Nomura PH Strategy Sept 2017

Connecting Markets East & West
Global Markets Research
Stay positive despite headwinds
Philippine Equity Strategy

September 2017
Dante Tinga, Jr. BDO-NS Angelo Torres BDO-NS Euben Paracuelles - NSL
+632 878 4969 +632 878 4967 +65 6433 6956
dante.tingajr@nomura.com angelo.torres@nomura.com euben.paracuelles@nomura.com
The "BDO-NS" (which stands for "BDO Nomura
Securities, Inc.") placed next to an analysts
name on the front page of a research report
Abigail Chiw, CFA BDO-NS Thomas Earll Huang BDO-NS indicates that the analyst is employed by BDO
Unibank Inc. ("BDO Unibank") who has been
+632 878 4590 +632 878 4968 seconded to BDO-NS, to provide research
abigail.chiw@nomura.com thomasearll.huang@nomura.com assistance services to NSL under an agreement
between BDO Unibank, NSL and BDO-NS. BDO-
NS is a Philippines securities dealer, which is a
joint venture between BDO Unibank and the
Nomura Group.
BDO
Appendix A-1
See Appendix A-1 for analyst certification, important
disclosures and the status of non-US analysts.
BDO-NSBDO
BDO BDO BDO-NS BDO NSL Any authors named on this report are research
BDO-NS NSL BDO-NS BDO
analysts unless otherwise indicated.
Key Messages
The sound macroeconomic backdrop (GDP growth of 6.7%/6.8% in 2017F/2018F) remains supportive of
equities. A young population plus healthy public & private sector balance sheets provide unique
advantages. An investment boom appears underway. We remain bullish on Philippine stocks despite
headwinds from rising rates, peso weakness and geopolitical risks.
The PCOMP continues to track higher, up 19% YTD. We raised our bottom-up determined 12-month index
target from 7,700 (in Jan 2017) to 8,500 (in June 2017). PCOMP upside is likely as long as index
heavyweights SM, SMPH, AC, ALI, etc, meet earnings expectations.
Investors need to pay attention to the twin catalysts of tax reform and accelerated government
infrastructure spending. The progress on these twin catalysts should drive a further re-rating for equities
and amplify our views on stocks and sectors we like. Sectors we prefer from a risk-reward perspective are
conglomerates, property and industrials. We remain cautious on consumer, and underweight utilities and
telecom.
With the index trading at 19x forward P/E, however, there are fewer near-term bargains available. We have
narrowed our top picks to ALI, ICT, MPI, RRHI and SM.
What concerns us? Despite the strong macroeconomic backdrop, corporates profits are under pressure
from intensifying competition, regulatory uncertainty, and disruptive technologies. More companies missed
rather than beat our 2Q17 earnings expectations.
1
Healthy macroeconomic backdrop underpins bullish
investment themes for Philippine equities
The Philippines robust economic growth outlook translates to positive, growth-oriented investment themes.
We nonetheless highlight risks to our bullish view on Philippine equities.
Factors driving healthy macro backdrop Key investment themes What concerns us?
Attractive demographics Healthy and resilient domestic Corporate earnings under pressure from
consumption story competition and regulatory pressures.
Low levels of debt
Increasing investment spending by Policy catalysts face execution risks
Rising structural growth potential government and corporates
Disruptive technologies may diminish

Continued pick-up in investments Healthy balance sheets get healthier demographic advantage
Sound economic policy management

Rising levels of affluence and Messy politics may weigh on investor
urbanization - accelerating economic sentiment
Potential for more structural reforms growth outside Metro Manila
Scope for higher rates, peso weakness

Impact of tax reform, increased may weigh on Philippine assets
infrastructure spending, and other
possible policy catalysts.
2
Young demographics and low debt levels provide unique
advantages
1) Better working age profile than Vietnam and Indonesia 2) turning into a strong advantage with falling unemployment
% Unemployment Rate (sa)

8.5
8.0
7.5
7.0
6.5
6.0
5.5
5.0
4.5
Apr-05 Nov-06 Jun-08 Jan-10 Aug-11 Mar-13 Oct-14 May-16
3) Credit sector as a % of GDP still low 4) Investments and spending likely resilient vs rising rates
Source: UN, PSA, CEIC; Nomura Global Economics. 3

Not a twin deficit problem
(1) Public capex has been a key driver of strong import growth (3) Stable saving rates, rising investment rates - positive
3mma, % y-o-y Capital goods imports % of GDP Savings rate

