November 11, 2019

Earnings and GDP drive PCOMP higher Calendar of Events

Week in review Date Event
 The PCOMP closed at 8,065.76 last Friday (+1.1% w-w), gaining for the fifth Nov 11 Analysts’ briefing: MWC
consecutive week. Upbeat investor sentiment was sustained on encouraging 3Q19
results and better-than-expected GDP growth. Nov 12 Analysts’ briefing: AC, DMC, SCC, ICT
 Philippine GDP growth accelerated to 6.2% in Q3 from 5.5% in 2Q19, exceeding
the street’s expectations. Growth was underpinned by surging public investment Nov 13 Analysts’ briefing: PGOLD, SSI
(public sector construction up 11% y-y in 3Q19 vs -27.2% in 2Q19) and recovering
Nov 14 Analysts’ briefing: CEB, JGS, GTCAP
private consumption (up 5.9% y-y from 5.5% in 2Q19). Meanwhile, CPI inflation
eased further to 0.8% y-y in October (from 0.9% in September). Nov 15 Analysts’ briefing: MEG, AGI, MWIDE
Market analysis
 3Q19 results continue to be encouraging amid improving economic activity and
benign inflation. So far, of the 26 companies that have reported, 8 have beat, 11 Best Performers w-w %
were in-line, and 7 missed expectations. 3Q earnings season concludes this week.
 Following strong GDP growth in 3Q19, Nomura Economist Euben Paracuelles
BLOOM PM 7.7%
maintains his above-consensus Philippine GDP growth forecast of 6%/6.7% in
RLC PM 4.9%
2019/2020 (Consensus: 5.7%/6.1%, respectively). His forecasts suggest a further
rebound in growth to 6.6% in 4Q19 before accelerating to above 7% in 1H20. ICT PM 4.3%
Stocks to watch
 We reiterate our Buy rating on RLC with a higher TP of PHP31 following the release WLCON PM 4.2%
of better-than-expected 9M19 earnings. Earnings was supported by hefty revenue
contribution of the China Chengdu project (PHP8.8bn) while its malls, office, and GLO PM 4.2%
residential segments all posted healthy top line growth.
Source: Bloomberg
 ALI’s 9M19 net income (+12% y-y) came in slightly behind our estimates. The miss
is due to flat property development revenues given timing lags from back-ended
residential launches in 2018, which should eventually catch-up. Maintain Buy. Worst Performers w-w %
 We keep our Buy rating on WLCON following strong 9M19 results (recurring
income ex IFRS 16 impact up 19.3% y-y, slightly ahead). Earnings growth was AGI PM -7.5%
mainly driven by 5.4% SSSG and GPM expansion from better product assortment.
 We upgraded GLO to Buy (TP PHP2,330) following higher-than-expected 9M19 DMC PM -7.1%
core earnings (up 20% y-y). Robust growth from data-related services revenues
and healthy EBITDA margins should support medium-term earnings growth.
MAC PM -5.3%
 We also upgraded DNL to Buy (TP PHP9.50) following its 20% YTD sell-down, MWC PM -3.3%
which we think is overdone. Though 9M19 profit fell 15% y-y due to soft commodity
volumes, High Margin Specialty product volumes have shown q-q recovery. DNL ALI PM -3.2%
is also trading at attractive forward P/E of 20.2x vs 25.5 peer average.
 We reinstated coverage on MPI with a Buy (TP PHP7.50). We highlight that its Source: Bloomberg
hospital transaction will unlock PHP30bn, which in turn should support majority of
the conglomerate’s capex plans until FY22F. 9M19 results were also encouraging Blo Actively Traded (PHPbn)
Most
with EPS acceleration driven by the toll roads business.
 We see buying opportunities for AGI and DMC – conglomerates that were battered
due to a recent MSCI rebalancing. Fundamentals are intact while valuations remain
SM PM 3.35
attractive (both trade at single-digit FY20F PER and below 1x PBR).
AC PM 3.07
 We downgrade AEV from Buy to Neutral, as we factor in near-term headwinds in
power (plant availability issues, execution bottlenecks, lower spot sales) and food ALI PM 2.32
(elevated input costs/opex, lower hog sales).
 MAC reported double-digit EPS growth in 3Q19, recovering from contraction in SMPH PM 2.13
1Q19. We still believe the market underappreciates the company's 22% FY18-21F
EPS CAGR outlook given continuing growth in Philippine tourism. Reiterate Buy. BPI PM 1.35
 BLOOM appears to be recovering from oversold levels (+7.7% w-w). We continue
to like the stock given its strong business model and market leadership in a growing Source: Bloomberg
gaming sector. Maintain Buy.
 Visit https://www.bdo.com.ph/bdonomura/home to access Nomura Philippine Research.
Disclaimer: The information, opinions and analysis contained herein are based on sources and data believed to be reliable but no representation,
expressed or implied, is made as to its accuracy, completeness or correctness. This material is only for the general information of the authorized
recipients. In no event shall BDO or its officers and employees, including the author(s), be liable for any loss/damage resulting from reliance, directly
or indirectly, or information found within this report.
November 11, 2019

