headlines - col financial...the psei continued to rally, increasing by another 78.74 points or 1.08%...

The PSEi continued to rally, increasing by another 78.74 points or 1.08% to close at a new high of 7,392.20.

Index gainers led decliners 18 to 11 while 1 issue was unchanged. The strongest sectors yesterday were the Property (+1.82%), Industrials (+1.52%), and Financials (+1.20%) sectors. Index gainers were led by URC (+4.76%), AGI (+4.16%), JFC (+3.42%), SMPH (+3.00%), and ALI (+2.81%). URC and JFC rose after reporting strong 1Q13 earnings results earlier this week while AGI jumped after disclosing plans to spin off its highly profitable gaming subsidiary Travellers. On the other hand, ICT (-6.05%) fell significantly after announcing plans to sell Php8.3Bil worth of shares. Other decliners were SCC (-3.75%), PX (-3.59%), BEL (-2.24%), and MPI (-1.64%).

Value turnover increased to Php21Bil from Php10Bil last Tuesday. The increase was largely attributable to the share placement of ICT. Foreigners were still net buyers, acquiring Php6.8Bil worth of shares.

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Market Summary

Close Points % YTD%PSEi 5,210.89 21.52 0.41 19.19All Shares 3,459.02 14.18 0.41 13.60Financials 1,304.87 5.26 0.40 34.67Holding Firms 4,369.45 10.57 0.24 24.71Industrial 7,907.14 21.75 0.28 11.77Mining & Oil 23,177.28 -59.86 -0.26 -1.39Property 1,908.65 31.58 1.68 28.85Services 1,783.59 -1.00 -0.06 10.35

INDICES

Ticker Company Price %SMPH SM Prime Hldgs 13.60 4.29RLC Robinsons Land Corp 18.46 2.56MPI Metro Pacific Inv Corp 4.20 1.94MEG Megaworld 2.15 1.90ICT Int'l Container Term 71.70 1.85

INDEX GAINERS

Ticker Company Price %URC Universal Robina Corp 59.45 -3.25SCC Semirara Mining 220.00 -2.65DMC DMCI Hldgs, Inc 57.90 -1.53GLO Globe Telecom, Inc 1,135.00 -1.13JFC Jollibee Foods Corp 105.80 -1.12

INDEX LOSERS

Ticker Company TurnoverAC Ayala Corporation 378,414,800ALI Ayala Land Inc 232,134,500RLC Robinsons Land Corp 207,296,400BDO BDO Unibank, Inc 192,199,500TEL Phil Long Distance Co 183,260,600

TOP 5 MOST ACTIVE STOCKSEVENTS CALENDARDATE TICKER COMPANY EVENTS16-May-13 RCB Rizal Commercial Banking Corporation Ex-date Php1.00 Cash Dividend17-May-13 ION Ionics Inc/Philippines Annual Shareholdings Meeting18-May-13 PSE Philippine Stock Exchange Inc Annual Shareholdings Meeting20-May-13 ACR Alsons Consolidated Resources Inc Ex-date Php0.016 Cash Dividend20-May-13 PF San Miguel Pure Foods Co Inc Ex-date Php1.20 Cash Dividend20-May-13 AEV Aboitiz Equity Ventures Inc Annual Shareholdings Meeting20-May-13 AP Aboitiz Power Corporation Annual Shareholdings Meeting20-May-13 AB Atok Big Wedge Co Inc Annual Shareholdings Meeting20-May-13 ISM ISM Communications Corporation Annual Shareholdings Meeting20-May-13 LOTO Pacific Online Systems Corporation Annual Shareholdings Meeting21-May-13 SMDC SM Development Corporation Ex-date Php0.053 Cash Dividend21-May-13 SM SM Investments Corporation Ex-date Php11.80 Cash Dividend21-May-13 MVC Mabuhay Vinyl Corporation Ex-date Php0.05 Cash Dividend21-May-13 PXP Philex Petroleum Corporation Annual Shareholdings Meeting21-May-13 PCOR Petron Corporation Annual Shareholdings Meeting

Headlines:

