TUESDAY, 23 FEBRUARY 2016

STOCKS IN FOCUS:

SMPH: FY15 income meets COL estimates

SMPHs revenue and income growth slowed to 4.7% and 10.3% respectively in 4Q15 from 9.2%
and 14.9% as of 9M15. This was due to a drop in real estate revenues in 4Q15. Nevertheless,
full-year net income was up 13.6% to Php20.90 Bil and this is equal to our estimate but missed
consensus estimate on lower than expected revenues. We maintain our HOLD rating on SMPH with
a fair value estimate of Php21.70. We like SMPH for being the biggest beneficiary, among property
companies, of the strong consumption in the Philippines. SMPH is the biggest mall operator in
the Philippines and continues to grow its portfolio at a good pace. However at the current price of
Php20.75, upside to our fair value estimate is limited to 4.5% therefore we maintain a HOLD rating
despite strong fundamentals of the company.

(As of February 22, 2016)

INDICES
INDICES
PSEi
All Shares
Financials
Holding Firms
Industrial
Mining & Oil
Property
Services

Close Points
%
6,783.08
-8.98 -0.13
3,911.89
-5.40 -0.14
1,525.61 -28.02 -1.80
6,405.08
8.93 0.14
11,089.67 133.40 1.22
10,599.03 -166.96 -1.55
2,701.16
2.31 0.09
1,539.88
-6.48 -0.42

Dow Jones
S&P 500
Nasdaq

16,620.66 228.67
1,945.50 27.72
4,570.61 66.18

AEV: Increasing estimates on lower income tax rate for AP

and cement business JV

Due to the lower than expected income tax rate of the Tiwi-Makban, we are raising APs 2016E
and 2017E net income forecast for the said years by 2.5% and 4.4% to Php19.4Bil and Php22.4Bil
respectively. We increased our FV estimate for AP by 3.1% to Php45.15/sh. Meanwhile, given
AEVs 74% stake in AP and its earnings accretive investment in Republic Cement, we are raising
our 2016E and 2017E earnings forecast for AEV by 3.2% and 4.9% to Php20.4Bil and Php24Bil
respectively. We are also raising our FV estimate on AEV by 5.7% to Php52/sh.

INDEX GAINERS
Ticker
URC
PCOR
ALI

Company
Universal Robina Corp
Petron Corporation
Ayala Land Inc
BLOOM Bloomberry Resorts
DMC DMCI Hldgs Inc

Index gainers led decliners 14 to 13 while 3 issues remained unchanged. Sector performance was
mixed with Financials (-1.80%) and Mining & Oil (-1.55%) leading decliners and Industrial (+1.22%)
making solid gains. Significant decliners were MBT (-3.29%), BPI (-3.10%), AGI (-1.92%), SMC
(-1.89%), and MPI (-1.86%). On the other hand, notable gainers were URC (+3.29%), PCOR
(+3.15%), and ALI (+1.75%).
Value turnover was thin, declining to Php4.4Bil from Php6.5Bil the previous session. Foreigners
were net sellers, liquidating Php82Mil worth of shares.

Price
194.40
9.49
31.90
4.33
12.46

%
3.29
3.15
1.75
1.41
1.30

INDEX LOSERS
INDEX LOSERS

PX: Releases inferred mineral resource estimates for Bumolo project

The PSEi took minimal losses on Monday as the release of unimpressive earnings results from
some companies did little to deter profit taking by investors. The index slipped 8.98 points or 0.13%
to close at 6,783.08.

-4.62
-4.82
-8.72

INDEX GAINERS

TOP STORY:

MARKET SUMMARY:

1.40
1.45
1.47

YTD%
-2.43
-1.97
-1.62
-2.97
0.53
1.65
-7.35
0.63

Ticker
MBT
BPI
AGI
SMC
MPI

Company
Metrobank
Bank of the Phil Islan
Alliance Global Inc

San Miguel Corporation

Metro Pacific Inv Corp

Price
76.45
87.60
14.32
70.00
5.79

%
-3.29
-3.10
-1.92
-1.89
-1.86

TOP 5 MOST ACTIVE STOCKS

TOP 5 MOST ACTIVE STOCKS
Ticker
URC
SMPH
JFC
ALI
MPI

Company
Universal Robina Corp

SM Prime Hldgs Inc

Jollibee Foods Corp
Ayala Land Inc

Metro Pacific Inv Corp

Turnover
332,642,800
283,820,900
281,746,900
273,916,500
214,966,800

PHILIPPINE EQUITY RESEARCH

STOCKS IN FOCUS:

SMPH: FY15 income meets COL estimates

4Q15 earnings up 10.3% to Php5.44 Bil. SMPHs revenue and income growth slowed to 4.7% and
10.3% respectively in 4Q15 from 9.2% and 14.9% as of 9M15. This was due to a drop in real estate
revenues in 4Q15. Nevertheless, full-year net income was up 13.6% to Php20.90 Bil and this is equal
to our estimate but missed consensus estimate on lower than expected revenues.

Richard Laeda, CFA

Ticker: SMPH
Rating: HOLD
Target Price: Php21.70

Exhibit 1: Results summary

in Php Mil

Revenues
Core Net income

4Q14

4Q15

% change

FY14

FY15

% change

18,441
4,934

19,301
5,444

4.7%
10.3%

66,240
18,391

71,500
20,900

7.9%
13.6%

% of estimate
COL
Consensus
100.0%
95.3%
100.0%
91.6%

source: SMPH, COL estimates, Bloomberg

Residential revenues drop in 4Q15 while rentals remain strong. Total revenue growth dropped
to 4.6% in 4Q15 due to a 9.8% decline in real estate revenues. This was due to lower revenue
recognition from the almost-completed projects that were launched in 2011 and 2012. Because of
the drop in 4Q15, real estate revenues were flat compared to 2014. Despite this, SMPH remains
optimistic this year as they expect to see an acceleration in booking of revenues from projects
launched in tha past three years. Projects of SMDC continued to enjoy strong sales which boosted
its reservation sales in 2015 by 15% to Php39.8 Bil from Php34.6 Bil.
On the other hand, other core businesses maintained their strong performance during the quarter
with revenues from rental and cinema and event ticket sales respectively growing 12.2% and 37.5%
respectively. Growth in rental revenus came from the 12.65% y/y expansion in Philippine mall GFA
from 6.5 Mil sqm as of end FY14 to 7.3 Mil sqm as of end last year. Excluding new malls and
expansion, same-store rentals grew 7% y/y.
Exhibit 2: FY15 Revenue breakdown

4Q14

4Q15

% change

FY14

FY15

% change

Rental revenues
Real estate

10,055
6,183

11,285
5,576

12.2%
-9.8%

36,497
22,152

40,700
22,200

11.5%
0.2%

Cinema and event ticket sales

1,004

1,380

37.5%

4,269

4,781

12.0%

Other revenues
Total

1,203
18,445

1,059
19,301

-11.9%
4.6%

3,323
66,240

3,819
71,500

14.9%
7.9%

in Php Mil

source: SMPH

Maintain HOLD and FV estimate of Php21.70. We maintain our HOLD rating on SMPH with a
fair value estimate of Php21.70. We like SMPH for being the biggest beneficiary, among property
companies, of the strong consumption in the Philippines. SMPH is the biggest mall operator in
the Philippines and continues to grow its portfolio at a good pace. However at the current price of
Php20.75, upside to our fair value estimate is limited to 4.5% therefore we maintain a HOLD rating
despite strong fundamentals of the company.

TUESDAY, 23 FEBRUARY 2016

page 2

PHILIPPINE EQUITY RESEARCH

AEV: Increasing estimates on lower income tax rate for AP and cement business JV
Due to the lower than expected income tax rate of the Tiwi-Makban, we are raising APs 2016E
and 2017E net income forecast for the said years by 2.5% and 4.4% to Php19.4Bil and Php22.4Bil
respectively. We increased our FV estimate for AP by 3.1% to Php45.15/sh. Meanwhile, given AEVs
74% stake in AP and its earnings accretive investment in Republic Cement, we are raising our 2016E
and 2017E earnings forecast for AEV by 3.2% and 4.9% to Php20.4Bil and Php24Bil respectively.
We are also raising our FV estimate on AEV by 5.7% to Php52/sh.

