2019 05 14 PH D

TUE 14 MAY 2019
Stocks in Focus:
AC: Earnings lag on lower than expected AC

Energy, IMI profit
1Q19 net profit grew 4.9%, lagging behind estimates. The 1Q19 net profit of AC grew just (AS OF MAY 10, 2019)
4.9% to Php8.03 Bil as the growth in the net income contribution of ALI and GLO was partly offset INDICES
by the decline in profits of AC Energy, MWC, and IMI. Although 1Q19 profit of GLO outperformed Close Points % YTD%
PSEi 7,742.20 -13.42 -0.17 3.70
of our estimates, the lower than expected profits of AC Energy and IMI brought total AC 1Q19
All Shares 4,791.26 -16.59 -0.35 6.05
profit below COL and consensus forecast. Financials 1,738.83 20.27 1.18 -2.30
Holding Firms 7,345.91 -68.36 -0.92 0.06
Maintain BUY with FV estimate of Php1,077. We are raising our FV estimate for AC from Industrial 11,528.32 23.92 0.21 5.27
Mining & Oil 7,325.28 -140.80 -1.89 -10.67
Php1,070 to Php1,077 as we factored in higher FV estimate for GLO (from Php1,800 to Php1,890),
Property 4,118.00 -0.74 -0.02 13.51
slightly offset by lower FV estimates for MWC (from Php28.10 to Php26.80) and IMI (from Php14.50 Services 1,595.57 -10.75 -0.67 10.60
to Php10.50). As for AC Energy, we believe the net income decline is not a cause for concern
as it was a result of the sell down of their stake in GNPower Mariveles and seasonality effect Dow Jones 25,324.99 -617.38 -2.38 8.56
S&P 500 2,811.87 -69.53 -2.41 12.17
on the wind farm. Long term potential of AC Energy remains bright on the back of aggressive
Nasdaq 7,647.02 -269.92 -3.41 15.25
expansion of its international renewable platforms. We also believe that at the current price of
AC, the negative outlook on MWC and IMI have been priced in. At the current price of Php890,
INDEX GAINERS
AC is trading at a 21% discount to our NAV estimate of Php1,128.
Ticker Company Price %
RLC Robinsons Land Corp 23.80 3.25
Top Stories: BPI Bank of the Phil Islands 84.75 2.73
MPI Metro Pacific Inv Corp 4.29 2.14
AP Aboitiz Power Corp 35.20 2.03
MAXS: Healthy operations amidst weak local consumer appetite
ICT Int'l Container Term 133.00 1.53
FGEN: 1Q19 recurring net income beats forecast
CEB: 1Q19 earnings beat estimates on lower-than-expected opex
INDEX LOSERS
PGOLD: Robust earnings growth in 1Q19 due to strong sales
Ticker Company Price %
COSCO: 1Q19 core earnings grow 9.1% y/y, in line with estimates AEV Aboitiz Equity Ventures 48.60 -5.08
CIC: Profits grow in 1Q19 despite some short-term challenges in topline TEL PLDT Inc 1240.00 -3.88
GTCAP: GTCAP exchanges stake in Pro-Friends for 702 hectares of land SCC Semirara Mining 21.70 -3.13
SMC San Miguel Corp 190.00 -2.81
LTG: 1Q19 earnings in line with estimates
BLOOM Bloomberry Resorts 10.90 -1.80
SCC: 1Q19 earnings below COL and consensus forecast
TOP 5 MOST ACTIVE STOCKS

Other News
Ticker Company Turnover
ALI Ayala Land Inc 555,660,700
US Economy: China is raising tariffs on US$60Bil of US goods AC Ayala Corporation 451,117,700
Economy: Foreign direct investments net inflows rise by 20.2% in February 2019 SMPH SM Prime Hldgs Inc 445,839,700
Economy: Infra spending down 5.7% in March GTCAP GT Capital Hldgs Inc 267,088,600
SM SM Investments Corp 261,713,000
Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of
the COL Financial website as these may be subject to tampering or unauthorized alterations.
DAILY NOTES I PHILIPPINE EQUITY RESEARCH
TUE 14 MAY 2019
Market Summary:
The local stock market declined amidst escalating US-China trade war. This is after the United
States raised tariffs on US$200Bil worth of Chinese imports from 10% to 25%.
The PSEi slid 13.42 points or 0.17% to close at 7,742.20. The main drags were SM (-1.60%), AEV
(-5.08%), TEL (-3.88%), SMC (-2.81%), and SMPH (-0.39%). On the other hand, the top gainers
were BPI (+2.73%), BDO (+1.34%), JGS (+1.32%), ICT (+1.53%), and ALI (+0.43%).
SMC (-2.81%) declined, while HLCM (+6.10%) rose following the news that the SMC will acquire
85.73% stake on HLCM for an EV of US$2.15Bil.
Value turnover decreased to Php7.6Bil from Php9.2Bil in the previous session. Meanwhile,
foreigners continued to be net sellers, liquidating Php688Mil worth of shares.
COL Financial Group, Inc. 2

TUE 14 MAY 2019
Stocks in Focus:
RICHARD LAÑEDA, CFA

SENIOR RESEARCH MANAGER
AC: Earnings lag on lower than expected AC Energy,
IMI profit
AYALA CORPORATION
BUY 1Q19 net profit grew 4.9%, lagging behind estimates/ The 1Q19 net profit of AC grew
PHP1,077 just 4.9% to Php8.03 Bil as the growth in the net income contribution of ALI and GLO was
partly offset by the decline in profits of AC Energy, MWC, and IMI. Although 1Q19 profit of GLO
outperformed of our estimates, the lower than expected profits of AC Energy and IMI brought
total AC 1Q19 profit below COL and consensus forecast.
Exhibit 1. Results summary

y/y % of estimates
1Q18 1Q19
in Php Mil change COL Consesnsus
AC net income 7,657 8,031 4.9% 23.0% 21.2%
Earnings of sub sidiaries
ALI 6,517 7,322 12.4% 22.1% 21.4%
GLO 4,796 6,732 40.4% 36.0% 34.6%
BPI 6,247 6,720 7.6% 25.6% 24.7%
IMI (US$ '000) 313 1,080 -65.7% 3.2% 3.1%
MWC 1,689 1,233 -27.0% 19.7% 21.0%
AC Energy 593 3 -99.6% 0.1% -
Source: AC, GLO, BPI, IMI, MWC, Bloomberg, COL estimates
Exhibit 2. Equity in net earnings from subsidiaries

1Q18 1Q19 y/y change
in Php Bil
ALI 3.04 3.50 15.0%
GLO 1.46 2.10 44.0%
BPI 3.05 3.20 5.0%
MWC 0.85 0.60 -29.0%
AC Industrials (IMI and AC Automotive) 0.22 -0.33 -253.0%
AC Energy 0.59 0.003 -99.6%
Others 0.00 0.80 -
TOTAL 9.20 9.87 7.3%
Source: AC, GLO, BPI, IMI, MWC, Bloomberg, COL estimates
ALI 1Q19 net profit grew 12.4% on strong leasing business. ALI’s 1Q19 net income grew
12.4% y/y to Php7.32Bil. This was driven by an 8.1% growth in revenues and higher operating
profit margin. Higher margin of offices for sale (+3ppts) and commercial lots (+5ppts), coupled
with muted increase in GAE (+1% y/y) pushed operating profit margins up 150bps. Despite
robust net income growth of 12.4, it is still lagging behind COL and consensus estimates due
to lower than expected residential revenues. Nevertheless, we expect revenue bookings to
pick up in the succeeding quarters as this is merely a result of the timing of booking and
construction completion.