Strategy: Changes to the MSCI Indices to influence share price action this month

JFC: 1Q13 earnings up 31% to Php881Mil; in line with COL forecast

FLI: Net income up by 25%, in line with estimates, raising FV estimate

MEG: 1Q13 income grew 15%

VLL: On track to meet record earnings

AGI: 1Q13 income in line with COL estimates

AC: 1Q13 earnings better than expected

Economy: Remittances in March decelerates

THURSDAY, 16 MAY 2013

INDICES

INDEX GAINERS

INDEX LOSERS

TOP 5 MOST ACTIVE STOCKS

Close Points % YTD%PSEi 7,392.20 78.74 1.08 27.17All Shares 4,567.08 31.22 0.69 23.47Financials 1,917.83 22.77 1.20 25.68Holding Firms 6,646.46 69.75 1.06 29.04Industrial 11,161.55 167.54 1.52 25.73Mining & Oil 18,653.93 -366.84 -1.93 -3.89Property 3,046.00 54.51 1.82 32.17Services 2,161.41 -6.70 -0.31 25.32

Ticker Company Price %URC Universal Robina Corp 132.00 4.76AGI Alliance Global Inc 27.55 4.16JFC Jollibee Foods Corp 139.10 3.42SMPH SM Prime Hldgs Inc 20.60 3.00ALI Ayala Land Inc 34.70 2.81

Ticker Company Price %ICT Int'l Container Term 93.90 -6.05SCC Semirara Mining Corp 282.00 -3.75PX Philex Mining Corp 15.04 -3.59BEL Belle Corporation 6.55 -2.24MPI Metro Pacific Inv Corp 5.98 -1.64

Ticker Company TurnoverSM SM Inv Corporation 1,001,040,000ICT Int'l Container Term 930,884,800TEL Phil Long Distance Co 718,092,900MBT Metrobank 568,210,200MPI Metro Pacific Inv Corp 468,948,600

(As of May 15, 2013)

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P H I L I P P I N E E Q U I T Y R E S E A R C H

Thursday, 16 May 2013 page 2

Strategy:Changes to the MSCI Indices to influence share price action this month

Several stocks will be added and deleted in MSCI’s global small cap and global standard indices in its bi-annual rebalancing this month. Issues that will be added to the small cap index are DNL, EEI, PIP, RFM and PF. On the other hand, GTCAP, MEG, PGOLD and RLC will be deleted from the same index. For the global standard index, MPI will replace SMC. Listed changes will officially take effect at the end of May.

Historically, changes in the MSCI indices influence share price action in the short term as funds also rebalance their portfolios to reflect the changes in the MSCI index. Prices of securities added tend to increase while prices of securities removed tend to weaken. We would like to reiterate that inclusion or deletion in the MSCI index does not mean that a company is fundamentally better or worse as the decision to add or delete a stock is determined by the stock’s investibility by foreign investors (based on liquidity and foreign ownership limits). Therefore, any short-term weakness in share prices caused by changes in MSCI constituents should be viewed as an opportunity to buy.

Jollibee Foods Corporation:1Q13 earnings up 31% to Php881Mil; in line with COL forecast

JFC delivers in line results. JFC’s 1Q13 net income rose 31% to Php881Mil. JFC’s strong performance resulted from higher system wide sales and wider margins. The first quarter figure was largely in line with COL and consensus forecasts.

Domestic sales up 9.5%. Domestic sales grew by 9.5% to Php14.3Bil during the first quarter, in line with our estimates. Growth was driven by an expanded store count and an increase in same store sales. As of end March, total stores nationwide grew by 146 or 5.8% to 2,652 branches. Meanwhile, same store sales growth during the quarter reached 5.3% based on our estimates. According to JFC, the growth in same store sales was mostly attributable to increased volume. It noted that the lower input costs allowed the company to expand margins while maintaining prices.

International sales underperform expectations. Meanwhile, JFC’s international operations remained weak. In 1Q13, international revenues rose 12.3% to Php3.9Bil, below our growth forecast of 20%. While the increase in its international stores was in line with our estimate (+12% actual versus our forecast of +11%), same store sales lagged our expectations. Based on our calculations, same store sales fell 3% year-on-year. This compares poorly to our forecast of a 5% growth.

