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Daily Edge Summary - July 16, 2015

Core Content Overview

This report provides an overview of the Philippine financial market performance as of July 15, 2015, along with insights from analysts and key financial updates from various sectors. The PSEi index closed at 7,559.04, showing a 0.27% increase. The market turnover was PHP8,494.59, with a 48.28% rise. The report also highlights the closure of financial markets on July 17, 2015, and the resumption of trading on July 20, 2015.

Key Financial Highlights

• PSEi: 7,559.04 (0.27% increase)
• Turnover (PHPm): 8,494.59 (48.28% increase)
• PLDT ADR (USD): 63.48 (0.05% increase)
• PLDT ADR (PHP): 2,870.25 (0.09% increase)
• Ave interbank rate: 2.50 (-3.13 bps)
• PHP/USD rate: 45.20 (0.01% increase)

Analysts

The report is authored by several analysts from Maybank ATR Kim Eng, including:

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

Top Idea

• Financial markets will be closed on July 17, 2015.
• Trading resumes on July 20, 2015.

Banks

Rizal Commercial Banking Corp (RCB)

• Share Price: PHP37.50
• Target Price (TP): PHP62
• Upside: 65%
• Recommendation: BUY
• Key Performance:
  • Net profit for 1H15 reached PHP2.53b, up 25% YoY, aligning with the FY15 estimate of PHP5.1b.
  • Annualized ROE was 9.3%, lower than 12.4% in 1Q15 due to a PHP8b capital infusion.
  • Net interest income increased by 3% to PHP3.8b, while non-interest income rose by 21.3% to PHP2,530m.
  • Trading and securities gains were zero in 2Q15, but were PHP1,723m in 1H15.
  • Loans excluding interbank grew by 18%, outperforming the industry's 14.5% growth.
  • NIM contraction of 12bps to 4.2% led to weaker-than-expected net interest income.
• Earnings Forecast:
  • FY15F: PHP5.1b (EPS: PHP3.34)
  • 2016F: PHP6.04b (EPS: PHP4.31)

Market Talk

Consumer

• EMP (Emperador Inc):
  • 1H15 net income likely reached PHP3.3b, a 7.9% YoY increase.
  • Revenues grew by 38% to PHP17.8b, driven by the acquisition of Whyte and Mackay.
  • 2Q15 revenues increased by 127% to PHP12.3b, with earnings up 48% to PHP2b.
• CIC (Concepcion Industrial Corp):
  • Preliminary 2Q15 results show sales increased by 15-20% YoY and net income up by 10-15%.
  • The company unveiled its 2020 vision to expand sales and bottom line 5x by being a preferred consumer lifestyle provider.

Conglomerates

• Ayala unit acquires 50% stake in Generika:
  • Ayala Healthcare Holdings Inc acquired a 50% stake in Generika from Julien Bello's family.
  • Teodoro Ferrer and his group will retain the remaining 50% ownership and continue as president and CEO.

Oil

• PNX (Phoenix Petroleum Philippines Inc):
  • Secured a PHP39m contract to supply fuel for the Malaya thermal power plant.
  • The contract involves 15m liters of industrial diesel oil for a 650MW power plant in Pililla, Rizal.

Utilities

• Singapore firm eyes 50MW solar plant in the Philippines:
  • Aurora Partners Pte Ltd, a joint venture between juwi Renewable Energies Pte Ltd and Asia Green Capital Partners, plans a 50MW solar project by 2017.
• EU commits PHP12b grant to the energy sector:
  • The European Union has committed a PHP12b grant over the next six years to support the Department of Energy's electrification target and renewable energy initiatives.

Earnings and Valuations Table

The Week Ahead

• July 16:
  • Robinsons’ Retail Holdings, Inc.
  • RFM Corporation
  • Petroenergy Resources Corporation
  • Island Information and Technology, Inc.
• July 17:
  • Iripple, Inc.
  • Macroasia Corporation

Conclusion

The report outlines the performance of the Philippine financial markets and highlights key developments in the banking, consumer, conglomerates, oil, and utilities sectors. RCB's performance is noted for its net profit growth and strong recommendation, while other companies like EMP and CIC are highlighted for their improved financial results. The report also mentions the upcoming events for various firms and provides detailed financial forecasts for the coming years.