August 8, 2017
Morning Huddle
Daily Summary
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US Tracker
US stocks close higher as stronger-than-expected corporate earnings continue.
DOW 22,118.42 +25.61 +0.12%
PHI 32.92 +0.19 +0.58%
Peso 50.355
TEL Par 1,658 vs 1,640 TEL
Corporate News
MBT 1H17 up 4.8% to PhP9.5bn, in line with our estimates (48%) and consensus (47%). 2Q17 net earnings is up 3.3% to PhP3.9bn. Loans went up 21.5%, as corporate segment grew 24% while retail went up 17%. We estimate NIM improved 9bps YoY and 2bps QoQ to 3.22%. This resulted in net interest income growth of 15.7% to PhP29.6bn. 1H17 non-interest income fell 10.8% as fee income came in flat while trading gains dropped 30% to PhP2.5bn. Note however that MBT was able to generate trading gains of PhP1.4bn in 2Q17, up 34%. Opex grew just 9% while provisions for credit losses declined 22% to PhP2.5bn. Asset quality still solid with NPL ratio at 0.9% while NPL cover is ample at 109%. CET 1 is strong at 13.2%.
Comment:
As earnings came in line with our forecasts, we maintain our FY17 net earnings estimate of PhP19.6bn (+9% YoY) and TP of PhP99.00, based on 1.38x PBV. MBT’s lending operations continues to beat peers as loan growth of 21.5% came in higher than the industry’s 19%, BDO’s 17%, and BPI’s 16.9%. We also estimate MBT’s asset yield continues to lead peers in 2Q17. Maintain BUY. Last 87.
GLO 1H17 core income down by 10.0% YoY to Php8.0bn, below our estimate of Php18.4bn (43.0%) but in-line with the consensus estimate of Php15.0bn (53.0%). Higher interest expense depreciation charges coupled with the share in equity losses and spectrum amortization related to the SMC telco asset acquisition offset the 6.0% YoY EBITDA growth.
Comment:
We have a NEUTRAL recommendation on GLO with TP at 2,090.0. Last 2,046.
MAXS 2Q17 net income up 14.9% YoY to PhP155.7mn. This brings 1H17 net income to PhP331.72mn (+12%YoY), slightly below our estimates (46.4%) and of consensus forecast (46.1%). 2Q earnings were driven by 11% (PhP6.05bn) topline growth and 12% improvement in systemwide sales (PhP8.29bn) driven by 20 new store openings in PH and 3 in abroad. Restaurant sales and commissary sales grew 11% and 7% to PhP5.04bn and PhP674.04mn, respectively. This is due to new store openings especially additional franchised outlets and stable same-store sales performance. This was achieved despite higher input costs due to the increase in prices of key raw materials.
Comment:
We currently have a BUY rating on MAXS with a TP of PhP24.00. At current price, MAXS trades at 22x 2017E PE. Meanwhile, MAXS currently operates a chain of 650 outlets with 51 located overseas. This is in-line with our 688 store outlet in 2017E. Last 19.3
DNL 1H17 recurring net income +7.5% to PhP1.35bn, below 2017 consensus estimates of PhP3.08bn (43.2%). In 2Q17 alone, net income was flat at PhP688.0mn. Consolidated GP contracted -1.9ppts to 17%. Also, majority of DNL's business segment food ingredients, oleochemicals, and specialty plastics experienced GP margin pressures during the period (FI -2.1ppts to 13%, Oleochemicals -0.4ppts to 16.4%, and SP -1.5ppts to 29%) due to decline in volume. Meanwhile, revenues grew by 24% YoY(PhP6.3bn), driven by strong domestic demand. Last 12.22
URC 1H17 profit -13.7% YoY to PhP6.4bn, below consensus’ estimate of PhP14.26bn (43.9%). In 2Q17 alone, net income down 23% to PhP2.88bn due to lower operating income and foreign exchange gains, and higher net finance costs and income tax provision. Consolidated EBIT also declined 7.9% to PhP7.6bn, EBIT margin dropped 300bps YoY due to decline in volumes in BCF Philippines and additional investments in Vietnam to recover the business. Meanwhile, revenues were up 9.6% to PhP60.8bn as a result of strong performances from Thailand and the consolidation of Snackbrands into the business. Last 151.50.
CNPF 1H17 net income +7.9% YoY to PhP1.47bn, in-line with consensus forecast (50.2%). In 2Q17 alone, net income up 6% YoY to PhP769mn. Growth in net income was driven by robust demand for its branded food products - marine, meat, and milk. 2Q17 revenues grew by 29.7% to PhP8.6bn, supported by the strong performance of its exports and a healthy increase in the CNPF’s branded sales. However, 2Q17 GPM and EBITM contracted 460bps to 25.6% and 190bps to 47.2%, respectively, due to higher input costs and the faster growth of lower margin OEM businesses. More details after briefing on August 10. Last 18.04.
ALI's 1H17 net income reached PhP11.51bn (+18% YoY), in line with the PhP24.18bn consensus forecast (48%). New bookings, project completion and lot sales drove the 29% growth in property development revenues to PhP46.58bn. Sustained demand growth from BPOs drove office leasing revenue 14% higher to PhP2.93bn, even as ALI did not aggressively tap POGOs. Meanwhile, foreign travel advisories and the conflict in Mindanao weighed on the hotels and resorts business, which grew 6% to PhP3.40bn. Last 41.85.
SMPH's 1H17 net income hit PhP14.39bn (+14% YoY). This is in line with the PhP27.44bn consensus forecast (52.4%). Consolidated revenue grew 10% to PhP43.25bn, driven largely by 10% growth in mall rentals to PhP21.75bn and 26% rise in amusement and merchandise sales to 1.58bn. Same mall sales growth was logged at 7%. Residential revenue grew 5% to PhP13.91bn on the back of higher construction accomplishments as outlook remains positive on 22% growth of reservation sales to PhP27.55bn. Last 34.
RLC's 1H17 net income hit PhP2.92bn (-9% YoY), below the FY17 consensus forecast of PhP6.39bn (46%). Earnings sustained its slide on a 9% decline in residential revenue to PhP3.34bn as the company rebuilt its team. Malls continued to account for bulk of revenue, growing 6% to PhP5.25bn, followed by offices (+9% at PhP1.51bn) and hotels (+7% at PhP919mn). RLC also entered the warehousing business with a 32k sqm facility in Muntinlupa, due for completion in 1Q18. On top of this, it will soon start development of the 18ha Sierra Valley township in Cainta Rizal. Last 24.95.
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