Exhibit 1: Results Summary

COL ConsensusRevenue 16,486 18,155 10.1 22.9 22.5Gross Profit 2,677 3,287 22.8 21.7 22.9

Gross Profit Margin (%) 16.2 18.1 1.9 - -Operating Income 885 1,176 32.9 19.6 21.7

Operating Margin (%) 5.4 6.5 1.1 - -Net Income 672 895 33.0 19.7 20.7

Net Margin (%) 4.1 4.9 0.8 - -Source: JFC, COL estimates, Bloomberg

in PhpMil 1Q13 %Change % of Full Year Forecast1Q12

KERVIN [email protected]

please see next page


Thursday, 16 May 2013

Margins improve to lift earnings. Despite the weaker-than-expected international sales, JFC’s earnings ended in line with our forecast as margins improved notably. For 1Q13, gross profit margin rose to 18.1% from 16.2% during the same period last year. This led to a 110 basis point improvement in its net income margin to 6.5%. The said level is above our full-year target of 5.7%. JFC continues to attribute margin improvement to lower input costs amidst declining in commodity prices.

Reiterate HOLD rating. We currently have a HOLD rating on JFC with a FV estimate of Php135.00/sh. Although we like Jollibee for being a direct play on the resilient consumer sector of the Philippines, valuations are not compelling with the stock already trading at 31X 2013E P/E.

Filinvest Land Inc:Net income up by 25%, in line with estimates, raising FV estimate

Net income grows on robust real estate sales. Filinvest’s net income for 1Q13 reached Php934Mil, up by 24.8% from the previous year. This is in line with estimates as it accounts for 24.9% and 24.8% of COL and consensus forecast, respectively. Net income increased on the back of higher real estate revenues, growth in rental revenues, and lower income tax expenses. Real estate sales grew by 20% to Php2.4Bil from Php2Bil last year. Rental revenues jumped 13.9% to Php467Mil. Meanwhile, income tax expense fell to Php108Mil, just half of Php218Mil booked last year.

Higher contribution from MRB and HRB boost revenues, drags margins. Real estate revenues grew by 20% to Php2.4Bil, driven by the strength of FLI’s mid-rise buildings (MRB) and high-rise buildings (HRB). During 1Q13, real estate revenues attributable to MRBs and HRBs reached Php1.7Bil, up by 29% from the previous year. As such, the segment now accounts for 69.5% of real estate revenues, up from 64.8% last year.


in PhpMil 1Q12 1Q13 % Change COL Consensus

Real estate sales 2,035 2,441 20.0 22.8 24.8

Gross Profit 901 1,022 13.4 21.9 27.5

Gross profit margin 44.3 41.9 (5.5)

EBIT 777 939 20.8 25.1 23.7

EBIT margin 38.2 38.5 0.7 - -

Net Income 748 934 24.8 24.9 24.8

net margin 36.8 38.3 4.1 - -Source: FLI, COL estimates, Bloomberg

% Forecast

CHARLES WILLIAM [email protected]




On the negative side, the growing contribution of lower-margin MRBs and HRBs dragged margins lower to 41.9% from 44.3% a year earlier. Nevertheless, we are not too concerned with the drop in margins as the strong growth in revenues from MRBs and HRBs still helped contribute to earnings growth.

Unbooked revenues reach Php13Bil. FLI also reported that as of end March, unbooked revenues reached Php13Bil, up by 22.6% from the same period last year. The said level of unbooked revenues is also good enough to supply 12 to 18 months worth of revenues. The growth in unbooked revenues was driven by the 7% increase in take-up sale to Php3.45Bil. During 1Q13, FLI launched 2 new projects and 5 additional phases of existing projects with a total sales value of Php4Bil last. This should help sustain the growth of take-up sales.

Growing rent income, on track to double leasable area. Rental revenues reached Php467Mil during 1Q13, up by 13.9% and in line with our estimates. Growth came on the back of higher occupancy rate of 98% on its existing office building portfolio. In addition, FLI recently completed Filinvest One (19,698 sqm) and started to turnover some of its floors. It expects Filinvest One to start contributing to revenues in August 2013. FLI added that it is still on track to double its gross leasable area to 550,600sqm by 2015 from 297,600sqm as of end 2012.

