Weekly Wrap

31 May 2021

Recovery hopes bolster PCOMP above 6,600 Calendar of events

Week in review Date Event
• The PCOMP jumped to 6,674.51 (+7.7% w-w) last week on heavy bargain Jun 4 May 2021 inflation data
hunting from local investors. Risk-on sentiment was encouraged by S&P Global
Ratings’ affirmation of the country’s investment grade BBB+ rating on Jun 8 Cash dividends ex-date: JGS
expectations of a “healthy” economic recovery prospects once the COVID-19
pandemic is contained. Net foreign selling however accelerated to PHP7.2bn Jun 14 Cash dividends ex-date: FGEN
(from PHP2.6bn the week prior) as fund managers adjusted portfolios to align
with the latest MSCI rebalancing that took effect last week. Jun 16 Cash dividends ex-date: SMC
• Recovery hopes were also revived by statements from: 1) the OCTA Research
Group suggesting a possible easing of quarantine restrictions in Metro Manila Jun 30 Cash dividends ex-date: GTCAP
due to an improving COVID-19 situation. The group downgraded the risk
classification in the region from high to moderate, citing a lower seven-day avg.
of new cases (1,100/day vs 1,500/day previously), a drop in the positivity rate to
10%, and a decline in the reproduction number to 0.57; and 2) Finance Secretary Best index performers w-w %
Carlos Dominguez III expecting the economy to start rebounding in 2Q21 given
a low base and as most economic activities has been allowed to resume
operations although at limited capacity.
Market analysis
• We look ahead to the May inflation print on 4 June, as inflation trends could
impact the outlook for interest rates. The BSP however, is still expected to
maintain an accommodative monetary stance to support economic recovery,
with its view for inflation to be reverting within its 2-4% target range by yearend.
• As we continue to monitor economic developments for signs of recovery and
remain wary of potential setbacks from the vaccination program or resurgence
in COVID-19 infections, we suggest investors hold a diversified portfolio of: 1)
defensive stocks (AP, CNVRG, TEL, PGOLD, RRHI) that should remain resilient
amid the pandemic; 2) names identified to benefit from improving export markets
(SCC, URC); 3) cyclical stocks (ALI, MEG, BPI, MBT) that could rally on easing Source: Bloomberg
mobility restrictions in 2H21F; and 4) conglos trading at deep discounts to book
value (MPI, LTG, GTCAP) despite their improving earnings outlook this year.
Worst index performers w-w %
Stocks to watch
• We reiterate our Buy rating on MPI with a higher TP of PHP6.60 as we raise our
valuation for Maynilad (+49% vs prev.) following the release of its revised
concession agreement. We consider this deal to be attractive given its 15-year
term, 12% guaranteed return, and retention of the rate rebasing mechanism.
• Upside potential for AC may be limited after last week's price rally given its
relatively thin 13% discount to NAV. Conversely, we believe AEV still has room
to appreciate given inexpensive valuations (FY21F P/E of 11.0x, a discount vs
the peer conglo avg. of 19.6x) with its 15.3% ytd selldown vs PCOMP's 6.5%.
• JGS rose 17.8% w-w on bargain hunting as the stock fell 30% ytd prior to its
rally. We are Neutral on JGS however, given premium valuations despite airline
losses seen dragging earnings. We prefer its food unit URC for better upside.
• AGI inched up 0.8% w-w, lagging the rally on index stocks as investors hold a
cautious outlook following its 1Q21 results. We downgraded AGI to a Neutral Source: Bloomberg
rating with a TP of PHP10.80 due to timing uncertainties on the recovery of
Travellers and GADC (unlisted). We also have a Neutral view on EMP on
concerns that the intermittent reimposition of liquor bans could weigh on its Most actively traded (PHPbn)
Philippine operations (~60-65% of the business).
• PGOLD rallied 11.2% w-w, recovering from its 13.9% ytd decline the week prior.
We continue to favor the name given its defensive business model which should
deliver steady earnings this year. At 14.9x FY21F P/E, PGOLD still trades at an
attractive discount to the PH consumer avg. of 28.4x. Maintain Buy.
• Investors bought up SMPH (+11% w-w), MEG (+9.4% w-w), and ALI (+7.3% w-
w) last week in anticipation for the further easing of mobility restrictions and
reopening of the economy. We have Buy ratings on ALI and MEG given
attractive valuations (discount to NAV of 45% and 57%, respectively), which we
think undervalues their earnings recovery prospects as supported by their
extensive portfolio of residential and office developments. We are Neutral on
SMPH however, given continuing headwinds faced by its mall leasing business
and pricey valuations (narrow 12% discount to NAV).
• We have maintained our Reduce rating on MWIDE (TP of PHP6.00) following Source: Bloomberg
its 1Q21 results, which were in-line with expectations. Our view for MWIDE
factors in the slower recovery prospects of its airport business and its pricey
valuations (FY21F EV/EBITDA of 13.4x). We suggest investors look to MPI
instead for exposure to PH infrastructure without a tourism overhang.