TUE 14 MAY 2019
Total real estate revenues grew 8.1% y/y to Php39.15 Bil driven by the office for sale segment,
commercial lot sales, and the leasing business. Office for sales jumped 99% to Php3.02 Bil as a
result of the completion progress of Alveo Financial Tower and new bookings from One Vertis
Plaza.
Shopping centers and office revenues continued to trend up in line with estimates on higher
lease rates and GLA. ALI ended the quarter with 1.91 Mil sqm of retail space, 6.1% higher than a
year ago. Office revenues were up 26.8% y/y driven by higher contribution from spaced added
in 2017and 2018. Office GLA expanded 9% y/y to 1.11 Mil sqm. Meanwhile, hotel and resorts
revenues jumped 25% on the back of a 29% increase in number of rooms compared to the
same period last year.
Residential development revenues were unusually weak in 1Q19 as it was down 0.9% y/ to
Php22.42 Bil. This was due to lower revenues from ALI’s Malaysian subsidiary, MCT. Due to
the full sell-out of MCT’s projects in Cybersouth, revenue booking will be lower this year. In
1Q19, MCT booked Php1.1 Bil vs Php1.72 Bil in the same period last year. Excluding MCT Bhd,
residential revenues were still weak; growing by just 2% y/y. Management attributed this to
the timing of the booking of sales and timing of construction progress of projects. We are
not concerned about the low growth registered in 1Q19 as we believe in the management’s
statement that this was due to timing issue of booking and construction. We expect revenues
to pick up in the succeeding quarters, underpinned by the strong take-up sales in 2017 and
2018 which registered growths of 13% and 16% respectively.
Exhibit 3. ALI Revenue breakdown

1Q18 1Q19 % change
in Php Mil
Residential development 22,616 22,419 -0.9%
Office for sales 1,519 3,023 99.0%
Commerical lots 1,998 2,335 16.9%
Shopping centers 4,484 5,097 13.7%
Office leasing 1,696 2,151 26.8%
Hotels and resorts 1,531 1,914 25.0%
Gross construction 17,432 12,754 -26.8%
Property management 1,569 1,416 -9.8%
Sub-total 52,845 51,109 -3.3%
Intercompany adjustments -16,627 -11,962 -28.1%
Total real estate revenues 36,218 39,147 8.1%
Source: ALI
GLO profit grows 40% on robust revenues, lower than expected expenses. GLO’s 1Q19
profits grew 40% y/y to Php6.7Bil due to its strong data revenue growth and lower than expected
operating and subsidy expense. Results were ahead of estimates, accounting for 36.0% of COL
and 34.6% of consensus full year forecasts, because of lower than expected interconnection
charges and subsidy expenses. Revenues remain buoyant on strong data performance. GLO’s

TUE 14 MAY 2019
1Q19 service revenues were up by 12.7% y/y to Php36.0Bil from Php31.9Bil in the same period
last year, accounting for 24.7% of COL’s full year estimates. Growth was driven by the robust
performance of GLO’s data revenues, which now account for 69% of total service revenues
compared to 57.8% during the same period last year. Of GLO’s total data revenues, mobile data
accounted for the lion’s share with 46%, while home broadband and corporate data accounted
for 14% and 9% respectively.
During GLO’s 1Q19 earnings result, management reiterated their guidance for 2019- for
revenues to grow by high single-digits from the 2018 levels given the company’s aggressive
network expansion. Management also expects EBITDA margin for hover around 50% for 2019
as the margins would still be impacted by the increasing contribution of lower-margin data
related products
BPI 1Q19 earnings up 7.6% as expected. BPI’s 1Q19 earnings rose 7.6% y/y to Php6.7Bil
was driven by strong net interest income (+28.3% y/y) and non-interest income (+13.3%
y/y). Earnings met our estimates as the higher-than-expected net interest income and non-
interest income were offset by higher-than-expected provisions and operating expenses. Note
that provisions jumped to Php1.8Bil from Php785Mil in the same period last year, driven by
provisions for Hanjin loans. Meanwhile, the increase in operating costs has been driven by
higher expenditures in technology and premises.
Net interest income in the first quarter expanded by 28.3% y/y to Php16.1Bil driven by higher
volume and margins. According to the bank, loans expanded by 11.5% y/y, buoyed by strong
growth in corporate loans, credit card loans, and housing loans at 11.8% y/y, 20.3%y/y, and 9.9%
y/y, respectively. This drove total assets up by 8.8% y/y. Meanwhile, based on our estimates, net
interest margin expanded by ~47 bps y/y and ~13 bps q/q. Similar to previous quarters, the
improvement was driven by asset re-pricing, partially offset by higher funding costs.
Supply rut and economic slowdown causes IMI core income to plummet by 65.7% y/y. IMI’s
reported net income in the first quarter of 2019 fell by 94.0% y/y to US$335,000, significantly
missing estimates as this figure only accounts for 1.0% of both COL and consensus full-year
net income forecasts. IMI missed on revenues and margins as a result of slower demand and
ongoing global supply shortage.
IMI’s revenues in 1Q19 remained largely flat at US$323.05 Mil, inching down by 0.8% y/y. This
was slightly below COL and consensus forecast since it only accounted for 20.7% and 20.2% of
full-year forecasts, respectively. The slump in revenues was caused by IMI’s consumer segment
which saw a 53% y/y drop in sales to US$25.3 Mil – a result of the weaker global economy
arising from numerous issues such as the trade fallout between US and China, among others.
IMI’s telco segment also saw a 12% decline to US$25.8 Mil. On the bright side, IMI’s core
segments such as automotive and industrial saw a 20% and 10% y/y increase, respectively.