George Ching
Ticker: AEV
Rating: HOLD
Target Price: Php52.00

Raising AP earnings estimates on Tiwi-Makbans lower than expected income tax rate. The
income tax holiday of the Tiwi-Makban geothermal plant will end in June 2016. However, given that
the plant already obtained the Certificate of Endorsement (COE) from the ERC as a renewable
energy (RE) producer, it will only need to pay 10% income tax (vs the 30% income tax of traditional
power producers) once its income tax holiday expires. This is a positive development as we assumed
a 30% income tax rate for the Tiwi-Makban.
Republic Cement acquisition to be earnings accretive. In September 2015, AEV CRH Holdings
Inc, the cement business joint venture of AEV and Irish building materials company CRH PLC,
completed the acquisition of a 99.09% stake of Republic Cement (formerly Lafarge Republic Inc.
or LRI). Net of finance cost, the acquisition of Republic Cement should boost AEVs earnings by
Php303Mil for 2016E (1.5% of earnings), and by Php406Mil for 2017E (1.7% of earnings).
TOP STORY:

PX: Releases inferred mineral resource estimates for Bumolo project

Releases inferred mineral resource estimates for Bumolo project . Philex Mining Corp. disclosed
the release of a maiden inferred mineral resource estimate (MRE) as a result of its on-going drilling at
the Bumolo porphyry copper-gold project. The MRE resulted to 21.7Mil tonnes of ore at 0.2% copper
and 0.3g/ton of gold, at a 0.274% copper equivalent cut-off grade. The project is part of PXs on-going
resource definition drilling program, which is aimed to provide additional ore to the Padcal Mine. The
Bumolo deposit is located in the Baguio Mineral District and is 1.5km to the east of the Sto. Tomas II
deposit of the Padcal Mine. PX is continuing the program to increase the inferred resources and to
upgrade it to measured and indicated resource estimates.

Angelo Lecaros
Ticker: PX
Rating: HOLD
Target Price: Php4.85

Results positive but still needs to be confirmed. The potential addition of resources bodes well
for PXs Padcal Mine given that it is currently estimated to last only until 2022, with an estimated
remaining reserve of 66.8Mil tons of ore as of end-2015. Assuming that the inferred 21.7Mil tonnes
are proven to be mineable, it will extend the Padcal Mines life by around two more years (or until
2024). This translates to an estimated additional Php22.0Bil in metals revenues. However, the
disclosed figure is still an inferred estimate and further tests will need to be done to classify these
resources as confirmed.
Maintain HOLD rating. Though the potential extension of the Padcal Mines life is positive for PX,
we remain cautious over its profitability because of the persistent decline in metal prices. We are
maintaining our HOLD rating on PX with a FV estimate of Php4.85/sh.

TUESDAY, 23 FEBRUARY 2016

page 3

PHILIPPINE EQUITY RESEARCH

Calendar of Key Events

FEBRUARY
MON

TUES

WED

THURS

FRI

SAT

2
VMC: Annual
Shareholders Meeting

3
UBP: Ex-date Php1.50
Cash Dividend

4
LOTO: Ex-date Php0.60
Cash Dividend

9
TECH: Ex-date Php0.005
Cash Dividend

10

11
HOUSE: Ex-date
Php0.25 Cash Dividend

12
TFC: Annual
Shareholders Meeting

13

15
PF: Ex-date Php1.20
Cash Dividend

16
WEB: Ex-date Php0.20
Cash Dividend

17
GLO: Ex-date Php22.00
Cash Dividend

18
IMI: Ex-date Php0.2204
Cash Dividend

19
MFC: Ex-date Php0.185
Cash Dividend

20

22

23
URC: Ex-date Php3.15
Cash Dividend

24

25

26
SLF: Ex-date Php0.39
Cash Dividend

27

29

TUESDAY, 23 FEBRUARY 2016

page 4

PHILIPPINE EQUITY RESEARCH

Investment Rating Definitions

BUY

HOLD

SELL

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.

Important Disclaimers
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 COLs 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.

2401-B East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City 1605 Philippines
Tel: +632 636-5411

TUESDAY, 23 FEBRUARY 2016

Fax: +632 635-4632

Website: http://www.colfinancial.com

page 5