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.
Stock coverage 23 November 2020
Mkt Cap Last Price Target Upside/ P/E (x) FD Norm EPS* EPS Grow th Div Yield EV/EBITDA (x) P/B (x) ROE
Company Ticker (USD mn) Rating 28-May-2021 Price Dow nside FY20F FY21F FY20F FY21F FY20F FY21F FY21F FY21F FY21F FY21F
Aboitiz Equity Ventures AEV 4,706 Buy 40.00 47.00 17.5% 14.3 11.0 2.79 3.62 -26.1% 29.7% 2.3% 10.5 0.9 13.7%
Aboitiz Pow er Corporation AP 3,598 Buy 23.40 30.00 28.2% 13.7 12.7 1.70 1.84 -24.6% 8.2% 3.6% 8.9 1.1 10.5%
Alliance Global Group, Inc. AGI 2,058 Neutral 10.20 10.80 5.9% 11.9 7.7 0.86 1.32 -50.2% 53.2% - 5.8 0.3 6.3%
Ayala Corporation AC 10,087 Neutral 779.00 800.00 2.7% 37.0 29.2 21.08 26.63 -59.4% 26.4% 0.8% 22.2 0.9 5.6%
Ayala Land ALI 10,605 Buy 34.50 45.00 30.4% 58.3 27.8 0.59 1.24 -73.7% 109.7% 0.4% 14.9 2.1 7.7%
Bank of the Philippine Islands BPI 7,921 Buy 84.00 92.00 9.5% 17.7 15.8 4.74 5.33 -25.8% 12.4% 2.1% NA 1.3 8.2%
BDO Unibank BDO 9,326 Not Rated 101.80
Bloomberry Resorts Corporation BLOOM 1,550 Neutral 6.80 7.00 2.9% NM 292.3 (0.64) 0.02 NM NM - 13.2 2.2 0.8%
Cebu Air CEB 560 Reduce 44.40 33.80 -23.9% NM NM (38.53) (28.82) NM NM - 68.8 1.4 -81.1%
Cemex Holdings Philippines CHP 352 Reduce 1.25 1.10 -12.0% NM 21.5 0.07 0.06 -26.9% -16.2% - 5.8 0.4 1.8%
Century Pacific Food CNPF 1,739 Buy 23.50 24.00 2.1% 21.5 17.8 1.10 1.32 23.2% 20.3% 1.5% 11.4 3.4 20.2%
Converge ICT Solutions, Inc. CNVRG 3,145 Buy 20.00 24.40 22.0% 44.4 27.1 0.45 0.74 58.0% 63.7% - 11.4 4.5 18.1%
D&L Industries DNL 1,100 Buy 7.37 9.20 24.8% 25.4 18.5 0.29 0.40 -21.0% 37.7% 2.5% 13.3 2.7 15.3%
DMC Holdings DMC 1,548 Neutral 5.58 5.90 5.7% 22.6 8.2 0.25 0.68 -73.6% 174.3% 8.6% 4.9 0.7 11.6%
Emperador Inc. EMP 3,230 Neutral 9.80 10.00 2.0% 23.4 22.8 0.42 0.43 2.8% 2.5% 1.7% 15.3 2.1 9.7%
Filinvest Land Inc. FLI 537 Buy 1.06 1.26 18.9% 6.9 6.9 0.15 0.15 -40.6% 0.9% 3.8% 9.7 0.3 5.3%
First Gen Corporation FGEN 2,158 Neutral 28.70 33.00 15.0% 9.5 7.5 0.06 0.08 -13.4% 25.5% 1.5% 5.1 0.7 13.0%
Globe Telecom GLO 5,056 Neutral 1,811.00 2,005.00 10.7% 12.8 12.4 141.44 146.33 -13.5% 3.5% 5.7% 5.4 2.7 23.4%
GT Capital Holdings, Inc. GTCAP 2,654 Buy 590.00 630.00 6.8% 21.3 10.4 27.67 56.51 -69.8% 104.3% 1.0% 25.0 0.6 8.2%
Intl Container Terminal Services ICT 6,254 Buy 146.40 150.00 2.5% 27.7 19.9 0.11 0.15 15.6% 39.4% 1.9% 8.3 2.9 20.1%
JG Summit Holdings, Inc. JGS 9,146 Neutral 58.20 57.00 -2.1% NM 46.3 (0.10) 1.26 NM NM 0.7% 12.1 1.1 3.1%
Jollibee Foods Corp JFC 4,421 Neutral 191.00 172.00 -9.9% NM 47.8 (5.43) 4.00 NM NM 0.7% 11.6 3.2 6.6%
LT Group, Inc. LTG 3,188 Buy 14.10 16.50 17.0% 7.1 5.3 1.99 2.66 -3.2% 33.8% 4.7% 1.4 0.5 12.7%