Raising NAV as we factor higher market prices for landbank. We are raising our FV estimate on FLI from Php2.00 to Php2.36 to factor in higher land prices. Since we initiated coverage on the stock, we have not adjusted our assumption on the prices of FLI’s landbank given their less attractive locations. However, with the significant drop in interest rates since 2010, we believe that FLI will also benefit from higher land prices.

For Filinvest Alabang, we raise our price assumption from Php80,000/sqm to Php100,000/sqm to reflect higher market price in the area. Recall that in FY12, a lot in Filinvest Alabang was sold for Php115,192/sqm. FLI will benefit from this development through its 20% stake in Filinvest Alabang Inc. and through Northgate Cyberzone which is also in Filinvest Corporate City in Alabang and is 100% owned by FLI.

The value of FLI’s landbank should also benefit from the further development of Timberland Heights and the CALA Expressway. FLI has completed the new masterplan for Timberland Heights, which should accelerate the development of the project. FLI launched two new projects in Timberland last year, one condotel called the Leaf and one mid-income subdivision called the Glades. Based on the new masterplan, Timberland Heights will also feature a town center, a church, and multiple schools. It is our view that future prospects of Timberland, and its surrounding areas in Rizal is improving thus we raise our raw land price assumption for FLI’s Rizal landbank (848 hectares or 35% of total landbank) from Php1,000/sqm to Php2,500/sqm. Note that this also approximates the replacement cost of land given that lots in The Glades are being sold at Php11,000/sqm.

The construction of the CALA Expressway should also benefit FLI. Note that FLI has 448 hectares of landbank in Cavite (20% of total landbank). The CALA Expressway is expected to be bid out this year. The invitation to pre-qualify and bid was published this week and the deadline to submit qualification documents is on June 10. We have not yet increased our valuation of FLI’s landbank in Cavite given that the CALA Expressway has not yet been bid out.




Exhibit 2: NAV breakdown

Source: COL estimates

Maintain BUY. We maintain our BUY rating on FLI as it continues to be one of the beneficiaries of the favorable outlook of the property sector. We believe demand for end-user housing, which is FLI’s primary market, continues to be strong as it benefits from the growth of the economy. FLI’s growing rental business, which currently accounts for 29% of income, gives the company a stable source of cash flow. At its current price of Php2.11, FLI is trading at 13.63X FY13E P/E, significantly below the market’s 13E P/E of 20.7X. Capital appreciation potential also remains sizeable at 12%.

RICHARD LAÑEDA, [email protected]

NAV in Php Bil Per share % of totalRaw Land 47.13 1.94 57.67%Housing projects 21.30 0.88 26.07%Investment properties 24.80 1.02 30.34%Filinvest Alabang stake 11.74 0.48 14.36%Less: Net debt 23.24 0.96 28.44%TOTAL 81.73 3.37 100.00%30% Discount to NAV 1.01 30.00%Fair value estimate 2.36

Megaworld Corporation:1Q13 income grew 15%

1Q13 income grows 15% to Php1.79 Bil. Megaworld’s profit for 1Q12 grew 14.97% y/y to Php1.79 Bil. Realized gross profit was flattish, up by just 3.77%, but this was offset by a 46.85% y/y improvement in rental revenues. Although MEG’s 1Q13 income accounted for only 22.87% of our full-year forecast, we believe that MEG still has the capability to meet our forecast given the quarterly inconsistencies of its net income. Last year, MEG’s first quarter income accounted for 21.3% of its FY12 income.