TUE 14 MAY 2019
Despite revenues just being slightly lower than our forecasts the snowball effect of higher
input costs and flattish fixed costs caused earnings to drop at a much faster pace. 1Q19 gross
profit margin of IMI dropped by 1.8 percentage points y/y to 9.0% which is largely due to
the impact of the ongoing global supply constraint for components. We also suspect that
IMI’s sudden ramp up of contracts affected its margins on a year-on-year basis as IMI heavily
invested in new technology required for the said contracts. These caused IMI’s gross profit and
operating profit to drop by 17.2% and 59.1% respectively.
MWC 1Q19 profit drops 27% on water supply shortage. MWC’s 1Q19 net income dropped
27% y/y to Php1.2Bil largely due to the impact of the water supply shortage experienced
by the Manila Concession. Earnings of the Manila Concession declined 16% y/y due to the
one-time bill waiver program implemented by the company and because of the Php534
Mil financial penalty imposed by MWCC. In addition, remediation efforts conducted by the
company resulted to slightly higher operating expenses. According to the company, excluding
these items, net profit of the Manila Concession would have grown by 16% y/y while core
profit of MWC as a group would have grown 22%.
AC Energy disappoints on lower contribution from investees companies, higher interest

expense. AC Energy’s net profit for 1Q19 dropped from Php593 Mil to just Php2.5 Mil on lower
earnings from its investee companies. Equity earnings of AC Energy dropped 39.5% from
Php822 Mil to Php496.9 Mil. AC Energy booked lower equity contributions from GNPower
Mariveles on scheduled outage combined with the impact of its reclassification to an asset
held for sale in light of the thermal sell-down to Aboitiz. This led to ~Php200Mil less in equity
contribution from GNPower. The El Niño season also led to a poor wind regime that resulted
in a Php200 Mil decline in equity earnings contributions from NorthWind and North Luzon
Renewables. Lastly, higher interest expense incurred from AC Energy’s issuance of US$410
million in green bonds also led to higher interest expense of around Php200 Mil.
Maintain BUY with FV estimate of Php1,077. We are raising our FV estimate for AC from
Php1,070 to Php1,077 as we factored in higher FV estimate for GLO (from Php1,800 to
Php1,890), slightly offset by lower FV estimates for MWC (from Php28.10 to Php26.80) and
IMI (from Php14.50 to Php10.50). As for AC Energy, we believe the net income decline is not a
cause for concern as it was a result of the sell down of their stake in GNPower Mariveles and
seasonality effect on the wind farm. Long term potential of AC Energy remains bright on the
back of aggressive expansion of its international renewable platforms. We also believe that
at the current price of AC, the negative outlook on MWC and IMI have been priced in. At the
current price of Php890, AC is trading at a 21% discount to our NAV estimate of Php1,128.

TUE 14 MAY 2019
Top Stories:
ANDY DELA CRUZ MAXS: Healthy operations amidst weak local

SENIOR RESEARCH ANALYST
consumer appetite
MAX’S GROUP INC.
BUY 1Q19 earnings up 17.6% y/y to Php145 Mil. MAXS reported that its net income for the first
PHP19.00 quarter of the year rose by 17.6% y/y to Php145 Mil. Results were slightly below estimates
since it only accounted for 18.5% and 18.9% of COL and consensus full-year forecasts. Still, we
don’t think that we should be too concerned since the underperformance was only due to the
jump in interest expense by 62.8% y/y to Php54 Mil. Operating income, which reflects core
operations, grew by 22.9% y/y to Php251 Mil and is in line with our forecast (21.2% of full-year
estimate). Note that first quarter results usually account for around 21% to 23% of full-year
results. Profitability in the quarter continued to improve from year-ago levels. For instance,
GPM for the quarter increased by 90 bps y/y to 26.2% from 25.3%. Despite the spillover of
high inflation into 1Q19, menu mix initiatives as well as supply chain productivity measures
implemented starting the first half of 2018 still paved the way for its profitability this period.
OPM also expanded by 1.2 percentage points to 7.5% owing to more efficient back-end
operations.
Revenues on the one hand grew at a slower pace of 4.2% y/y to Php3.4 Bil. This is expected
since it accounts for 21.7% of both COL and consensus forecasts. MAXS reassures that the slow
revenue growth was only due to the months of January and February when consumers were
mostly hesitant on spending. Note that no price increases were rolled out during the period.
Exhibit 1: Results summary

% of
in PhpMil 1Q18 1Q19 % Change COL Consensus
Revenues 3,220 3,355 4.2 21.7 21.7
Gross Profit 816 879 7.7 20.6 20.7
Gross Margin (%) 25.3 26.2 - -
EBIT 204 251 22.9 21.2 21.8
EBIT Margin (%) 6.3 7.5 - - -
Net Income 124 145 17.6 18.5 18.9
Net Margin (%) 3.8 4.3 - - -
Source: MAXS, COL Estimates, Bloomberg
Revenues up 4.2% y/y to Php3.4 Bil, as expected. MAXS’ revenues for the quarter grew by
a slower pace of 4.2% to Php3.4 Bil. As discussed earlier, MAXS said that the slow revenue
growth was only due to the months of January and February when consumers were mostly
hesitant on spending. Starting the month of March and April, its sales have already picked
up and should begin its revenue growth back to its previous momentum. Same store sales
growth for the quarter remained flat and MAXS added a total of 14 stores for the period and
closed down 13 stores.

TUE 14 MAY 2019
Systemwide sales also grew at roughly the same pace of 3.4% y/y to Php4.6 Bil. MAXS registered
positive growth for all of its key brands, namely Max’s (+3.4% y/y), Pancake House (+4.3% y/y),
Yellow Cab (+4.9% y/y), and Krispy Kreme (+7.4% y/y).
Narrative continues as margins continue to recover. MAXS was able to negate the cost
pressures from 4Q18 coming into 1Q19 through its various initiatives. As discussed earlier,
GPM of MAXS improved by 90 bps y/y to 26.2% in 1Q19 owing to the fresh set of fat-trimming
initiatives which were rolled out in April. New initiatives rolled out on the store level included
new menu offerings which improved product sales mix towards higher margin products
(through forecasting month-ahead raw material costs and immediately designing new menu
offerings based on said data to get the most profitability while keeping in mind the value to
customers), among others.
On its back-end operations, management also reduced operating expenses through a

reduction in the number of warehouses used due to better inventory management, among
others. All these factors expanded MAXS’ operating profit margin in the first quarter to 7.5%,
higher by 120 bps y/y. This caused its operating profits to jump by 22.9% y/y to Php251 Mil.
Management aims to grow faster following 1Q19. Following the results delivered in 1Q19,
MAXS reiterates its optimism on the next few quarters. In fact, management mentioned that
there is still a lot of room for improvement in terms of its profitability and that there are already
concrete productivity measures in the pipeline for 2019. Aside from its profitability initiatives,
MAXS discussed that there are also plans to bolster up its revenue growth back to its historical
growth figure of double digits.
Factoring in higher interest expense and IFRS 16 impact. We are factoring the higher
interest rates and changes in the accounting method due to the implementation of IFRS 16.
As a result of the higher financing costs, our net income figure in 2019 declined by 7.2% to
Php728 Mil and in 2020 by 5.2% y/y.
Exhibit 2: Summary of changes in forecast

2019E 2020E
in PhpMil Old New % Change Old New % Change
Revenues 15,474 15,256 (1.4) 17,052 17,054 0.0
Gross Profit 4,275 4,235 (0.9) 4,792 4,797 0.1
Gross Margin (%) 27.6 27.8 - 28.1 28.1 -
Operating Income 1,185 1,196 0.9 1,420 1,418 (0.1)
Operating Margin (%) 7.7 7.8 - 8.5 8.3 -
Net Income 785 728 (7.2) 947 898 (5.2)
Net Margin (%) 5.2 4.8 - 5.6 5.3 -
Fair value estimate 19.70 19.00 (3.6)
source: COL estimates

