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.

Papa Securities Corp. (Morning Huddle Daily News) - August 9, 2017

August 8, 2017   Morning Huddle Daily Summary

 

US Tracker US stocks closed lower on news of N. Korea successfully producing a nuclear warhead. DOW 22,085.34 -33.08 -0.15% EPHE 36.44 -0.04 -0.11% PHI 32.97 +.05 +0.15% Peso 50.44 TEL Par 1,663 vs 1,658 TEL   Economic News IMF lowers Philippine FY17 GDP forecast to 6.6% from 6.8%, and FY18 to 6.8% from 6.9%. The IMF says this is due to the absence of election-related public spending last year. They also said the government should pursue the comprehensive tax reform program, provide insurance against the volatile international finance conditions, and protect the confidence and trust that the private sector both domestic and international have on the conduct of economic policies.     Industry News ‘Milk tax’ to worsen undernutrition. The planned milk tax is included in House Bill 5636, the Tax Reform for Acceleration and Inclusion Act (TRAIN) bill. Proposed milk tax is likely to increase the prices of powdered milk in the country by a range of 11% - 26% while flavored milk, specifically chocolate flavored milk will see increased prices by a range of 11% - 34%. Brands under listed companies to be affected include Magnolia (PF) and Birch Tree (CNPF).   Corporate News GTCAP acquires 20% stake (4mn shares) in Sumisho Motor Finance Corp (SMFC) for PhP379.92mn or PhP94.98/sh. This will allow GTCAP’s entry into motorcycle financing. Payment will be made on August 11, 2017. SMFC is a jv of PS Bank, PS Bank Retirement Fund, Sumitomo Corporation, and Sumitomo Corporation of the Philippines. As per its last SEC filing, SMFC’s FY15 net earnings more than doubled YoY to PhP50.5mn. Last 1,215.   PCOR 1H17 net income up to Php8.2bn (+56.0% YoY), above consensus full-year estimate of Php9.2bn (89.1%). The strong 1H17 was driven by improved refinery production yields and sustained sales volume of 52.9mn barrels (+0.5% YoY) coming from the strong performance in 2016. The press release did not provide any additional details regarding their 1H17 performance. Last 9.65.   ICT 1H17 net income up to US$103.6mn (+19.0% YoY), above consensus full-year estimate of US$177.1mn (58.7%). Strong volume growth (4.5mn TEU, +7.0% YoY), group-wide cost optimization initiatives and positive contribution of the Congo terminal contributed to the double-digit growth in 1H17. Last 105.2.   EAGLE's 1H17 net income of PhP2.22bn (+13% YoY) stands in line with our PhP4.35bn FY17 expectation (51%) and with the consensus forecast of PhP4.64bn (48%). Topline grew 12% to PhP7.48bn, driven by double-digit growth in selling volumes. This was offset by lower ave. selling prices (ASPs). EAGLE maintained that its Line 3 (2mn tons/year) would be complete by 1Q18, with an ITH from BoI effective in the same year. Current recommendation is a BUY with a TP of PhP17.15/sh. Last 15.00.

APS Daily Market Insights August 8, 2017

TOP NEWS HEADLINES

 DD Plans P7.5 Bn Follow-on Offering. Double Dragon Properties Corp. plans to conduct a follow-on offering (FOO) of 150 Mn shares amounting to P7.5 Bn, in a bid to join the PSEi in the near term. Currently, DD has a free float level of 25.6% and will have a 30.3% float after the FOO. Assuming DD will reach its 2020 net income target of P5.5 Bn, earnings will record a CAGR of 50.25%. Price to book estimates for 2018 stood at 3.6x while 2018PER stood at 46.9x assuming current price levels.

Papa Securities Corp. (Morning Huddle - Daily News) - August 8, 2017

August 8, 2017   Morning Huddle Daily Summary

 

US Tracker US stocks close higher as stronger-than-expected corporate earnings continue. DOW 22,118.42 +25.61 +0.12% EPHE 36.48 +0.17 +0.47% 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.

Papa Securities Corp. (Morning Huddle - Daily News) - August 7, 2017

August 7, 2017   Morning Huddle Daily Summary

 

US Tracker US stocks rise on strong jobs data. DOW 22,092.81 +66.71 +0.30% EPHE 36.31 +0.23 +0.64% PHI 32.73 +0.45 +1.39% Peso 50.16 TEL Par 1,642 vs 1,630 TEL   Economic News July headline inflation was at 2.8%, slightly faster than 2.7% in June. This is in line with market expectation of 2.6%-3.0% for the month. YTD average is at 3.1%, in line with the BSP’s 2%-4% target range. The higher inflation is attributed to the PNR fare increase, increase in electricity rates due to higher generation charges, and higher rental rates for housing. Food prices eased on ample supply.     Corporate News NIKL books PhP1.5bn earnings in 1H17. Despite being a turnaround from just PhP24mn last year, this is slightly below consensus, accouting for 46% of the full year estimate. NIKL sold 4.4% more NIKL ore in 1H17 at an ASP of US$4.4/lb, 12.2% higher YoY. A stronger dollar (+6.8%) helped boost earnings as well. Last 6.20.   MPI 1H17 core net income grew to Php7.8bn (+17.4% YoY), above our full-year estimate of Php14.2b (54.9%) and consensus estimate of Php13.4bn (58.1%). In 2Q17 alone, core net income grew to Php4.6bn (+49.0% YoY) driven by robust traffic growth on all managed toll roads, expanded power portfolio through increased investment in Beacon Electric, and continuing growth in the Hospital Group. Meanwhile, better-than-expected operations of the logistics and other operating segments drove the outperformance in this quarter. MPI moved the IPO of the Hospital Group from 2018 to 2019 as they look for various options to fund its expansion. MPI also submitted an unsolicited proposal to build a 4.6-kilometer expressway connecting Cavitex to Sangley Point in Cavite City. We have a BUY recommendation on MPI with a 12-month TP of 8.10 for a potential upside of 21.0%. Last 6.69.