August 4, 2017
Morning Huddle
Daily Summary
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US Tracker
DOW 22,026.10 +9.86 +0.04%
EPHE 36.08 +0.02 +0.06%
PHI 32.28 -0.11 -0.34%
Peso 50.27
TEL Par 1,623 vs 1,610 TEL
Corporate News
Philippines Renewable Energy Holdings Corp. (PREHC) is acquiring 23.5%-31.7% of EDC’s outstanding voting shares at 7.25/sh (22% premium to market price and 7.6% to PAPA’s fair value). FGEN will sell 10.6% of its existing stake in EDC, while the remaining 21.1% will be sourced from public ownership through a tender offer. In the event that all minority shareholders choose to sell their shares, the scale back provision will apply, where the number of tendered shares will be pro rated. If PREHC is able to acquire the full 8.9bn common shares during the tender offer, FGEN’s proceeds could range from PhP11.4bn-14.4bn, depending on the amount of shares the public minority is willing to sell.
MER reported core earnings of PhP5.5bn in 2Q17, 4.8% lower YoY. This brings 1H17 core profit to PhP10.1bn (-2.6% YoY), in line with both PAPA (53%) and consensus (53%) estimates. Lower income was recorded as revenue growth (+9.5%) failed to outpace greater expenses (+11.1%). Volume growth for the first half came in at 3.1%, while distribution revenue grew by 2.9%. We have a BUY rating on MER with TP at PhP319.00/sh. Last MER 279.60.
PX records 3.4% decline in 1H17 core profit. Core income during the period came in at PhP748mn, below consensus estimate (40%). In 2Q17, the level of ore mined continued to fall by 10% as the deeper draw points affected PX's ability to mine while terrain in newer draw points were harder to operate in. Consequently, revenue and core profit in 2Q17 fell 7.7% and and 24.8% respectively despite better copper and silver ASP. Last 8.86.
BPI 1H17 down 7.7% to PhP11.7bn, in line at 51% of FY17E consensus of PhP23.1bn. We estimate 2Q17 is down 27.9% to PhP5.5bn. Loan growth of 16.9% came in lower than the industry’s 19% pace, while deposits inched up just 8%. Net interest income rose 13.5% to PhP23.5bn. As expected, non-interest income dropped 18.4% to PhP11.8bn in the absence of hefty PhP4.8bn trading gains in 2Q16 last year as BPI sold some HTM securities. Opex growth was managed at just 5%, while provisions for credit losses declined 19% to PhP2.5bn. CET 1 of 12.8% is near the regulatory minimum of 9.33% (8.5% min + 0.83% for D-SIB). Last 105.4
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