100.0 Government capital outlays 27 Investment rate
26
80.0 25
60.0 24
23
40.0 22
21
20.0
20
0.0 19
18
-20.0 17
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Q1 2017
-40.0
Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
(2) and so the current account and fiscal balances are (4) Basic balance Foreign Direct Investment (FDI) inflows
moving in the same direction have more than fully financed current account deficit so far
%GDP, 4 quarter rolling sum USDbn Net FDI Current account

8 Current Account Fiscal balance (RHS, inverted) 5 Basic balance
6 4
3
4 2
2 1
0
0
-1
-2 -2
-4 -3
-4
-6 Mar-05 Mar-08 Mar-11 Mar-14 Mar-17
Mar-00 Sep-02 Mar-05 Sep-07 Mar-10 Sep-12 Mar-15
Source: CEIC; DOF, Nomura Global Economics estimates 4
Summary of economic forecasts
% y-o-y growth unless otherwise stated 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 2016 2017 2018 2019
Real GDP (sa, % q-o-q, annualized) 6.0 7.3 4.3 9.0 6.5 7.7 4.1 9.5
Real GDP 7.1 6.6 6.4 6.6 6.7 6.8 6.8 6.9 6.9 6.7 6.8 7.1
Private consumption 7.2 6.2 5.7 5.8 5.9 6.3 6.0 6.3 7.0 5.9 6.2 6.5
Government consumption 3.1 4.5 0.2 0.3 7.4 4.4 16.6 9.9 8.4 2.8 10.8 10.0
Gross fixed capital formation 25.4 18.5 11.8 8.5 11.6 18.5 21.2 24.7 25.2 12.8 20.6 25.0
Exports (goods & services) 9.0 13.4 20.3 19.8 12.2 6.1 -4.8 -2.2 10.7 14.8 0.8 5.0
Imports (goods & services) 13.3 15.4 17.5 15.8 15.8 9.7 5.5 6.1 18.5 14.7 8.1 15.0
Contribution to GDP growth (% points)
Domestic final sales 11.4 9.6 7.4 6.1 8.1 10.2 12.3 11.7 11.7 8.0 11.4 13.8
Inventories -1.4 -0.8 -0.9 -0.7 1.6 -0.7 1.2 0.1 -0.2 -0.2 -0.1 0.2
Net trade (goods & services) -2.9 -2.2 -0.2 1.2 -2.9 -2.6 -6.6 -4.8 -4.5 -1.1 -4.6 -6.9
Exports -1.8 3.6 16.3 9.4 6.3 1.3 1.5 -1.5 -2.4 8.1 0.2 5.0
Imports 12.6 16.9 15.1 7.6 11.2 5.7 8.3 7.5 18.3 9.7 8.2 11.0
Merchandise trade balance (USDbn) -6.5 -7.2 -6.5 -7.5 -8.0 -8.3 -8.1 -9.4 -26.7 -30.3 -37.7 -45.6
Current account balance (USDbn) 0.8 -1.0 -0.3 0.4 0.9 -0.8 -0.8 -0.2 0.6 0.2 -1.5 -4.1
Current account balance (% of GDP) 1.0 -1.2 -0.4 0.5 1.2 -0.9 -1.0 -0.2 0.2 0.1 -0.4 -1.0
Fiscal balance (% of GDP) -2.4 -2.7 -2.8 -3.1
Consumer prices (2006=100) 2.0 2.5 3.2 3.0 2.9 2.7 3.4 3.7 1.8 3.0 3.9 3.3
Unemployment rate (nsa, %) 5.4 4.7 6.6 5.7 5.4 5.2 5.2 5.2 5.5 5.7 5.2 5.0
Reverse repo rate (%) 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.50 4.00
Exchange rate (USD/PHP) 48.5 49.6 50.2 50.5 50.3 49.9 49.8 49.6 49.6 49.9 49.3 47.9
Notes: Numbers in bold are actual values; others forecast. Interest rate and currency forecasts are end of period; other measures are period average. All forecasts are modal forecasts (i.e., the single
most likely outcome). Table reflects data available as of 15 August 2017.
Nomura Global Economics Research 5

Philippines positioned for higher potential structural
growth
Keep an eye on the big picture: rising potential growth in

contrast with the rest of the region Investment to GDP during high-growth periods
7.5
8 Labor Capital 6.7
TFP GDP growth 6.2
7
6
5 4.0
4
2.8
3 2.0
2
1
0
-1 Nomura forecasts
-2
-3
1980-89 1990-99 2000-09 2010-16 2017-22 2017-22
(baseline) (more
reforms)
Source: CEIC; Nomura Global Economics estimates.
6
Key catalysts that could improve Philippines
attractiveness as an investment destination
Catalyst #1: Tax reform
Philippines needs a simpler, fairer, and more efficient tax system