Stock Coverage

Mkt Cap Last Price Target Upside/ P/E (x) EPS Grow th Div Yield P/B (x) ROE
Company Ticker (USD mn) Rating 8/11/2019 Price Dow nside FY19F FY20F FY19F FY20F FY19F FY19F FY19F
Aboitiz Equity Ventures AEV 6,250 Neutral 56.00 61.00 8.9% 15.0 13.9 -9.2% 7.8% 2.3% 1.7 11.6%
Aboitiz Pow er Corporation AP 5,773 Neutral 39.60 40.00 1.0% 15.4 13.8 -20.4% 11.2% 3.7% 2.1 14.4%
Alliance Global Group, Inc. AGI 2,078 Buy 10.62 17.00 60.1% 6.3 5.5 13.4% 13.6% 1.0% 0.6 9.6%
Ayala Corporation AC 10,545 Buy 848.50 1,070.00 26.1% 15.8 13.8 10.7% 14.5% 0.7% 1.5 18.4%
Ayala Land ALI 13,719 Buy 47.00 57.00 21.3% 20.7 17.3 14.3% 19.7% 1.3% 3.3 16.7%
Bank of the Philippine Islands BPI 8,705 Buy 97.50 115.00 17.9% 14.7 11.9 21.4% 23.3% 1.8% 1.6 11.1%
BDO Unibank BDO 13,839 No rating
Bloomberry Resorts Corporation BLOOM 2,345 Buy 10.76 15.00 39.4% 13.8 11.5 25.6% 20.2% 1.4% 2.7 21.4%
Cebu Pacific CEB 1,123 Buy 94.35 145.00 53.7% 6.8 6.3 89.8% 7.5% 12.7% 1.4 20.7%
Cemex Holdings Philippines CHP 257 Neutral 2.50 2.80 12.0% NM NM NM NM NA 0.4 1.3%
Century Pacific Food CNPF 1,075 Buy 15.32 18.70 22.1% 17.7 16.1 10.4% 10.2% 1.5% 2.9 17.2%
Chelsea Logistics Holdings Corp. C 234 Neutral 6.47 7.50 15.9% 21.6 18.8 21.9% 14.9% NA 0.7 3.9%
D&L Industries DNL 1,242 Buy 8.78 9.50 8.2% 22.2 20.2 -11.3% 9.8% 2.5% 3.5 16.5%
DMC Holdings DMC 2,007 Buy 7.63 11.50 50.7% 8.2 7.6 -11.2% 8.4% 6.1% 1.2 15.1%
Emperador Inc. EMP 2,198 Neutral 7.00 8.00 14.3% 16.2 15.3 4.2% 6.2% 2.4% 1.7 11.1%
Filinvest Land Inc. FLI 778 Buy 1.62 2.00 23.5% 5.7 5.0 17.6% 13.4% 3.8% 0.5 10.0%
Globe Telecom GLO 5,014 Buy 1,900.00 2,330.00 22.6% 11.6 10.8 17.9% 6.9% 4.8% 3.1 28.3%
GT Capital Holdings, Inc. GTCAP 3,838 Buy 900.00 990.00 10.0% 12.4 10.8 8.2% 14.7% 0.6% 1.1 8.9%
Intl Container Terminal Services ICT 4,906 Neutral 123.80 125.00 1.0% 24.7 21.5 22.0% 15.8% 4.0% 4.7 20.5%
JG Summit Holdings, Inc. JGS 11,139 Neutral 78.50 60.00 -23.6% 21.4 14.7 14.1% 45.4% 0.6% 1.9 9.8%
Jollibee Foods Corp JFC 4,939 Reduce 228.00 230.50 1.1% 42.6 39.4 -30.2% 8.1% 1.3% 4.9 11.7%
LT Group, Inc. LTG 2,791 Buy 13.02 20.00 53.6% 8.0 7.1 40.7% 12.6% 2.3% 0.8 10.4%
MacroAsia Corporation MAC 611 Buy 19.50 26.00 33.3% 22.3 19.6 32.9% 13.4% 0.6% 4.8 23.2%
Manila Electric Company MER 7,810 Neutral 349.80 400.00 14.4% 17.1 17.9 3.1% -4.7% 3.7% 4.3 26.7%
Manila Water Company, Inc. MWC 785 Neutral 19.18 25.00 30.3% 8.9 8.3 -17.8% 6.9% 4.7% 0.7 10.0%
Megaw ide Construction Corp. MWIDE 707 Buy 17.18 23.00 33.9% 34.0 25.2 2.3% 34.9% 0.3% 2.1 9.6%