MacroAsia Corporation MAC 193 Neutral 4.89 5.00 2.2% NM 250.9 (0.80) 0.02 NM NM - 1,233.0 1.9 -0.5%
Manila Electric Company MER 6,688 Buy 284.00 370.00 30.3% 15.1 13.9 18.83 20.38 -10.9% 8.2% 5.3% 10.4 3.3 24.9%
Manila Water Company, Inc. MWC 622 Buy 14.42 17.40 20.7% 6.0 5.9 2.41 2.44 -22.6% 1.1% 4.3% 7.1 0.5 9.4%
Megaw ide Construction Corp. MWIDE 265 Reduce 6.30 6.00 -4.8% NM NM (0.27) (0.10) NM NM - 13.4 0.6 0.1%
Megaw orld MEG 2,084 Buy 3.13 4.30 37.4% 10.8 8.8 0.29 0.35 -44.4% 21.6% 1.0% 7.8 0.4 5.6%
Metro Pacific Investments MPI 2,518 Buy 3.93 6.60 67.9% 26.2 10.7 0.15 0.37 -69.6% 144.1% 2.9% 13.7 0.5 6.2%
Metropolitan Bank & Trust Company MBT 4,595 Buy 48.90 58.00 18.6% 15.9 9.8 3.08 4.99 -50.7% 62.3% 8.2% NA 0.7 6.9%
Petron Corporation PCOR 603 Reduce 3.08 3.00 -2.6% NM 22.6 (1.51) 0.14 NM NM - 7.7 0.3 10.9%
PLDT Inc. TEL 5,959 Buy 1,320.00 1,603.00 21.4% 10.2 9.5 130.00 139.27 3.7% 7.1% 5.9% 5.0 2.1 24.1%
Puregold Price Club PGOLD 2,365 Buy 39.25 52.00 32.5% 14.1 14.9 2.78 2.64 18.3% -4.9% 1.0% 5.3 1.5 10.2%
Robinsons Land RLC 1,860 Buy 17.14 23.00 34.2% 15.7 11.5 1.09 1.49 -34.7% 35.8% 2.9% 7.1 0.8 7.3%
Robinsons Retail Holdings, Inc. RRHI 1,664 Buy 51.80 76.00 46.7% 29.2 23.6 1.77 2.20 -31.1% 23.9% 1.4% 4.7 1.0 5.5%
San Miguel Corporation SMC 5,765 Neutral 116.00 125.00 7.8% 173.9 33.2 0.67 3.49 -84.5% 423.2% 1.2% 5.2 0.4 7.0%
San Miguel Food and Beverage Inc. FB 8,760 Buy 70.95 80.00 12.8% 32.8 29.1 2.16 2.43 -26.8% 12.7% 3.6% 9.4 2.6 9.2%
Security Bank Corporation SECB 1,937 Neutral 123.00 131.00 6.5% 12.5 12.0 9.86 10.22 -26.4% 3.6% 2.4% NA 0.7 6.1%
Semirara Mining and Pow er Corporation SCC 1,171 Buy 13.18 15.30 16.1% 16.6 8.5 0.79 1.56 -66.9% 96.5% 9.5% 4.5 1.3 15.5%
Shakey's Pizza Asia Ventures PIZZA 256 Neutral 7.99 7.50 -6.1% NM 27.3 (0.17) 0.29 NM NM 0.3% 11.0 2.0 8.4%
SM Investments Corporation SM 24,666 Neutral 980.00 950.00 -3.1% 44.3 25.2 22.12 38.83 -40.2% 75.5% 0.7% 18.7 1.9 11.7%
SM Prime Holdings SMPH 22,266 Neutral 36.90 36.00 -2.4% 68.0 49.0 0.54 0.75 -52.7% 38.7% 0.6% 25.8 3.4 8.0%
Universal Robina Corporation URC 6,540 Buy 142.00 175.00 23.2% 26.1 24.3 5.45 5.83 12.4% 7.1% 2.4% 13.6 3.0 12.5%
Vista Land & Lifescapes VLL 1,011 Buy 3.81 4.60 20.7% 8.1 6.3 0.47 0.60 -45.0% 27.8% 3.3% 11.4 0.5 7.7%
Wilcon Depot, Inc. WLCON 1,556 Buy 18.16 21.00 15.6% 53.4 34.1 0.34 0.53 -29.4% 56.6% 1.1% 14.4 4.4 14.2%

*Rounded; Fully-diluted Normalized EPS; FGEN and ICT in USD

**Presentation of some figures have changed 22 January 2020 onwards due to a revised approach to dilution, equity, and foreig n
exchange translation
Source: BDO Securities estimates, Bloomberg
Note: Prices as of 28 May 2021

Disclaimer: Our 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.