Source: MEG, COL estimates, Bloomberg

Gross profit from residential grew 3.77% Megaworld’s 1Q13 realized gross profit from its residential business grew 3.77% y/y to Php1.4 Bil. Although this accounts for 21.11% of our full-year forecast, MEG’s realized gross profit tend to be inconsistent on a quarterly basis and is dependent on both sales and project completions. Last year, the 1Q12 gross profit accounted for 24.5% of full year gross profit while in FY11, the 1Q11 accounted for just 20.4% of FY11 gross profit. Thus we believe MEG is still in position to meet our estimates.

in Php Bil COL ConsensusReal estate sales 4,172 4,791 14.83% 21.53%Realized gross profit 1,347 1,398 3.77% 21.11%Rental revenues 950 1,394 46.85% 24.55%Operating income 1,264 1,585 25.41% 22.08%Core net income 1,557 1,790 14.97% 22.87% 22.87%

1Q13 % of full year estimate1Q12 % change




Consolidated take-up sales jump 28.6% y/y. Reservation sales from the group (MEG, ELI, and Suntrust) grew 28.6% y/y from Php14 Bil to Php18 Bil signaling strong demand for the group’s projects. Among the properties under our coverage, MEG recorded the biggest y/y increase in reservation sales.

Leasing business tracking ahead of estimates. MEG’s rental revenues grew 46.85% y/y to Php1.4 Bil in 1Q13 and represented 24.6% of our full-year forecast. Growth came from higher lease rates and higher GLA. Last year MEG added 47,000sqm of office space. We believe rental revenues will surprise on the upside based on its 1Q13 performance. Historically, first quarter rental revenues has been the weakest and accounted for around 21% of full year rental revenues. Upside will come from the offices that MEG has in the pipeline. We estimate that MEG will add around 93,000sqm of new office space this year.

Reiterate BUY and FV estimate of Php4.90. We are reiterating our BUY rating on MEG. We are encouraged by the strong reservation sales of the group which should translate to higher revenues and earnings in the future. We also like MEG for its growing leasing business whose revenues continue to grow as a percentage of the whole, thereby improving earnings visibility. Aside from its solid earnings performance, we believe there is value in MEG’s landbank in McKinley, whose proximity to Fort Bonifacio and Makati makes it attractive to BPO locators.

Vista Land & Lifescapes, Inc:On track to meet record earnings

1Q13 net income jumps 29.5% on higher sales and margins. VLL’s 1Q13 net profit jumped 29.5% to Php1.34 Bil, on track to meet COL and consensus full-year estimates of Php5.26 Bil and is ahead of the consensus estimate of Php5.1 Bil respectively. Net income growth was driven by a 20.8% growth in real estate sales and a 120-basis point expansion in EBIT margin.

Exhibit 1. Results summary

Source: VLL, COL estimate, Bloomberg

Reservation sales reach new high. VLL’s gross reservation sales in 1Q12 rose 16.1% y/y to a new record high of Php11.8 Bil, showing no signs of weakening demand in the housing market where VLL has the biggest exposure. This reinforces our view that demand for horizontal housing units will remain robust as these are end user demand and housing backlog outside Metro Manila remains big. VLL is targeting quarterly take-up sales of Php12 Bil or a total of Php48 Bil for the year.

in Php Mil COL ConsensusReal Esate Sales 4,021 4,858 20.8% 24.4% 24.3%Gross profit 2,017 2,459 21.9% 24.2%

Gross margin 50.2% 50.6% 0.5%EBIT 1,100 1,388 26.2% 26.3% 24.6%

EBIT margin 27.4% 28.6% 1.2%Net income 1,036 1,342 29.5% 25.5% 26.3%

% of full year estimates1Q131Q12 % change





Sales growing faster than expenses. Growth of Vista Land’s income was primarily driven by continued booking of sales made in the previous quarters, but it was amplified by economies of scale and cost controls. Gross profit margin expanded by 50 basis points while EBIT margin expanded 120 basis points as operating expenses rise just 17% versus revenue growth of 21%.

Downgrade to HOLD due to valuation. We are downgrading VLL from BUY to HOLD given that the share price of VLL has risen 27.5% since our last report on VLL where we raised our FV estimate to Php6.52. The current price of Php7.05 is already higher than our FV estimate of Php6.52 thus we downgrade VLL to HOLD. Note that the fundamentals and prospects of VLL remain positive and we advise investors to buy VLL when the share price corrects to a level that provides a more meaningful upside.


