Papa Securities Corp. (Morning Huddle - Daily News) - August 15, 2017

August 15, 2017   Morning Huddle Daily Summary

 

US Tracker US stocks rise after Pentagon says it is working towards a diplomatic solution with N.Korea. DOW 21,993.71 +135.39 +0.62% EPHE 35.52 +0.13 +0.37% PHI 33.76 +0.30 +0.90% Peso 51.08 TEL Par 1,724 vs 1,730 TEL   Economic News Tax collections inch towards target. BIR's tax collections rose 14.1% to PhP134.2bn last month, just 0.4% lower than that period's target. This was in part helped by partial payment worth PhP3.4bn of Mighty Corp.'s tax deficiency. 7M17 collections now amount to PhP987.8bn, 9.3% higher YoY and 4.9% below government target.   The Investment Coordination Committee (ICC) has approved six projects worth PhP57bn involving roads, bridges, procurement of equipment, and other programs. These projects will now be elevated to the NEDA Board before they can be implemented. Since June 2016, the NEDA Board has approved 18 infrastructure projects worth a combined PhP463bn that are ready for implementation.     Corporate News EDC 1H17 core income at PhP5.2bn, up 11% YoY. This is in line with PAPA (52%) but higher than consensus forecast (54%). Revenue rose by 4.1% from higher sales volume from Unified Leyte and better ASP from Bacman. Net margin now stands at 29.4%, 174bps higher YoY. We suspect EDC's organizational restructuring, which led to a 206bps improvement in operating margins last quarter, was the main driver. Growth in the second half will likely be much slower due to the Leyte quake. Provided repairs go according to schedule, we are looking at revenue declining by 3.6% by year-end. More details to follow on the earnings call this afternoon. Last 6.82.   FLI's 1H17 net income rose 7% to Php2.6bn, behind the PhP5.9bn consensus forecast (44%). The drag came from a 17% decline in real estate revenue in 2Q17 to PhP2.81bn, despite 1H17 being up 8% to Php7.5bn. Rentals surged 25% to PhP2bn on the back of new capacity of office spaces. Last 1.81.     VLL's 1H17 net income hit PhP4.5bn (+15% YoY), in line with the consensus forecast of PhP8.8bn (51%). 16% topline growth (to PhP18.2bn) drove earnings, as recurring revenue jumped 37% (to PhP2.9bn) while real estate sales rose (PhP14.4bn). VLL now has 951k sqm in recurring GFA and will add 50k more by yearend to 1mn sqm. This will grow 30% in 2018 to 1.3mn sqm. Current mix is 80% malls/retail with the balance in office. Last 5.81.     WLCON's 1H17 net income hit PhP763mn, beating our PhP710mn estimate. This comes on the back of strong same store sales growth at 5.7%, helping bring 1H17 revenue 11% higher to PhP8.5bn. GP margin remained consistent at 30%.  Last 8.33.   RRHI core income +9.6% to PhP1.15bn in 2Q17. This brings 1H17 earnings to PhP1.99bn (+14.1%) in-line with PhP5.34bn full year consensus’ estimate (%). 2Q17 net income rose 4% YoY, while revenues up 8% YoY. Consolidated SSSG decelerated during the quarter (+2.2%) vs 1Q17 (+3.2%) bringing 1H17 SSSG to 2.7%. Meanwhile, RRHI opened 91 stores QoQ bringing their total store count to 1,619 plus 1,954 The Generics Pharmacy stores. Note that 1H numbers of RRHI historically accounted for ~41% of full-year results. Last 86.50.   PGOLD net income +9.8% YoY to PhP2.49bn in 1H17. This is in line with both PAPA and consensus estimate (40%). In 2Q17 alone, net income up 9% YoY to PhP1.21bn. The improvement came from the 10.8% YoY increase in revenues to PhP56.6bn and strong SSSG for the quarter (PGOLD 4%; S&R 10%). Meanwhile, operating margin and the net margin remained flattish at 6.0% and 4.2%, respectively. Note that 1H numbers of PGOLD historically accounted for ~41% of full-year results. Last 47.00.   SSI 1H17 net income up 13.7% to PhP274mn, below 2017 consensus estimate of PhP609.8mn (44.9%). Revenues were down -1.91% to PhP8.42bn driven by the rationalization program and slower sales from casual, footwear, accessories, and luggage segment. Meanwhile, profit and operating margin expanded 50bps to 3.3% and 7.8%, respectively, driven by a 6.2% decrease in opex. Last 4.12.   PIZZA 1H17 recurring income up 10% YoY to PhP386mn, in-line with full-year consensus forecast of PhP750.50mn (51.4%). Revenues rose 20% YoY to PhP3.4bn, due to 8% SSSG and expansion on local store network. Meanwhile, GP and operating margins jumped 120bps to 30.1% and 180bps to 17.6%, respectively. However, net income margin saw a decline of 100 bps to 11.4% primarily due to interest expense incurred beginning mid-2016.  As of end-June, PIZZA opened a total of 11 stores, in-line with 2017 guidance of 20 stores. Last 12.62.   JFC profit up 18.1% to PhP1.96bn in 2Q17. For 1H17, net income +14.2% YoY to PhP3.49bn in 1H17 in line with both PAPA (47%) and consensus estimates (51%). Strong profit over the quarter was driven by the 13.6% YoY rise in revenues to PhP61.84bn, store network expansion, and SSSG of 6%. Systemwide sales grew by 13.5% while the foreign business grew by 25.6%. Last 222.00.