Megaw orld MEG 3,129 Buy 4.90 6.50 32.7% 9.3 8.4 11.2% 10.7% 1.1% 0.9 10.0%
Metro Pacific Investments MPI 2,906 Buy 4.65 7.50 61.3% 9.0 9.0 15.1% -0.1% 1.6% 0.8 9.0%
Metropolitan Bank & Trust Company MBT 6,018 Buy 67.55 81.00 19.9% 10.2 9.3 29.5% 9.7% 1.5% 1.0 10.0%
Petron Corporation PCOR 930 Buy 5.01 6.50 29.7% 28.5 17.5 -36.6% 62.6% 3.0% 0.7 3.7%
PLDT Inc. TEL 4,751 Buy 1,110.00 1,420.00 27.9% 9.2 8.8 7.1% 4.0% 6.5% 2.0 22.3%
Puregold Price Club PGOLD 2,268 Buy 39.70 57.75 45.5% 16.7 15.1 7.0% 10.6% 0.8% 1.7 11.4%
Robinsons Land RLC 2,747 Buy 26.70 31.00 16.1% 14.4 12.2 17.5% 17.9% 1.3% 1.4 9.8%
Robinsons Retail Holdings, Inc. RRHI 2,405 Buy 77.00 95.00 23.4% 25.7 22.8 -16.9% 12.6% 1.0% 1.7 6.7%
San Miguel Corporation SMC 8,010 Neutral 170.00 190.00 11.8% 20.0 19.0 -4.5% 5.7% 2.3% 1.1 6.0%
San Miguel Food and Beverage Inc. FB 10,653 Neutral 91.00 103.00 13.2% 33.7 31.1 -9.8% 8.4% 3.6% 5.7 21.0%
Security Bank Corporation SECB 3,030 Neutral 203.00 203.00 0.0% 15.0 12.8 18.8% 17.2% 1.5% 1.3 9.0%
Semirara Mining and Pow er Corporation SCC 2,004 Buy 23.80 28.00 17.6% 9.5 8.3 -11.1% 13.7% 6.9% 2.3 25.6%
Shakey's Pizza Asia Ventures PIZZA 362 Buy 11.92 16.10 35.1% 20.3 18.4 7.2% 10.4% 1.4% 3.5 18.4%
SM Investments Corporation SM 25,533 Neutral 1,070.00 1,080.00 0.9% 28.2 25.5 23.4% 10.7% 0.9% 3.4 12.5%
SM Prime Holdings SMPH 22,884 Buy 40.00 46.60 16.5% 34.4 28.9 19.3% 19.0% 1.0% 3.8 13.4%
SSI Group, Inc. SSI 174 Buy 2.65 3.90 47.2% 10.3 9.2 17.0% 12.8% 0.5% 0.8 7.6%
Universal Robina Corporation URC 6,615 Neutral 151.50 171.50 13.2% 30.0 28.4 12.8% 5.9% 1.4% 3.7 12.5%
Vista Land & Lifescapes VLL 1,944 Neutral 7.73 7.80 0.9% 8.6 7.6 15.0% 14.0% 2.1% 1.0 12.5%
Wilcon Depot, Inc. WLCON 1,397 Buy 17.20 19.30 12.2% 36.7 32.2 17.1% 14.1% 0.7% 4.8 14.2%

Source: BDO-Nomura estimates, share prices as of November 8, 2019

Disclaimer: The BDO Nomura rating system is a relative system indicating expected performance against the PSEi (PCOMP:IND) benchmark. "Buy”
indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months, “Neutral” in line with the Benchmark, “Reduce” to
underperform the Benchmark, and “Suspended” for a halt on company coverage to comply with applicable regulations and/or firm policies. An analyst’s
Target Price (TP), is an assessment of the current intrinsic fair value of the stock based on an appropriate valuation methodology determined by the
analyst. The achievement of any target price may be impeded by general market and macroeconomic trends, and by other risks related to the company
or the market.