Tax reform also needed to ensure fiscal sustainability
Current system is not progressive and hinders investments
Objective is to broaden the tax base, remove loopholes
Proposal is a series of revenue-enhancing packages with the 1st package due for
passage within this year
Catalyst #2: Infrastructure rollout
Poor quality Philippine infrastructure a bottleneck to growth

Government solution is to ramp up infrastructure spending
PPPs remain in play, but this does not appear to be a top priority (although
government seems open to unsolicited proposals)
7
Catalyst #1: A clear case for tax reform
(1) One of the highest personal income tax rates in Asean (2) Sharp rise in diesel and gasoline fuel consumption
(3) The government has underinvested in and needs to fund (4) as well as human capital spending (as measured by health
physical infrastructure expenditures)
Source: CEIC, DOF, Nomura Global Economics estimates

8
Competitive tax regime may help sustain FDI inflows
(1) Already structurally rising FDI inflows (2) Inverse correlation of corporate tax rates in ASEAN and FDIs
USDbn
Country Tax rate FDI inflows (%
9
of GDP)*
8 FDI inflows, 12 month rolling sum
Singapore 17% 17.9%
7
6 Cambodia 20% 7.6%

5
Vietnam 22% 5.4%
4
Indonesia 25% 1.6%
3
2 Thailand 23% 3.0%

1
Philippines 30% 1.4%
0
Dec-06 Dec-08 Dec-10 Dec-12 Dec-14 Dec-16
Three reasons we see a further pick-up in FDI inflows on a trend basis:

(1) Becoming a standout in ASEAN, while factors that drive Japanese firms to invest are being addressed via reforms
(2) Five to six foreign banks applying for domestic presence following the legislated bank liberalisation
(3) Government measures are FDI-friendly, including potential for lower corporate tax rates and a further easing of constitutional foreign
ownership restrictions
Source: CEIC; Nomura Global Economics estimates. 9

Comprehensive yet pragmatic approach to tax reforms
The Department of Finance (DOF)-proposed tax reforms are broken down into bite-sized
packages to navigate the legislative process and minimise the risk of delays
Source: Department of Finance, Senate Economic Planning Office, Philippine House of Representatives HB 04774; Nomura Global Economics estimates.
10
Package One intends to lower personal income tax
rates
Current Income Tax Schedule

Annual Taxable Income Tax Rate
0 - 10,000 5%
Over 10,000 - 30,000 500 + 10% of the excess over 10,000
Over 30,000 - 70,000 2,500 + 15% of the excess over 30,000
Over 500,000 125,000 + 32% of the excess over 500,000
Proposed Income Tax Schedule (2018, 2019)

Annual Taxable Income Tax Rate Percent of Taxpayers
0 - 250,000 0% 83%
Over 250,000 - 400,000 20% of the excess over 250,000 8%
Over 400,000 - 800,000 30,000 + 25% of the excess over 400,000 6%
Over 800,000 - 2,000,000 130,000 + 30% of the excess over 800,000 2%
Over 2,000,000 - 5,000,000 490,000 + 32% of the excess over 2,000,000 1%
Over 5,000,000 1,450,000 + 35% of the excess over 5,000,000 0.1%
Proposed Income Tax Schedule (2020 onwards)

Annual Taxable Income Tax Rate
0 - 250,000 0%
Over 250,000 - 400,000 15% of the excess over 250,000
Over 800,000 - 2,000,000 102,500 + 25% of the excess over 800,000
Over 2,000,000 - 5,000,000 402,500 + 30% of the excess over 2,000,000
Over 5,000,000 1,302,500 + 35% of the excess over 5,000,000
Source: CEIC, DOF, Nomura Global Economics estimates

11
Philippine legislative process: We expect Package One of
tax reform bill to be enacted into law within this year
Philippines House of Representatives