TUE 14 MAY 2019
Maintain BUY. Following our decreased earnings forecast due to higher interest rates, our
fair value estimate declined by 3.6% to Php19.0/sh. We are maintaining our BUY rating for
MAXS. At our fair value estimate of Php19.0/sh, MAXS implied 2019E P/E of 20.4X is still below
the historical average P/E multiple of its restaurant peers. We continue to believe that MAXS
deserves to trade in line with its peers given its similarly attractive medium-term outlook, its
strong brand portfolio, proven track record of growing revenues, as well as the recovery of
margins from a very low level in 2017. Its resiliency amidst cost pressures in 2018 also gives
us confidence that it will be able to navigate cost pressures in the years to come, as well as
provide investors with earnings stability and transparency.
GEORGE CHING
FGEN: 1Q19 recurring net income beats forecast
FIRST GEN CORPORATION 1Q19 recurring net income beats forecast. FGEN’s 1Q19 net income increased 102.5% to
BUY US$81Mil. Excluding one-offs items, recurring net income rose 28.3% to US$77Mil, higher than
PHP26.80 forecasts, representing 38.5% of COL forecast and 34.1% of consensus forecast. The higher
than expected earnings was mainly driven by the better than expected performance of EDC
and FG Hydro. Gas plants’ earnings declined 2% to US$45Mil, but still exceeded forecast,
representing 30% of our full year forecast.
Exhibit 1: FGEN 1Q19 results summary
in US$Mil 1Q18 1Q19 % Change % of FY COL forecast

Net revenues 470.0 534.0 13.6 25.5
Net Income 40.0 81.0 102.5 40.6
Net margin (%) 8.5 15.2 6.7 -
source: FGEN, COL estimates
Gas plants’ earnings contribution higher than expected. The recurring earnings
contribution of FGEN’s gas plants (Sta. Rita, San Lorenzo, San Gabriel and Avion) declined
2% to US$45Mil, but still exceeded representing 30% of our full year forecast. San Gabriel’s
earnings amounted to US$9.2Mil, representing 30% of our full year forecast, while the Avion
posted a net loss of Php13.5Mil (full year net income forecast of Php150Mil), as sales volume
declined 23% due to the plant’s planned outage in 1Q19.
EDC’s earnings contribution higher than forecast. EDC’s core earnings amounted to
Php3.36Bil during the quarter, 82% higher y/y, representing 37% of our full year forecast.
EDC’s revenues increased by 22% to Php10.7Bil, representing 29% of our full year forecast.
Revenues increased as EDC’s Unified Leyte plant and Tongonan plant was affected by Typhoon
Urduja in 1Q18. The revenues of Bacman, Palinpinon and Nasulo also improved.
Hydro plant earnings above forecast on higher water availability, higher WESM prices.
The Pantabangan-Masiway hydro plant’s (in which FGEN has an effective 68% stake) 1Q19
revenues rose 41% y/y to Php1.1Bil, representing 51.5% of COL forecast. Revenues were
supported by higher sales volume and selling price to the WESM, coupled with higher ancillary

TUE 14 MAY 2019
service revenues. Sales volume increased 40.3% during the period due to higher water levels
in the dam. The plant also booked Php47.8Mil from ancillary service revenues. The plant’s net
income rose 68% to Php757Mil, above forecast, representing 104% of our full year forecast.
Note that the hydroelectric plant earns bulk of its profits during the first quarter. During 2018,
1Q18 earnings of Pantangan-Masiway accounted for 150% of its full year earnings.
Maintaining BUY rating. We have a BUY rating on FGEN with a FV estimate of Php26.8/sh.
We believe that the approval of the San Gabriel contract and the delisting of EDC will improve
investor sentiment in the near term. Based on FGEN’s market price of Php20.70/sh, upside to
our FV estimate is significant at 29.3%.
FRANCES ROLFA NICOLAS CEB: 1Q19 earnings beat estimates on lower-than-

RESEARCH ANALYST
expected opex
CEBU AIR INC.
BUY CEB: 1Q19 earnings beat estimates on lower-than-expected opex. CEB’s 1Q19 net income
PHP99.00 grew 138.4% to Php3.4Bil. However, CEB booked non-core items such as forex losses, hedging
gains and gains due to sale of aircraft amounting to Php749Mil (gain) in 1Q19 and Php514Mil
(loss) in 1Q18. Excluding these, 1Q19 core net income reached Php2.7Bil, up 37.2% y/y. Results
ended ahead of both COL and consensus estimates at 44.9% and 35.9% of full-year forecasts
respectively. Note that 1Q core net income over the last three years averaged at 31% of full year
net income. The beat in our forecast was mainly due to the lower-than-expected operating
expenses.
Exhibit 1: Results Summary

% of estimates
1Q18 1Q19 % change
COL consensus
Revenues 18,261 21,177 16.0 25.1 25.2
Operating Expenses 15,997 17,345 8.4 22.8 -
Operating Income 2,264 3,832 69.3 44.5 38.4
Net Income 1,437 3,426 138.4 - -
Core net income 1,951 2,677 37.2 44.9 35.9
Net Margin (%) 10.7 12.6 - - -
source: CEB, COL estimates, Bloomberg
Higher fares and passenger volume boost revenues. CEB’s 3Q18 revenues grew 16.0%
y/y to Php21.2Bil, in line with both COL and consensus estimates at 25.1% and 25.2% of full
year forecast respectively. The growth in revenues was attributable to the 8.5% increase in
passenger volume to 5.3Mil, ahead of capacity growth of 6.0%, and 7.1% increase in total
yield to Php3,731 per passenger. Broken down, average tickets increased by 5.7% to Php2,965
while ancillary revenue per passenger increased by 13.1% to Php767. Moreover, 1Q19 cargo
revenues rose 12.7% to Php1.4Bil, on the back of a 11.4% increase in yield to Php28/kg.

