first news 2 february 2015

FIRST NEWS Monday 2 February 2015

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International Markets & Commodities

Dow Jones 17,164.95 -251.90 -1.45%

S&P 500 1,994.99 -26.26 -1.30%

Nasdaq 4,635.24 -48.17 -1.03%

Gold (US$/t oz.) 1,283.70 +25.00 +1.99%

Oil (US$/bbl.) 47.85 +3.26 +7.31%

US$ 1.00 : PhP 44.11

PSEi 7,689.91 +72.61 +0.95%Range 7,645.52 - 7,689.91AdvancesDeclinesUnchanged

93 89 52

Volume (bn) 2.62

Value (PhP bn) 12.58

Block Sale Value (PhP bn) 0.410

Foreign Buying (PhP bn) 5.37

Foreign Selling (PhP bn) 5.13

Net Foreign B(S) (PhP bn) 0.243

Most Active Top 5 Index Advancers / DeclinersFNI +1.00% RLC +4.91%ALI +2.56% JFC +3.57%TEL -0.07% ALI +2.56%URC +0.49% JGS +2.42%SMPH -0.43% AGI +2.24%BDO +0.44% SCC -0.07%JGS +2.42% ICT -0.18%SM +2.09% SMPH -0.43%MBT -2.71% AEV -0.44%JFC +3.57% MBT -2.71%

International News - US markets decline 3 days out of 5, extending declines

for the year. The S&P index fell 3.1% in January, its worst monthly performance in a year as oil rallied and dollar strengthened (+5% for January), hurting exporters. Weighing on stocks and the dollar, US Q4 GDP expanded at a weaker-than-expected 2.6% annual pace after Q3s spectacular 5% rate. U.S. Treasury debt prices jumped, with long-term yields hitting record lows as slower growth fuelled speculation the Fed will delay interest rate hikes.

- Russia surprised markets by cutting interest rates despite fears of a Russian recession mount. Adding to concerns for some investors, Greece's finance minister said the government would not cooperate with the EU and IMF mission bankrolling the country and would not seek an extension to the bailout program.

Oil prices soar, Shorts Cover; Sell-off not over yet? - Oil prices soared and fueled a frenzy of short-covering,

spurring speculation that a a 7-month price collapse has ended as Baker Hughes data showed the number of rigs drilling for oil in the US fell by 94 or 7%this week. Earlier gains were fueled by reports of Islamic State militants striking at Kurdish forces southwest of the oil-rich city of Kirkuk. A Reuters poll however shows that oil prices may post only a mild recovery in the second half of the year, with prices still averaging less in 2015 than during the global financial crisis. "This doesn't change the fundamental outlook in oil. We are still about 2 million barrels oversupplied."

January

27 LFM Ex-date for 75% Stock Dividend

29 Q4 GDP Release

Access iTRADE by DA Market on Bloomberg Profile Page: DMMA

Research Page: ERH DMM

Market Review

The PSEi registered a fresh high close at 7,689.91, up 72.61 pts. or 0.95% following a rally in US markets. Last Thursday, Q42014 GDP was reported at 6.9%, better-than-expected 5.9% estimate bringing full-year growth to 6.1%.

Advancers outpaced Decliners 93 to 89 on the back of a T/O value of P12.58bn and NFB OF P243mn. Notably, most active stock FNI, gained 1% ahead of plans to for a P31bn follow-on offer this Q1. See details within report. Top index gainers were RLC +4.91%, JFC +3.57%, ALI +2.56%, JGS+2.42% and AGI +2.24%

Move Over Thailand, the Philippines is Southeast Asia's Strong Man The Bloomberg article cites Economic Planning Secretary Arsenio Balisacan saying that the Philippines is no longer the sick man of Asia, and that with 3 years of successive above 6% growth, puts the country ahead of Thailand. The article further compares the 2 countries in terms of GDP, Manufacturing Exports, Consumption and Demographic Dividends.

Read More: http://www.bloomberg.com/news/articles/2015-01-30/move-over-thailand-the-philippines-is-southeast-asia-s-strong-man

Market Outlook

Current 7,689.91

Support 7400, 7300, 7240, 7020

Resistance 7736, 8000

- While we continue to be positive over the long-term, the market may be susceptible to profit-taking as we tread higher into the earnings season and low-volume , considering the generous YTD rally high of 6.9% in January alone. RSI-3 is above neutral (65) and approaching overbought territory as MAC/D continues to show a bullish crossover but approaching elevated levels as well.

