Papa Securities Corp. (Morning Huddle - Daily News) - August 17, 2017

August 17, 2017   Morning Huddle Daily Summary

 

US Tracker US stocks close higher on gains from Home Depot and United Technologies. DOW 22,024.87 +25.88 +0.12% EPHE 35.95 +0.49% +1.38% PHI 34.34 +0.31 +0.91% Peso 51.35 TEL Par 1,763 vs 1,740 TEL   Economic News DOF says without tax reform, the government can only fund half of PhP9tn Build Build Build program. According to Finance Secretary Carlos Dominguez, the Senate version of the tax reform proposal (Senate Bill 1408) is expected to generate PhP169bn in the first year of implementation. Expected loss of PhP126bn from personal income tax cuts will be offset by a larger VAT base, adjustment of excise taxes on fuel, automobiles and sugar-sweetened beverages. The Senate has been deliberating on the package since July 24.   Corporate News SCC to construct 50MW coal plant. This will be in Antique and will provide power for the baseload requirements of Semirara Island and surrounding off-grid provinces. The plant will likely take 3yrs to complete. DOE will be constructing the delivery cables costing over PhP1.0bn alongside the plant.   Comment: Using DMC's off-grid generators as benchmark, the 50MW could yield an additional ~PhP2.0bn in revenues (+4.6%) and ~PhP240mn in income (+1.5%).Last 176.0   MWC, IFC eye Asian projects. Manila Water Asia Pacific, a subsidiary of MWC, signed a memorandum of understanding with International Finance Corp. to explore opportunities in providing water, used water, and environmental services in Asia Pacific. Last 31.60.

Papa Securities Corp. (Morning Huddle - Daily News) - August 16, 2017

August 16, 2017   Morning Huddle Daily Summary

 

US Tracker US stocks end slightly higher after retail sales in July exceeded expectations (0.6% vs 0.4%). DOW 21,998.99 +5.28 +0.02% EPHE 35.46 -0.06 -0.17% PHI 34.03 +0.27 +0.80% Peso 51.08 TEL Par 1,738 vs 1,740 TEL   Economic News Cash remittances in June up 5.7%. The figure for the first half now amounts to US$6.9mn, higher by 1.9% YoY but below the 4% growth target set by BSP. During the period, the number of OFWs rose by 1.14mn.     Corporate News SHLPH 2Q17 net income dropped 55.1% YoY to Php1.3bn, bringing down 1H17 net income by 17.4% YoY to Php4.2bn, above the consensus estimate of Php7.0bn (60.0%). The planned refinery shut down and lower benefit from inventory gains due to falling crude oil prices drove the double-digit decline in net income. Last 65.25.   DD's 1H17 net income jumped 161% to PhP376mn as revenue soared 131% to PhP1.6bn. An increase in rental revenues drove topline as DD continued to grow its retail portfolio and acquired Hotel of Asia (HOA). HOA is now growing its 2 hotel brands Hotel101 and Jinjiang Inn to 5,000 rooms by 2020. Meanwhile, it has 20 operational malls, 18 of which are under the CityMalls brand. DD will be opening another 12 CityMalls by yearend. In time with the announcement of a follow-on offering, the company upgraded its 2020 net income target to PhP5.5bn from PhP4.8bn as it grew its leasable portfolio target to 1.2mn sqm from 1mn sqm. Last 45.00.   MPI unit starts Harbor Link construction. NLEX Corp. broke ground for the building of the R-10 section of the NLEX Harbor Link Segment 10. The Valenzuela to C3 section of the Harbor Link is expected to finish by 1Q18 while the R-10 section is scheduled to be completed by 4Q18. Last 6.58.

Papa Securities Corp. (Morning Huddle - Daily News) - August 11, 2017

August 11, 2017   Morning Huddle Daily Summary

 