TUE 14 MAY 2019
Moving forward, we expect revenues to continue growing despite the flight interruptions that
the company recently announced. Recall that CEB said that it will be reducing 10 flights a
day, out of a daily operations of ~400 flights due to unprecedented level of disruptions to its
operations. We estimate that the impact of this event will only be minimal as the cancelled
flights account for just ~2% of the company’s estimated total number of flights. Moreover, the
reopening of Boracay island, and expected arrival of bigger and more fuel efficient aircrafts in
the second half of the year should provide a boost to revenues. Note that the company guided
a capacity growth of 14% for 2019.
Exhibit 2: Passenger volume
in Php Thousands 1Q18 1Q19 % change

Passengers carried 4,876 5,289 8.5
Capacity 5,905 6,260 6.0
source: CEB
Exhibit 3: Total yield breakdown
1Q18 1Q19 % change

Average fare 2,805 2,965 5.7
Ancillary 678 767 13.1
Total Yield 3,483 3,731 7.1
source: CEB, COL Estimates
Opex up 8.4% y/y, fuel expense flat on lower jet fuel prices. Operating expenses in 1Q18
grew by 8.4% to Php17.3Bil mainly due to higher depreciation and general and administrative
expenses. Fuel expense, which accounts for the biggest portion of the company’s opex (~40%),
was flat at Php5.9Bil as a result of declining jet fuel prices. Note that the average jet fuel price
in 1Q19 was 3.9% lower at US$74.7/bbl, vs. the 1Q18 average of US$77.7/bbl. Meanwhile, the
Philippine peso depreciated by ~1.7% to an average of Php52.4/US dollar (from Php51.5/US
dollar) during the quarter.
Moving forward, we expect opex to improve given the relatively lower oil prices compared to
last year, and delivery of bigger and more fuel efficient aircrafts as mentioned above. Note that
the average jet fuel price from April 1- May 13 is at US$80.3/bbl, down 5.1% from the US$84.6/
bbl average in 2Q18. Moreover, the company has received its first A321neo aircraft, which
has 31% higher capacity than previous generation aircrafts (A320ceos). In addition, the neo
generation aircrafts are equipped with new engine choices, which bode to deliver per seat
fuel improvements of 20%. For the rest of the year, CEB is scheduled to receive 5 additional
A321neos and 5 A320neos.
Exhibit 4: Fuel costs
1Q18 1Q19 % change

Fuel Expense 5,853 5,881 0.5
Average jet fuel price per barrel (USD) 77.7 74.7 (3.9)
source: CEB, COL Estimates

TUE 14 MAY 2019
Reiterate BUY rating. We currently have a BUY rating and FV estimate of Php99.0/sh on CEB. We
continue to like CEB given the relatively lower jet fuel prices and its fleet/capacity expansions.
Moreover, valuations remain attractive. At its current price of Php82.3/sh, the stock is currently
trading at 5.5X 2019E EV/EBITDA, a discount compared to the regional average of 8.7X.
JUSTIN RICHMOND CHENG

RESEARCH ANALYST
PGOLD: Robust earnings growth in 1Q19 due to strong
sales
PUREGOLD PRICE CLUB INC.
HOLD 1Q19 earnings grow 11.9% y/y, driven by strong sales. PGOLD’s 1Q19 net income grew
PHP45.00 11.9% y/y to Php1.5Bil. This is in line with COL and consensus forecast at 22.8% and 21.6%,
respectively (usually between 21-22%). Growth was driven by the robust topline growth of
12.8% amid faster SSSG of 7.5% in 1Q19 versus 6.3% in the same quarter last year. The strong
topline growth was partly tempered by lower margins with gross margin declining by 30
bps to 17.4% as Puregold continued to be affected by less vendor support. Vendor support
remained tepid, still due to the high inflation environment in 4Q last year (spill-off in negative
consumer sentiment).
% of Full year Forecast

in PhpMil 1Q18 1Q19 %Change
COL Consensus
Net Sales 30,870 34,830 12.8 22.3 22.1
Gross Profit 5,460 6,060 11.0 22.7 22.9
Gross Margin (%) 17.7 17.4 - - -
Operating Income 2,356 2,571 9.1 27.2 25.0
Operating Margin (%) 7.6 7.4 - - -
Net Income 1,349 1,510 11.9 22.8 21.6
Net Margin (%) 4.4 4.3 - - -
Source: PGOLD, COL Estimates, Bloomberg
Robust sales growth amid faster SSSG. PGOLD’s sales grew 12.8% y/y to Php34.8Bil, in line
with estimates at 22.3% of COL and 22.1% consensus estimates. On a per segment basis,
Puregold’s SSSG accelerated to 6.9% in the first quarter from 5.1% last year, notwithstanding
the higher spending power last year due to the TRAIN law. Puregold’s basket size grew 9%,
partly offset by lower traffic count (-1.9%) as shoppers went in less frequently but purchased
higher volumes. We think the faster SSSG of Puregold was also supported by higher prices as
inflation peaked in 4Q18. Note that we have yet to see how election-related spending could
boost SSSG as PGOLD expects this to support growth in 2Q19 (possibly by around 0.5%).
Meanwhile, S&R continued to deliver a strong SSSG at 9.4% in 1Q19 amid higher basket size
(8.0%) and traffic count (1.3%).

TUE 14 MAY 2019
Margins still pressured by subdued vendor support from Puregold. Consolidated gross
margins declined by 30 bps y/y to 17.4% in 1Q19. This was driven by a 50 bps decline in
Puregold’s GPM to 16.4% as support from vendors remained subdued. The weaker support
continued to be due to the spill-off of negative consumer sentiment with companies easing
on providing merchandising support, display allowances, and listing fees for new product
launches. Management noted that vendor support remained weak but still showed some
improvement compared to what was observed in 4Q18. We think going vendor support should
continue to improve, especially in the second half of the year, as inflation has already subsided
and consumption remained healthy (with a 6.3% growth) as seen in 1Q19 GDP figures.
Meanwhile, S&R gross margins improved by 30 bps, but this was not enough to offset the
decline in Puregold. The better GPM was partly due to the stronger peso. This allowed S&R’s
strong sales growth of 20% to flow completely to its bottomline with net margin actually 10
bps higher y/y to 7.0%.
Maintain HOLD rating. We currently have a HOLD rating on PGOLD with a FV estimate
of Php45.0.sh. We continue to like PGOLD given the company’s strong position in taking
advantage of the growth opportunities in the retail sector. Furthermore, its growth outlook
remains positive as the consumer environment is expected to improve given that inflation has
already eased. This should also support the recovery in spending of consumer companies and
lead to improved vendor support. However, at PGOLD’s current price of Php44.35/sh, there is
no more upside to our FV estimate.

RESEARCH ANALYST
COSCO: 1Q19 core earnings grow 9.1% y/y,
in line with estimates
COSCO CAPITAL INC.
BUY 1Q19 core earnings grow 9.1% y/y. COSCO’s 1Q19 consolidated income (including minority)
PHP11.00 jumped to Php10.1Bil from Php1.9Bil in the same quarter last year. The huge jump was largely
driven by the ~Php8.0Bil net gain from the sale of Liquigaz last November 2018. Meanwhile,
recurring income grew 9.1% y/y to Php1.3Bil, in line with estimates at 24.2% of COL forecast.
Historically, 1Q19 net income accounted for around 23% of full-year results. Growth was amid
a strong performance on all formats with PGOLD continuing to be the main driver of growth
(+11.9% earnings growth). Other formats also delivered double digit earnings growth and
higher y/y.