- Note also that 2015 is anticipated to be marked with volatility which calls for a more nimble investor with a short to medium-term investment horizon. Market swings may stem particularly from external factors including possible tightening in the US (interest rate hike by mid-year) and concerns about deflation in the eurozone and economic slowdown in China. On the local front, we may see election-related news to become more market relevant as we enter the thick of the campaign season and monitor poll results.

- BUY Selectively employing a pyramid tranche buying strategy. 2015 PSEi forecasts range between 8,000 to 8,500, 10.6 - 17.5% year-on-year growth.

http://www.bloomberg.com/news/articles/2015-01-30/move-over-thailand-the-philippines-is-southeast-asia-s-strong-manhttp://www.bloomberg.com/news/articles/2015-01-30/move-over-thailand-the-philippines-is-southeast-asia-s-strong-manhttps://twitter.com/itradephhttp://www.itrade.phmailto:[email protected]



LegendLTP Last Traded PriceTP Target Price

COMPANIES

BPI (LTP 99, TP 94.30, HOLD)- BPI grew Q42014 Net Profit increased 72% to P5.2bn as improved treasury earnings complemented

core business expansion. FY2014 Net Profit declined 4% to P18bn vis-a-vis extraordinary trading gains which boosted FY2013 bottomline, but also below the P20.21bn profit guidance set at the beginning of the year.

- Net loans reached P800bn, +26% YoY; Deposits +19% to P1.176 trillion, 69% of which was low-cost current account/savings account (CASA) deposits; Net interest income +15% to P34.8bn. Non-interest income -5% to P21bn. Excluding securities and foreign exchange trading (-51% to P3.1b), non-interest income was P17.8bn, +13%. Gross 90-day NPL fell to 1.51% from 1.74% while Loan Loss Reserve stood at 110%.

- CAR 14.02% and Tier 1 ratio 13.3%. Last year, BPI raised P25bn from a stock rights issue. - In 2014, we used the capital that we raised to invest for the future and meet robust loan demand.

CEB (LTP 94.70, Not rated)- CEB fully paid P52.1mn penaltyor numerous flight delays and cancellations during the busy

Christmas holidays.- CEB which earlier blamed bad weather and airport congestion, also admitted in a hearing last week

that the situation was caused by a high amount of absenteeism by the ground handling staff that it contracted from a third-party provider.

CPG (LTP 0.98, Not Rated)- CPG plans to raise as much as $150mn (P6.6bn), authorizing the offering of US dollar bonds or

notes, proceeds from which will be used for general corporate purposes. CPG aims to launch this debt offering by February this year.

- The company said the US$bonds may only be offered to not more than 19 non-qualified buyers and to any number of qualified buyers; the offer and sale of the notes will not be registered with the SEC.

DMPL (LTP 16.88, Not Rated)- DMPL has priced its Stock Rights Offering (SRO) at P10.60/rights share (equivalent to SG$0.325/

rights share), enabling the co. to raise $154.4 mn to pare down the $165mn bridge loan facility from BPI to acquire DMFI.

- DMPL will offer one share for every 2.029 ordinary shares held. The offering will run from February 11 to 27 while listing of new shares on both exchanges where the company is dually listed will be on March 10 this year.

- DMFI has a 26% market share in the canned fruit market in the US and is envisioned to provide the group with a solid growth platform and supplement its expansion efforts and provide longer term opportunities in the emerging markets of South America.

EW- EW to venture into the non-life insurance business, and plans to raise capital via Stock Rights Offer

(SRO)

FNI (LTP 3.04, Not Rated)- FNI plans to sell 6.16bn common shares, with an option to issue another 924.72mn shares to

underwriter UBS at a maximum price of P4.38/share or about P31bn in proceeds which would be the biggest share sale for the quarter. The co. is still awaiting regulatory approval and hopes to conduct the offering by end-March or early April.

- Proceeds will be used to acquire 2 mining assets in Palawan ($50mn) and Zambales ($30mn) and develop these mines into production in one year. Initial development costs for the mines are pegged at $30 million and $20 million, respectively. Another portion will be allotted for expansion of its Cagdianao mine in Surigao del Norte.

- FNI plans to purchase the entire outstanding stock of Southeast Palawan Nickel Ventures, Inc., which holds a mine concession in Palawan which will take 2-3 years to develop and produce about 4mn WMT, targeting 10mn WMT nickel ore annually. Currently the co, produces 6mn WMT annually from its operating mine in Surigao del Norte, which can go up to 7mn WMT.

- FNI also wants to establish its presence in Zambales through the acquisition of Ferrochrome Resources, Inc., but it has no estimates yet as to how much that mine could produce

MPI (LTP 5.17, TP 6.15, BUY)- Unit MNTC bagged the right to operate the 94km SCTExafter the BCDA did not receive a bid

challenging MNTCs offer.