US Tracker In a broad-based sell-off, US stocks fell below 22,000 after US-North Korea tensions escalated. DOW 21,844.01 -204.69 -0.93% EPHE 35.22 -0.87 -2.41% PHI 33.01 +0.62 1.91% Peso 50.795 TEL Par 1,677 vs 1,712 TEL   Corporate News MEG 1H17 net income rose 11% to P6.7bn, beating the consensus forecast of P12.4bn. This also beat Papa's P11.5bn estimate. The 20% surge in rental income to P5.8bn drove earnings after it hit the 1mn sqm mark. Residential revenue, meanwhile, was flat at P16.8bn.   TEL 1H17 core income up 1.0% YoY to Php11.9bn, in-line with our estimate of Php25.4bn(47%) and consensus estimate of Php22.76bn(53.0%). Recurring income increased by 1.0% as expense management and reduction in subsidies lead to a 10.0% decline in operating expenses, offsetting the 7.0% decline in service revenues. The decline in total mobile subscribers (-14.0% YoY) and blended ARPU (-2.8% YoY) drove the 7.0% decline in service revenues.   RCB 1H17 fell 9.9% to PhP2.4bn, in line with consensus at 52.6% of PhP4.5bn. In 2Q17, net earnings jumped 67% to PhP1.3bn, driven by steady core lending, fees, and managed opex. Loans went up 16%, driven by corporate loans (+15%), SME loans (+26%), and consumer (+14%). NIM improved to 4.26% from 4.06% in end-2016, resulting in net interest income of PhP8.6bn, up 6.7%. However, non-interest income fell 6.9%, thus driving down gross income growth to just 2% to PhP12.4bn. Opex was subdued as it grew just 5% to PhP8.7bn. Capital ratios remained ample with CET 1 of 12.13% and CAR of 15.2%, while asset quality is still solid with NPL ratio of 1.35% and NPL cover at 79.82%.     DMC 2Q17 profit rises 17.94% to PhP4.0bn. This brought 1H17 earnings to PhP7.6bn (+20.8%), in line with consensus estimates (50%). DMC's earnings in the first half were driven by DMCI Homes (+78%), SCC (+24%), and the construction arm (+25%). The remaining segments posted flat to negative income growth. DMC expects a more modest second half as SCC's coal mine is faced with a higher strip ratio. The segments performed as follows:   >The property business was boosted by higher sales and reservations and the switch in accounting method to % of completion. >DMC's construction arm benefited from higher completion of ongoing projects and lower construction costs. >SCC's contribution rose 24% from a strong 1Q despite posting flat growth in the second quarter. >Off grid power fell 5% due to the expiration of Masbate’s ITH. >Nickel mining was down 5% as well due to lower output despite higher nickel prices. >Maynilad’s contribution dropped 31% on the delay of implementing the tariff rate rebasing.   PNB 1H17 dropped 37% to PhP2.7bn, largely behind consensus at 38% of PhP7.1bn. Excluding the one-time gain of PhP2.7bn in 1H16, net earnings would have been up 29.7%. 2Q17 alone is down 11% to PhP1.5bn. Loans went up 16%, while deposits rose 17%, thus net interest income gained 8% to PhP10.3bn. Non-interest income plunged 46.7% to PhP3.4bn in the absence of one-time gains last year. Meanwhile opex grew just 6%. Net NPL ratio remained low at 0.25%, while NPL cover was ample at 130%.     SMC core profit rose 21% in 1H17. Income rose on higher sales volume from its beer and foods business, better production yields from oil, and sustained growth from toll roads. Meanwhile, the power segment saw income drop 15% due to the maintenance shutdown of Ilijan and Malampaya. Last 101.60.   GTCAP posted 1H17 net income to common shareholders fell 20.5% to PhP7.2bn, in line at 48% of consensus of PhP14.97bn. Excluding discontinued operations, core net income is up 19% to PhP7.4bn. Revenues grew 18% to PhP108.2bn, driven by Toyota, Federal Land, Pro-friends, and higher equity contributions from associates. Last 1,168   •  MBT gained 5% to PhP9.5bn on 21% loan growth with NIM improvement. • Toyota net income fell 7% to PhP6.8bn despite strong car sales growth of 18% to 85,728 units. Unfavorable FX rates, increased sales of low margin models, and rise in opex cut net margin to 7.8% from 9.7%. • Federal Land and Profriends net earnings was flat at PhP1.5bn as booked sales grew 18% for FedLand and 14% for Profriends. • AXA posted net income of PhP854mn, up 13% on 28% growth in annualized premium equivalent to PhP3bn. • MPI reported core net income rose 12% to PhP6.98bn due to an expanded power portfolio, robust traffic growth, and sustained growth in healthcare segment   MWIDE 1H17 net income at Php927.0bn (-6.0% YoY), in-line with consensus estimate of Php1.6bn (57.0%).