TUE 14 MAY 2019
in PhpMil 1Q18 1Q19 % Change %COL

Puregold 1,349 1,510 11.9% 22.8%
Real estate 284 313 10.2% 26.9%
Liquor distribution 179 230 28.5% 24.6%
Specialty retail 111 29 -73.9% 39.9%
Liquigaz 102 - - -
Office Warehouse 9 29 222.2% 39.7%
Others (43) 7,961 - -
Consolidated net income 1,880 10,072 435.7% -
Core Income to equity 1,210 1,320 9.1% 24.2%
Source: COSCO, COL Estimates
PGOLD delivers robust earnings growth on strong sales. PGOLD’s 1Q19 net income
grew 11.9% y/y to Php1.5Bil. This is in line with COL and consensus forecast at 22.8% and
21.6%, respectively (usually between 21-22%). Growth was driven by robust topline growth
of 12.8% and a faster consolidated SSSG of 7.5% vs 6.3% in 1Q18. Broken down, Puregold’s
SSSG accelerated to 6.9% in the first quarter from 5.1% last year, notwithstanding the higher
spending power last year due to the TRAIN law. Meanwhile, S&R continued to deliver a strong
SSSG at 9.4% in 1Q19 amid higher basket size (8.0%) and traffic count (1.3%). Note that the
strong topline growth was partly tempered by lower margins with gross margin declining by
30 bps to 17.4% as Puregold continued to be affected by less vendor support still due to the
high inflation in 4Q last year (spill-off in negative consumer sentiment).
Real estate profits expand amid new commercial properties. COSCO’s real estate business
booked profits of Php313Mil, up 10.2% y/y. 1Q19 results are in line with our estimates at
26.9% of full-year forecast. Earnings growth was fueled by a 5.4% growth in revenues and
better margins from higher rental rates. COSCO opened one new community mall in 1Q19,
bringing commercial buildings operated to 33. This new mall is located in Aurora, and two
more ongoing developments are scheduled to open in Negros Oriental by 4Q19 and Las Pinas
by the first quarter of 2021.
Liquor distribution earnings grow on strong volumes. Liquor distribution earnings grew
28.3% y/y to Php230Mil, in line with our estimates at 24.6% of full-year forecast. Growth was
on the back of a 24% growth in revenues with sales volume increasing by 36% to ~722,000
cases. Sales volume continued to be strong, still driven by the resilient performance of brandy
sales (+41%). Alfonso Light and Alfonso Brandy drove the strong performance of the brandy
segment. Growth was also boosted by higher gross margin (+80bps y/y) to 23.1% on increased
sales mix towards higher priced liquor. Net margin also improved by 30 bps, albeit at a slightly
slower pace compared to GPM due to higher finance costs.

TUE 14 MAY 2019
Reiterate BUY rating as COSCO is still very undervalued. We are reiterating our BUY rating
on COSCO with a FV estimate of Php11.0/sh. COSCO remains severely undervalued with the
market not pricing in its other businesses (apart from PGOLD) like the liquor distribution and
real estate business. Over the last 12 months, COSCO (+7.5% y/y return) has outperformed
PGOLD share price performance (-4.8% y/y return). Nevertheless, COSCO is still trading at a
steep discount to PGOLD. In fact, even if we only value COSCO for its 49% stake in PGOLD
based on the latter’s market value, this still translates to a target price of Php8.5/sh, presenting
a 20% upside to COSCO’s current price.

RESEARCH ANALYST
CIC: Profits grow in 1Q19 despite some short-term
challenges in topline
CONCEPCION INDUSTRIAL CORP
HOLD 1Q19 earnings grow 13.5% y/y. CIC’s net income grew 13.5% y/y to Php187Mil, accounting
PHP43.00 for 17.4% and 15.5% of COL and consensus estimates, respectively. Historically, 1Q profits of
CIC accounted for around 19% of full-year figure. While it seemed like results underperformed
our estimates, profits are actually expected to catch up in the succeeding quarters on stronger
sales for both the aircon and ref business. Note that sales grew by only 7.3% y/y in 1Q19, despite
the low base last year (sales down 1.4% y/y in 1Q18). Meanwhile, gross margin improved 50bps
y/y to 36.7% due to stable commodity prices and the stronger peso.
% of Forecasts
In PhpMil 1Q18 1Q19 % Change
COL Consensus
Revenues 3,077 3,303 7.3 21.0 21.1
Gross Profit 1,113 1,212 8.9 21.9 21.6
Gross Margin (%) 36.2 36.7 - - -
Operating income 403 434 7.9 17.6 17.0
Operating margin (%) 13.1 13.2 - - -
Net income 164 187 13.5 17.4 15.5
Net Margin (%) 5.3 5.7 - - -
Source: CIC, COL Estimates, Bloomberg
Mixed performance for the aircon and refrigerator business. CIC’s air-conditioning
segment (CCAC) delivered an 8.6% y/y growth in revenues during 1Q19. This is despite the low
base in 1Q18 due to order fulfillment issues after adopting a new ERP system. The growth in
revenues was amid a relatively weak consumer market for aircon due to a delay in the summer
season as well as the extended negative consumer sentiment given peak inflation in 4Q18.
CCAC also lost some market share (2 p.p. to 46%) due to more aggressive competition in a
relatively weaker market with CIC’s sell-in up only 3%. Furthermore, higher operating costs
for investments in organizational capability and improvements in logistics, led to a 100 bps
decline in net margin for CCAC and flat earnings growth (-1%).

TUE 14 MAY 2019
Meanwhile, the refrigerator business (CDI) delivered flat sales (+0.3%) in 1Q19 to Php888Mil.
Nevertheless, CDI managed to grow net profits by 62% on the back of higher margins. CDI’s
sales were flat due to a higher trade inventory from dealers, given the weak 2H18 sales. On a
positive note, CDI was able to recover its market share by 2 p.p. to 22% due to new product
launches and increased trade engagement. Gross margin also improved by 430 bps to 32.3%
due to a more favorable product mix coupled with the impact of its price increase last year,
cost reduction efforts, and the steady commodity and fx prices.
Exhibit 2: Revenue Breakdown
In PhpMil 1Q18 1Q19 % Change
CCAC 2,017 2,191 8.6

CDI 885 888 0.3
COPI 171 220 28.7
Source: CIC
Exhibit 3: Margins Breakdown
Gross Margin Increase/ Net Margin Increase/

1Q18 1Q19 Decrease 1Q18 1Q19 Decrease
CCAC 39.8 39.5 -0.3 11.6 10.6 -1.0
CDI 28.0 32.3 4.3 4.9 7.8 2.9
COPI 36.1 27.3 -8.8 17.0 11.4 -5.6
Source: CIC
COPI earnings slows due to sales mix, while Midea continues to perform well. 1Q19
revenues from CIC’s elevator and escalator business (COPI) grew 28.7% y/y to Php220Mil.
Growth was driven by the strong performance of new equipment sales (+58%). However,
earnings declined by 16% to Php25Mil due to sales mix given the lower margins (around high
single-digit margin) for equipment sales.
Meanwhile, Midea’s performance continued to improve in 1Q19 with the company booking
Php1Mil in net income for the period. The improvement in profitability is amid the company’s
increased scale. Midea’s revenues jumped 43% y/y to Php301Mil, owing its growth to CIC’s
expanded distribution coverage. All categories performed well with Midea’s own brands
primarily driving the growth, while the company also added Toshiba appliances under its
product portfolio last February 2019.
Signs show a better performance for CCAC and CDI in succeeding quarters. We saw several
indications that likely point to a better performance for CCAC and CDI. For CCAC, consumer
sell-out (sales to consumers) were up by 68% in April alone, signaling an improvement in the
aircon market, especially given the relatively hot weather and as the residual effect of high
inflation fades. This also likely signals an improvement in CCAC’s sell-in as dealers restock their
inventory to cater to the pick-up in demand for aircon. CDI is also expected to deliver better