MWC (LTP 32.30, 32.43, HOLD)- MWC signed and executed a Joint Venture agreement with the Zamboanga City Water District

(ZCWD) in the conduct of non-revenue water reduction activities. WMC to own 70% while ZWCD will hold 30%. Last month, MWC was awarded the contract for the 10-year project.

https://twitter.com/itradephhttp://www.itrade.phmailto:[email protected]



SMC (LTP 76.15, Not Rated)Japans Kirin Holdings Co. Ltd. is keen on increasing its stake in SMB- Managing director Nishimura said there had been no talks with SMC President RSA since Kirin

Holdings acquired in 2009 a 48% stake in SMB, the largest producer of beer in the country. Kirin bought into SMB to enable it to gain a foothold in the growing beer market in Southeast Asia.

- The beer market is still growing but San Miguel has almost 96 percent market share, so we dont have much room to get another market share. So (for SMB) to go into the soft drinks business makes sense to us. We can utilize the platforms of the beer business. For example, to deliver the soft drinks, we can use the transportation system of the beer. I believe the potential of the soft drinks business of the SMB is very big even with so many competitors. I believe we have a chance to succeed.

STR (LTP 7.13, Not Rated)VLL (LTP 6.89, Not Rated)Senator Manny Villar to spend close to P3bn to put up 6 more AllHomes stores to double total to 12 outlets by end-year.3 stores will be put in the next 3-4 months in Santa Rosa City in Laguna, Imus in Cavite and Las Pias City while two more branches, including one in Antipolo, are slated for opening later in the year. The stores will be bigger with an average of 7000-9000sqm. About P300mn-400mn for each of the six new branches had been earmarked as capital expenditure; while P200mn minimum will be allocated for inventory.The new sites would also be expandable as they are aimed to accommodate a Starmall. Starmall is the branding of the groups shopping mall venture. We plan to again open six more stores next year, perhaps six every year. BANKING - Universal and commercial banks (UKBs) lending, less placements with the BSP, grew 16.8% to P4.41 trillion in December, slower than the 20.1% expansion in November - the slowest pace since the rate hit 16.4% in December 2013. - Including placements with the BSP, lending rose 15.3% to P4.67 trillion in December, also a

deceleration from the 19% growth a month ago.- BSP said slower credit growth may be due to effects of recent stricter regulations implemented by the

central bank but stressed lending continues to support the economy.




January February

Start End Co. Event Start End Co. Event

7 PSB Ex-date for 0.75/share cash dividend

3 VMC Annual Shareholders Meeting

NIKL Ex-date for 50% stock dividend 3 7 IS Annual Shareholders Meeting

PGOLD Ex-date for 0.20/share cash dividend

4 RPL Extraordinary Shareholders Meeting; Annual Shareholders Meeting

COSCO Ex-date for 0.20/share cash dividend

6 RPL Annual Shareholders Meeting

12 RCI Ex-date for 0.02/share cash dividend

PBB Annual Shareholders Meeting

15 19 Pope Francis visits Philippines;Market closed on the 15, 16 (Thurs-Fri) and 19 (Mon).

9 URC Q12015 Earnings Release

16 ACPR Ex-date for 6.5625/share cash dividend

9 13 GLO Q42014 Earnings Release

27 LFM Ex-date for 75% Stock Dividend 10 CAT Annual Shareholders Meeting

29 Q4 GDP Release 11 TFC Annual Shareholders Meeting

12 BSP Monetary Policy Meeting

13 PPREF Ex-date for 2.382/sh cash dividend

18 TFC Annual Shareholders Meeting

Legend

Cash/Stock Dividend Ex-date

Cash/Stock Dividend Payment Date

Earnings Release

Annual Shareholders Meeting

REFERENCES Philippine Dailies, PSE, Bloomberg, Reuters, DA Market Securities, Inc. DISCLAIMER This report is provided for informational purposes only and is not intended to solicit buying and selling of securities or to participate in any particular trading strategy. DA Market Securities, Inc. (DMSI) makes reasonable effort to use reliable, comprehensive information, but makes no representation or warranties as to the accuracy, completeness, or timeliness of the data provided. DMSI shall not have liability for any damages of any kind relating to such data. This report may not be reproduced or published for any purpose. DA market officers, directors and employees, including persons involved in the preparation or issuance of this report, may have investments in securities or derivatives of securities of the companies mentioned in this report.


first news 2 february 2015

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