Papa Securities Corp. (Morning Huddle - Daily News) - August 10, 2017

August 10, 2017   Morning Huddle Daily Summary

 

US Tracker US stocks closed lower after Trump threatens N.Korea. DOW 22,048.70 -36.64 -0.17% EPHE 36.09 -0.35 -0.96% PHI 32.39 -0.58 -1.76% Peso 50.575 TEL Par 1,638 vs 1,635 TEL   Corporate News PF 1H17 net income +24% YoY to PhP3.1bn, in-line with our estimate of PhP6.44bn (48.1%), and ahead of consensus’ (57.9%). In 2Q17 alone, net income up 27.6% YoY to PhP1.6bn. Strong profit performance was mainly attributed to its Branded Value-Added businesses (+4% YoY), improved operational efficiencies, and lower raw material costs. Meanwhile, revenues grew 5% YoY to PhP56.0bn. However, milling business declined 2% to PhP4.6bn due to soft global wheat prices and intense competition. Last 311.0   1H17 segment sales performance Segment % ch YoY in PhPbn Branded Value-Added 4% 12.6 Better sales mix, increased volumes from the processed meats segments Agro-industrial (Feeds, Poultry, and Monterey) 6% 39.5 Higher volumes and favorable selling prices Milling -2% 4.6 Soft global wheat prices and intense competition   MRSGI 1H17 net income up 53.1% YoY to PhP401.1mn, ahead of consensus full-year forecast of PhP961.50mn (41.7%). In 2Q17 alone, profit up 45.9% YoY to PhP305.2mn. Revenues were slightly up 1.9% to PhP8.6bn in 2Q17. This is a result of the opening of a new store during the 2H16 and additional two new stores during 1H17. Excluding the impact of newly opened stores, SSSG was 1% 1H17 vs 1H16’s 5%. Comment: Note that 1H results historically account for ~30% of MRSGI’s full-year performance thus we reckon 1H17’s performance was ahead of consensus FY forecast. As of end-June, MRSGI operated a total of 52 stores. Earnings Summary           PhP in mn 2Q16 2Q17 YoY 1H16 1H17 YoY Revenue      8,461.0      8,620.7 1.9%   16,131.88   16,651.1 3.2% Gross Profit      1,839.0      2,007.3 9.1%     3,400.80      3,710.4 9.1% Net Income         209.2         305.2 45.9%         262.03         401.1 53.1% GPM 21.7% 23.3% 160bps 21.1% 22.3% 120bps NIM 2.5% 3.5% 100bps 1.6% 2.4% 80bps Source: MRSGI               EMP net income -20.6% YoY to PhP2.7bn amid softer domestic liquor consumption. This is below FY2017 consensus’ estimate of PhP7.49bn (36%). 1H17 revenues were also down 1.6% to PhP1.1bn. No further details were disclosed. Last 7.07   BLOOM 1H17 surged 24x YoY to PhP4.1bn, beating consensus at 109% of PhP3.8bn. In 2Q17 alone, net earnings grew 47% to PhP1.96bn. EBITDA rose 28% to PhP6.8bn. Strong earnings was mainly due to better Solaire operations and lower losses from Korea. . All segments reported strong volume: VIP (+25.0%), mass table (+22.0%), and gaming machines (+28.0%). Gross gaming revenues went up 26% to PhP22.9bn. Non-gaming revenues grew 40% to P1.6 bn driven by new shows in the Theatre at Solaire, the opening of The Shoppes at Solaire, and improved hotel occupancy of 91.6% from 84.2% in 1H16. Last 9.05.     MWC posts Php3.2bn (+3.0% YoY) in 1H17, in-line with consensus full-year estimate of Php6.0bn (53.0%). The 3.0% increase in consolidated billed volume (366.9mn cubic meters), with billed volume in the Manila concession area growing by 1.0%, while billed volume in local non-Manila concession areas grew by 10.0%. Last 31.35.   SCC 2Q17 profit flat at PhP3.4bn. 1H17 earnings were booked at PhP7.9bn (+23.5% YoY), in line with both PAPA (48%) and consensus (50%) estimates. The power segment recorded better capacity factor during the first half (blended rate of 56% vs 50% last year), leading to a 12% increase in generation, but only 1.2% increase in energy sold. Meanwhile, coal sales volume dropped 4.2% despite higher production (+25%) due to timing difference of export deliveries. We currently have a NEUTRAL rating on SCC with TP at 180/sh. Last 165.80.     CEB posts Php4.3bn (-43.6% YoY) in 1H17, in-line with consensus full-year estimate of Php8.7bn. Higher aviation fuel expense (+29.5% YoY), Php1.1bn hedging losses, and higher FX losses (+185.0% YoY) primarily drove the lower net income in the 1H17. Last 100.70.