TUE 14 MAY 2019
sales (from a flat growth) as the trade inventory from dealers normalizes given the better
performance of the refrigerator market this year. Finally, both segments should enjoy better
margins as the stable commodity and fx will be better reflected in CIC’s costs starting 2H19.
Maintain HOLD rating. We are maintaining our HOLD rating on CIC with a FV estimate of
Php43.0/sh. We continue to like CIC for its strong growth prospects given its market leading
position in the air-conditioning business and growing share in the laundry market. However,
valuations are no longer attractive with CIC trading at around 15.5X 19E P/E, higher than the
regional average of 13.5X. Furthermore, there is no more upside to our FV estimate as CIC is
already trading ~4.5% higher than our fair value.
CHARLES WILLIAM ANG, CFA GTCAP: GTCAP exchanges stake in Pro-Friends for 702
DEPUTY HEAD OF RESEARCH
hectares of land
GT CAPITAL HLDGS INC.
BUY GTCAP to exchange stake in Pro-Friends for assets. GTCAP disclosed that it has signed
PHP1,030 an agreement on Pro-Friends’ redemption of GTCAP’s preferred shares, equivalent to a 51%
stake in the property company. In exchange for its stake, GTCAP will receive ~702 hectares of
selected assets, worth an estimated Php20Bil. The assets are located mostly within Lancaster
New City in Cavite.
According to GTCAP, the exchange allows both parties to focus on our respective areas of
expertise. The agreement remains subject to regulatory approvals.
Slight decline in NAV. We are slightly reducing our FV estimate on GTCAP from Php1040/sh
to Php1030/sh following the exchange. Note that we have previously valued GTCAP’s stake
in Pro-Friends at Php22.5Bil, slightly higher than the Php20Bil worth of assets that GTCAP
receives.
FRANCES ROLFA NICOLAS

LTG: 1Q19 earnings in line with estimates
RESEARCH ANALYST
LT GROUP INC. LTG: 1Q19 earnings in line with estimates. LTG’s 1Q19 earnings rose 21.8% to Php4.4Bil,
N/A mainly due to its tobacco (PMFTC) and banking businesses (PNB), which are the holding
N/A company’s major earnings contributors. PMFTC’s profits grew 20.7% y/y largely due to higher
volumes while PNB’s profits grew 29.9% y/y due to higher net interest income and trading
and foreign exchange gains. Likewise, distilled spirits (TDI) and property business (Eton) grew
69.6% and 52.6% respectively. Meanwhile, earnings of its beverage business (ABI) dropped
45.0% due to higher opex. Results during the year ended in line with consensus estimates at
24.3% of full year forecast.

TUE 14 MAY 2019
Exhibit 1: Earnings Summary
in Php Mil 1Q18 1Q19 % change % of consensus

Revenues 17,125 21,891 27.8 27.5
Gross Profit 9,460 11,112 17.5 -
Gross profit margin (%) 55.2 50.8 - -
Operating income 4,570 5,407 18.3 36.5
Operating margin (%) 26.7 24.7 - -
Net income 3,631 4,422 21.8 24.3
Net margin (%) 21.2 20.2 - -
source: LTG, Bloomberg
Exhibit 2: Segment income contribution

in Php Mil 1Q18 1Q19 % change
PNB 833 1,082 29.9
PMFTC 2,352 2,839 20.7
ABI 149 82 (45.0)
TDI 135 229 69.6
Eton 97 148 52.6
VMC 59 75 27.1
Others* 6 (33) -
source: LTG
*includes ROPA sales from Eton to PNB
Tobacco earnings up 20.7% on higher volumes. 1Q19 income contribution from Tobacco
through PMFTC reached Php2.8Bil, up 20.7% y/y. The growth in earnings was mainly due to the
8.8% increase in volumes, in line with the industry growth of 8.9%. Note that 1Q18 was a low
base in terms of volumes because of trade loading in 4Q17 with the price increase announced
in late 2017. As such, PMFTC’s market share was relatively flat at 70.1% during the quarter.
PNB’s income contribution up 29.9% y/y on higher net interest income and trading gains.
PNB’s 1Q19 income contribution reached Php1.1Bil, up 29.9% y/y. However, this includes gains
from sale of real and other properties acquired (ROPA). Excluding the ROPA gains, core income
grew at a faster rate of 44% y/y to Php1.9Bil. The growth in core earnings was largely brought
about by higher net interest income, and trading and foreign exchange gains. Net interest
income for the period grew 11% y/y to Php7.1Bil on the back of a 17% increase in loans and
receivables. Likewise, trading and foreign exchange gains surged to Ph856Mil from Php38Mil in
1Q18. Meanwhile, operating expenses, excluding ROPA sale-related items, reached Php6.7Bil,
up 19% y/y, due to higher provisioning for probable credit losses, increase in documentary
stamps, and higher depreciation from the new core banking system.
Tanduay Distiller’s (TDI) earnings up 69.6% y/y on higher liquor revenues. TDI’s 1Q19
profits grew 69.6% y/y to Php229Mil, mainly due to higher liquor revenues during the year.
Liquor revenues grew 11% to Php3.9Bil on the back of a 5% increase in volumes and higher
selling prices. Meanwhile, bioethanol revenues grew 46% to Php810Mil, brought about by the
34% increase in volumes. Gross profit margin was flat at 17% as costs grew at the same pace