Alliance Global, Inc:1Q13 income in line with COL estimates

1Q13 income up 20.7% y/y. AGI’s 1Q13 net income jumped 20.7% y/y to Php3.58 Bil driven by growth of MEG, Emperador, Travellers, and Golden Arches. Emperador was the biggest contributor to growth, with income growing 40.4% and accounted for 40.32% of AGI’s net income. Net income of MEG, Emperador, and Travellers were all in line with our estimates while Golden Arches exceeded forecast due to an expansion in net margin. Overall, AGI’s net income is in line with COL estimates and slightly better than consensus.


Source: AGI, COL estimates, Bloomberg

MEG 1Q13 income grows 15% to Php1.79 Bil. Megaworld’s profit for 1Q12 grew 14.97% y/y to Php1.79 Bil. Realized gross profit was flattish, growing just 3.77% but this was offset by a 46.85% y/y improvement in rental revenues. Although MEG’s 1Q13 income accounted for 22.87% of our full-year forecast, we believe that MEG still has the capability to meet our forecast given the quarterly inconsistencies of its net income. Last year, MEG’s first quarter income accounted for 21.3% of its FY12 income.

in Php Mil COL ConsensusMEG 1,557 1,790 15.0% 22.9% 22.9%Emperador 1,027 1,442 40.4% 23.0%Travellers 854 995 16.5% 14.2%Golden Arches 152 234 53.9% 32.2%Corporate and others 591 493 -16.6%

AGI 2,961 3,575 20.7% 23.9% 26.4%

% of estimates1Q12 1Q13 y/y

change




Emperador’s grows on higher revenues, bigger margin. Emperador’s net income jumped 40.4% to Php1.44 Bil on the back of a 17.4% growth in revenues and an expansion in margins. Economies of scale led to an expansion in net margin from 18.7% to 22.3%. Revenues in 1Q13 showed that consumption did not drop despite the higher prices as a result of the higher sin taxes. We expect revenue growth to be higher as we suspect that buyers frontloaded their purchases back in Dec2012 in anticipation of higher prices this year.

McDonalds’s profit better than expected on higher net margin. Revenues of Golden Arches grew 16.5% to Php3.85 Bil while net profit grew at a much faster pace of 53.9%, thereby expanding its margins by 150bps to 6.1% While details of why margins expanded were not available, we suspect that costs related to store renovations dropped this year.

Travellers income rose 16.5% on higher revenues. Net profit of Travelers rose 16.5% to Php995 Mil on the back of a 54% jump in gaming revenues and 25% improvement in hotel revenues due to increased gaming capacity and continued increase in property visitation. Details on why net income grew at a much lower rate were not readily available but we will update investors once they are.

Raise FV estimate to Php28.11 but downgrade to HOLD on valuation. We raise our FV estimate on AGI from Php26.75 to Php28.11 as we factor in our higher FV estimate for MEG. However, given the recent gains, the share price of AGI is close to reaching our FV estimate. The share price of AGI has gained 31.2% since we upgraded our FV estimate to Php26.75. Give the limited upside to our FV estimate, we downgrade our recommendation from BUY to HOLD. We believe fundamentals and prospects of AGI remain positive and we advise investors to buy into the stock when the price corrects to a level that provides a meaningful upside. Upside to our FV estimate will come from the spin-off of Travellers which is schedule to be done in 3Q13.




Ayala Corporation:1Q13 earnings better than expected

1Q13 net income jumps 29% driven by ALI and BPI. AC’s 1Q13 net profit grew 29% driven by the growth of its core businesses. ALI and MPI were the biggest growth drivers as their earnings grew 29.5% and 47.5% respectively in 1Q13. Earnings were ahead of COL and consensus estimates as earnings of ALI, GLO, and BPI were ahead of COL and consensus forecast.


Source: AC, Bloomberg, COL estimates

ALI earnings up 30% to Php2.76 Bil. ALI’s 1Q13 net income was up 30% to Php2.76 Bil and was already 27.3% of our full year forecast. Growth and outperformance were primarily driven by strong real estate revenues. ALI booked Php4.1 Bil in commercial lot sales during 1Q13, more than four times the Php915 Mil worth of commercial lot sales booked during the same period last year. The amount is also significantly more than our full-year commercial lot sales forecast of Ph1.5 Bil, and is the main reason for its outperformance versus our estimates. Aside from strong commercial lot sales, ALI’s residential development and leasing business continued to deliver solid growth as the company capitalized on its strong take-up sales in the past and its growing leasing portfolio.

