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 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.

Papa Securities Corp. (Morning Huddle - Daily News) - August 14, 2017

August 14, 2017   Morning Huddle Daily Summary

 

US Tracker US stocks closed flat with the focus still on threats from N.Korea. DOW 21,858.32 +14.31 +0.07% EPHE 35.39 +0.17 +0.48% PHI 33.46 +0.45 +1.36% Peso 50.98 TEL Par 1,706 vs 1,740 TEL   Economic News BSP reassures market of strength of Peso. After breaching 51PHP/USD last Friday, BSP Governor Espenilla says the BSP is ready to use its "huge pile of foreign currency reserves" to stabilize the peso in case of excessive volatility.     Industry News PH records first avian flu outbreak. Around 37,000 fowls have died of the Avian Influenza Type A Subtype H5 in San Luis, Pampanga. Pampanga Gov. Lilia Pineda has declared a state of calamity in the province. A 1km radius quarantine area within San Luis town will be implemented, while another 7km radius controlled area has been declared. According to Sec. Pinol, ~400,000 chickens would be slaughtered but upon actual inspection, 200,000 birds will be culled within the next 3 days to control the virus. Fowls and eggs from the controlled area are not allowed to be brought out.   Comment: Given PF’s climate control technology and strict sanitary inspection for poultry farms, PF confirmed that no poultry farms were affected by the avian flu in Pampanga.     Corporate News AC 1H17 rose 9% to PhP15.1bn, ahead of consensus at 58% of PhP26.1bn, led by ALI and AC Energy.  In 2Q17, net income inched up 2% to PhP8.1bn. BPI was down 8% due to the absence of one-off gains, GLO fell 9.8% on equity losses and spectrum amortization of VTI assets, while MWC inched up 2.3% on higher billed volume. ALI rose 18%, led by property development and commercial leasing, while AC Energy surged 64% on a favorable wind regime, improved efficiencies of coal plants, and earnings from solar plant. AC likewise said it is looking at more unsolicited proposals, same with the C3 elevated expressway project with SM. Last 882.   JGS 1H17 core income after tax was flat at PhP15.9bn, in-line with PhP29.96bn consensus estimate (53%). For 2Q, core income -0.2% to PhP7.76bn.1H’s soft earnings was primarily due to lower net income of CEB as a result of the rise in fuel prices and hedging losses incurred for the period. The 9% and 13.7% decline in net income of RLC and URC, also contributed to the consolidated net income decline.   1H17 net income segment performance: - CEB (-43.6% to PhP4.3bn): Higher aviation fuel expense - RLC (-9% to PhP2.92bn): Decline in residential revenue - URC (-13.7% to PhP6.4): Decline in volumes in BCF Philippines and additional investments in Vietnam - Robinsons Bank (+20.3% to PhP161.33mn): Higher interest income, commission income and trading gains - JGS Petrochem (+31.5% to PhP3.20bn): Increase in the volume of polymers   JGS Earnings Summary             PhP in mn 2Q16 2Q17 YoY 1H16 1H17 YoY Revenue       58,787       66,966 13.9%     119,378.0      134,473 12.6% Gross Profit       24,590       25,664 4.4%        49,900.1         51,572 3.4% Operating Profit       13,778       13,392 -2.8%        28,417.0         27,079 -4.7% Core Income After Tax         7,773         7,756 -0.2%        15,947.0         15,990 0.3% Net income attributable to parent         7,904         7,132 -9.8%        17,534.0         14,644 -16.5% GPM 41.8% 38.3% (350bps) 41.8% 38.4% (340bps) OPM 23.4% 20.0% (340bps) 23.8% 20.1% (370bps) CIATM 13.2% 11.6% (160bps) 13.4% 11.9% (150bps) NIM 13.4% 10.7% (270bps) 14.7% 10.9% (380bps) Source: JGS               LTG posted a flat net income of PhP4.53bn last 1H17, below 2017 consensus estimate of PhP10.2bn. In 2Q17, profit declined 2.1% PhP1.7bn. Contributions from the liquor and banking units were disappointing due to lower ethanol volume and disappointing non-interest income, respectively.   1H17 net income segment performance: - Tobacco (+28% to PhP1.86bn): Higher selling prices - Liquor (-13.7% to PhP105.0mn): Lower ethanol volume and higher alcohol costs - Bank (-38% to PhP2.75bn): Non-interest income plunged 46.7% to PhP3.4bn - Beverage (-44% to PhP401.0mn): Higher opex - Property (+31% to PhP174mn): Higher lease rates at its BPO office buildings   In a press release, RWM disclosed gross gaming revenues in 1H17 reached PhP9.2bn, down 26.4% YoY as its casino had been non-operational for 27 days due to the shooting incident last June 2. Non-gaming revenues inched up 3.9% to PhP2bn. EBITDA amounted to PhP2.2bn, a decline of 37.1% YoY. Detailed financials have yet to be disclosed but we think the plunge in net earnings follows that of EBITDA. Last 3.40.   DMC secures PhP11.7bn worth of contracts in 1H17. This is 2.6x more than the value of contracts during the same period last year. Total order book, however, is slightly down by 4% YoY at PhP26.8bn. Some of DMC's largest projects include CALAX (18km), Sec.1&2 of Skyway 3, ALI's Citygate, and Ortigas & Co.'s The Royalton and Imperium luxury condominiums. DMC says construction projects are so far still being driven by the private sector with only slightly growth from government infra projects. Last 15.68.   Toyota Philippines, a subsidiary of GTCAP, said it is likely to surpass its sales target of 175,000 units this year, or 10% growth. In 1H17, Toyota has sold 85,728 vehicles, translating to 18% growth YoY. Last 1,145.

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%).