TUE 14 MAY 2019
as revenues. Moreover, as of March 2019, nationwide market share improved to 28.1% from
26.1% as of March 2018.
Eton earnings up 52.6% y/y on higher revenues. Eton’s earnings contribution for 1Q19
reached Php148Mil, up 52.6% y/y, mainly due to higher revenues. Leasing revenues grew 13%
to Php400Mil, as a result of higher lease rates and contribution from additional retail space in
Centris Walk. Meanwhile, residential revenues grew 9% y/y to Php246Mil. LTG noted that it has
fully leased out the newly completed Eton Square Ortigas, adding 2,000 sq. m. of gross leasable
area to its commercial leasing portfolio. Moreover, the eWestMall and eWestPod, the office
and retail components of the lifestyle hub Eton WestEnd Square is targeted for completion by
2019. These projects should help boost leasing revenues and provide additional residential
units for sale or lease.
Asia Brewery (ABI) earnings drop on higher costs and opex. ABI’s 1Q19 income contribution
reached Php82Mil, down 45.0% y/y, mainly due to higher packaging costs. This in turn led to
a decline in gross profit margin from 30% to 28%. Moreover, operating expenses grew 20% to
Php666Mil due to increase in advertising and promotions. On the other hand, revenues grew
13% y/y to Php3.9Bil with Cobra accounting for the largest share at 35% followed by bottled
water at 26%, packaging at 19%, soymilk at 11% and others at 9%. Note that Cobra registered
a 13% growth in volume, a reversal from the 14% drop in FY2018.
Consensus currently has a BUY rating and FV estimate of Php21.8/sh on LTG.
GEORGE CHING
SCC: 1Q19 earnings below COL and consensus forecast
SEMIRARA MINING CORPORATION 1Q19 earnings below COL and consensus forecast. SCC’s disclosed 1Q19 earnings declined
BUY 49% to Php2.33Bil, trailing COL estimate (19.3% of forecast) and consensus estimate (18.1%).
PHP33.20 We will release a more detailed analysis of the 1Q19 results once the F/S is available. The coal
segment and power generation segment contributed Php2.13Bil and Php204Mil in earnings,
respectively.
Maintain BUY rating. We have a BUY rating on SCC with a FV estimate of Php33.20/sh. We
believe that much of the negative news is already priced-in, as SCC’s share price has declined
by 25.2% in the past 12 months, steeper than the PSEi’s 0.1% drop. The stock is also the
cheapest among all power companies, trading at only 7.7X 2019E P/E based on our revised
earnings forecast and capital appreciation potential remains significant at 53%, also based on
our revised fair value estimate.

TUE 14 MAY 2019
Other News:
RESEARCH ANALYSTS US Economy: China is raising tariffs on US$60Bil of US goods

ANDY DELA CRUZ
JOHN MARTIN LUCIANO China will raise tariffs on US$60Bil of US goods. The new tariffs will reach as high as 25%,
FRANCES ROLFA NICOLAS
while some tariffs on goods will increase to 20%. Those rates will rise from either 10% or
5% previously. The duties mostly target US farmers with products including peanuts, sugar,
ADRIAN ALEXANDER YU
wheat, chicken and turkey. This decision came after the US raised tariffs on US$200Bil worth of
Chinese imports from 10% to 25% last week. (Source: CNBC)
Economy: Foreign direct investments net inflows rise by 20.2% in February

2019
FDI net inflows in February 2019 rose by 20.2% to US$746 Mil from the same period a year ago.
Net equity capital investments contributed largely to the increase in FDI net inflows during
the period as it expanded by 141.7% to US$233 Mil. These were sourced mainly from Japan,
China, USA, Singapore, and Switzerland and were channelled primarily to transportation and
storage, financial and insurance, manufacturing, real estate, and professional, scientific and
technical industries. (source: BSP)
Economy: Infra spending down 5.7% in March
According to the Department of Budget and Management (DBM), infrastructure and capital
outlays fell 5.7% to Php59.7Bil in March. The DBM attributed the drop to the decline in
infrastructure outlays of some agencies, including the Department of Interior and local
Government (DILG), and the Department of Education (DepEd), which were unable to
implement some projects due to the delay in the 2019 budget. Nevertheless, disbursement for
infrastructure in the first three months of the year grew 13.4% to Php178.1Bil from Php157.1Bil
in the same period in 2018. The DBM expects government spending to normalize with the
signing of the 2019 budget, especially after the election ban. (source: Philstar)

TUE 14 MAY 2019
IMPORTANT RATING DEFINITIONS

BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the next six to
12 months.
HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might be poor
or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the next six to twelve
months.
SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.
IMPORTANT DISCLAIMER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may be
incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are subject to change
without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. COL Financial and/
or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies mentioned in this report and may trade
them in ways different from those discussed in this report.
COL RESEARCH TEAM
APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com
CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com
ANDY DELA CRUZ JOHN MARTIN LUCIANO FRANCES ROLFA NICOLAS

SENIOR RESEARCH ANALYST SENIOR RESEARCH ANALYST RESEARCH ANALYST
andy.delacruz@colfinancial.com john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com
JUSTIN RICHMOND CHENG ADRIAN ALEXANDER YU

RESEARCH ANALYST RESEARCH ANALYST
justin.cheng@colfinancial.com adrian.yu@colfinancial.com
COL FINANCIAL GROUP, INC.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

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TUE 14 MAY 2019

AC: Earnings lag on lower than expected AC

TOP 5 MOST ACTIVE STOCKS

TUE 14 MAY 2019

COL Financial Group, Inc. 2

TUE 14 MAY 2019

RICHARD LAÑEDA, CFA

Exhibit 1. Results summary

Exhibit 2. Equity in net earnings from subsidiaries

COL Financial Group, Inc. 3

TUE 14 MAY 2019

Exhibit 3. ALI Revenue breakdown

COL Financial Group, Inc. 4

TUE 14 MAY 2019

COL Financial Group, Inc. 5

TUE 14 MAY 2019

AC Energy disappoints on lower contribution from investees companies, higher interest

COL Financial Group, Inc. 6

TUE 14 MAY 2019

ANDY DELA CRUZ MAXS: Healthy operations amidst weak local

Exhibit 1: Results summary

COL Financial Group, Inc. 7

TUE 14 MAY 2019

On its back-end operations, management also reduced operating expenses through a

Exhibit 2: Summary of changes in forecast

source: COL estimates

COL Financial Group, Inc. 8

TUE 14 MAY 2019

Exhibit 1: FGEN 1Q19 results summary

in US$Mil 1Q18 1Q19 % Change % of FY COL forecast

COL Financial Group, Inc. 9

TUE 14 MAY 2019

FRANCES ROLFA NICOLAS CEB: 1Q19 earnings beat estimates on lower-than-

Exhibit 1: Results Summary

COL Financial Group, Inc. 10

TUE 14 MAY 2019

Exhibit 2: Passenger volume

in Php Thousands 1Q18 1Q19 % change

Exhibit 3: Total yield breakdown

1Q18 1Q19 % change

source: CEB, COL Estimates

Exhibit 4: Fuel costs

1Q18 1Q19 % change

COL Financial Group, Inc. 11

TUE 14 MAY 2019

JUSTIN RICHMOND CHENG

Exhibit 1: Results Summary

% of Full year Forecast

COL Financial Group, Inc. 12

TUE 14 MAY 2019

JUSTIN RICHMOND CHENG

COL Financial Group, Inc. 13

TUE 14 MAY 2019

Exhibit 1: Results Summary

in PhpMil 1Q18 1Q19 % Change %COL

COL Financial Group, Inc. 14

TUE 14 MAY 2019

JUSTIN RICHMOND CHENG

Exhibit 1: Results Summary

Source: CIC, COL Estimates, Bloomberg

COL Financial Group, Inc. 15

TUE 14 MAY 2019

Exhibit 2: Revenue Breakdown