MWC core income was flat at Php1.3Bil. Manila Water’s 1Q13 core income was flat at Php1.3Bil. Earnings were disappointing mostly due to higher depreciation and interest charges incurred during 1Q13. In addition, revenues were also disappointing, growing by only 6.4% to Php3.6Bil due to the lower than expected growth of water consumption in the East Zone. However, MWC views the weak 1Q13 results as a minor setback as the average consumption declined in the period due to unexpected heavier rainfalls.

Globe’s core earnings grew by 12.6%, earnings beat on lower depreciation. Globe’s core earnings grew by 12.6%. Globes 1Q13 core earnings reached Php3.1Bil, up by 12.6% from the same period last year. Earnings beat expectations largely due to Globes lower than estimated depreciation charge. Earnings growth was also driven by stronger service revenues which increased by 5.5% to Php21.4Bil. In addition, Globe’s postpaid revenues have now reached Php6Bil, up by 32% and now accounts for 35% of mobile and 28% of consolidated revenues.

BPI earnings top estimates on strong trading gains. BPI posted Php8.4Bil in net income for 1Q13, up 43% year-on-year and already representing 44% and 48% of COL and consensus full-year forecasts respectively. BPI’s outperformance was mainly due to a surge in trading gains, which rose by 56% to Php6.2Bil. Meanwhile, BPI net interest income grew 4% as a 15% increase in average asset base was offset by lower margins.

in Php Mil COL ConsesnsusAC (core income) 3,488 4,500 29.0% 32.0% 33.7%

Core earnings of major subsidiariesALI 2,132 2,762 29.5% 27.3% 24.7%GLO 2,740 3,086 12.6% 26.7% 29.6%BPI 5,834 8,369 43.5% 44.3% 48.5%MWC 1,338 1,333 -0.4% 20.1% 24.8%

1Q12 1Q13 % change % of estimates




AC Trading at a deep discount to NAV. At the current price of Php678, AC offers good value to investors as it is trading at a 16.1% discount to its market-based NAV of Php808.32. Historically, AC traded at a 5-10% discount to its market-based NAV. Aside from being a cheaper way to own its listed subsidiaries, the growth of AC’s investments in power and infrastructure give investors another compelling reason to own the stock. Note that potential contributions from the said businesses have not yet been factored into our forecasts. We are currently in the process of adjusting our fair value estimate on AC to factor in the improving earnings prospect of its subsidiaries.


KERVIN [email protected]

Economy:Remittances in March decelerates

The Bangko Sentral ng Pilipinas reported that overseas personal and cash remittances reached US$1.9Bil and US$1.7Bil in March, up 3.7% and 3% respectively, the slowest growth seen since August 2009. The slowdown was most likely due to the continued weakness of the global economy. Nevertheless, cumulative cash remittances for the first three quarters of the year is still up by 5.6% from last year and is well within the government’s target growth rate of 5% for the year.



Investment Rating Definitions

Stocks that have a BUY rating have attractive fundamentals and valuations, based on our analysis. We expect the share price

to outperform the market in the next six to twelve months.

Stocks that have a HOLD rating have either 1.) attractive fundamentals but expensive

valuations; 2.) attractive valuations but near term earnings outlook might be poor or vulnerable to numerous risks. Given the

said factors, the share price of the stock may perform merely inline or underperform the market in the next six to twelve months.

We dislike both the valuations and fundamentals of stocks with a SELL rating.

We expect the share price to underperform in the next six to twelve months.

BUY HOLD SELL

Securities recommended, offered or sold by COL Financial Group, Inc.are subject to investment risks, including the possible loss of the principal amount invested. Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. COL Financial ans/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of securities of the companies mentioned in this report, and may trade them in ways different from those discussed in this report.

Important Disclaimers

2401-B East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City 1605 PhilippinesTel: +632 636-5411 Fax: +632 635-4632 Website: http://www.colfinancial.com

headlines - col financial...the psei continued to rally, increasing by another 78.74 points or 1.08%...

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