to 395m shares, with a likely discount and dilution effects on EPS and ROE.
• MWC is involved in a significant water supply contract and has received approval for rate hikes.
• AEV has increased its stake in AP to 76.88% through a share purchase.
• The Consumer sector shows strong upside potential, with JFC, PIP, RFM, URC, PF, and DMPL all recommended as BUY.
• Banks and Property sectors are highlighted for their growth and investment potential.