12
Catalyst #2: Government infrastructure spends to boost
Philippines attractiveness as an investment destination
Poor-quality Philippine infrastructure is a bottleneck to growth. The Duterte administration promises to ramp
up government spending (USD160bn from 2017 to 2022) on infrastructure.
Quality of infrastructure (1 out of 138, 1= highest) Government promises increased infrastructure spending
Sources: World Economic Foundation, 2016-17 Global Competitiveness Report, Department of Finance, Nomura Research
13
What projects should we look out for?
Key projects identified by the Duterte administrations Build, Build, Build program. Some projects are carried
over from Aquino government, but there is a decided switch from PPPs to government-funded projects.
Total Project Estimate
Project Description Cost Completion Source of Funding
General
Clark International Airport (CIA) The project aims to build an 82,600 sqm terminal building, having a design capacity of 8
Php 12.55bn 2019 Appropriations Act
Expansion million passengers per year.
(GAA)
General
Mindanao Railway: Tagum-Davao City-Digos This phase involves the establishment of a 102.28-km commuter railway from Tagum City
Php35.26bn 2020 Appropriations Act
Segment in Davao del Norte to Digos City in Davao del Sur.
(GAA)
This project involves the construction of a commuter line and airport express railway
Official Dev't
between Malolos and Clark Green City through Clark International Airport. It is composed
PNR North 2 (Malolos-Clark Railway Project) Php211.43bn N/A Assistance (ODA)
of two segments: Malolos to Clark International Airport (50.5 kms) and Clark International
Loans
Airport to Clark Green City (19 kms).
Official Dev't
This project is seen to provide irrigation water supply to around 8,700 hectares of farmland
Chico River Pump Irrigation Project Php2.7bn 2020 Assistance (ODA)
and will benefit around 4,350 farmers.
Loans
This involves: 1) construction of an air traffic management automation (ATM) system and
New Communications, Navigation and Official Dev't
construction of the Manila ATM Center Building in Pasay City near the Ninoy Aquino
Surveillance/Air Traffic Management Php10.87bn 2019 Assistance (ODA)
International Airport (NAIA), and 2) the installation of communications equipment and
(CNS/ATM) Systems Development Project Loans
surveillance equipment in 4 radar sites (Tagaytay, Palawan, Zamboanga, and Davao).
The project aims to complete the remaining segments of the Plaridel Bypass Road "to Official Dev't
Arterial Road Bypass Project Phase II alleviate the perennial traffic congestion at the interconnection point of the North Luzon Php4.62bn 2019 Assistance (ODA)
Expressway with the Daang Maharlika Highway," NEDA said. Loans
About 151.5 sq. kms, this project aims to mitigate damage due to flooding in the lower Official Dev't
Cavite Industrial Area Flood Risk Management
reach of the San Juan River Basin and the Maalimango drainage areas in Cavite. It involves Php9.89bn 2024 Assistance (ODA)
Project
the improvement of the San Juan River channel and the drainage for Maalimango Creek. Loans
Official Dev't
New Centennial Water Source Kaliwa Dam The project will increase Metro Manila's raw water supply and ensure water security, as it
Php10.86bn 2019 Assistance (ODA)
Project involves the construction of an additional supply source of 600 mn liters per day.
Loans
Source: www.build.gov.ph, National Economic Development Agency (NEDA) as of June 2017

14
Evolution of rail network: MRT-7 and LRT-1 extension
allows suburbs rail access to Metro Manila
Sources: DOTr, MPI, SMC, ppp.gov.ph.

15
Status of reforms?
Tax reform and accelerating infrastructure spending go hand in hand. So far, so good on tax reform.
Infrastructure program subject to implementation bottlenecks, however.
#1 Tax Reform #2 Infrastructure Program
The House of Representatives approved HB 5636, the What has changed? The Duterte administration is
1st of 5 tax reform packages, last 30 May 2017. Key looking to use the govt balance sheet aggressively to
components: reduction in PIT rates, increase in excise fund infrastructure. This means moving away from
tax rates on petrol and automobiles, expanded VAT PPPs and relying more on government borrowings
base, and new excise tax on sugar-sweetened (both local and ODA loans).
beverages. This translates to Php130bn in net
revenues (0.7% of GDP).
Government budget allocation for infrastructure has
already increased from 3% of GDP in 2016 to 4.5% of
The Senate tackles the bill when sessions resume in GDP in 2017. Disbursements remain slow, however.
July. Govt targets enactment into law by 3Q17.
Government to ramp up annual infrastructure spending

President Duterte enjoys support from a majority of to as much as 7% of GDP during Dutertes term (target
legislators in both the House and Senate. The infra spending of USD160bn over 6 years), ushering in
Department of Finance targets passage of Packages 2- a Golden Age of Infrastructure for Philippines. Tax
5 of the Tax reform plan within the first three years of reform is needed, however, to ensure fiscal
Dutertes term. sustainability and to keep the deficit within 3% of GDP.
Nomura Research
16
The strong domestic growth story helps ensure equity
markets self-correct when valuations get too low
Foreign investors were predominantly net-sellers of PH equities from August 2016 March 2017 despite
expectations that Philippines GDP growth would remain above trend. Sentiment has since reversed, though.
PSE turnover vs net foreign buying/selling (USDmn weekly) GDP 2016-19F CAGR %
7.0% 6.9%
5.4%
5.3% 5.0%
3.6%
3.5%
1.8%
1.8%
0.0%
Philippines Asia Pacific Emerging Global Developed
Markets Markets
Sources: Bloomberg, EPFR, Datastream, and Nomura Research.

17
Investing in the Philippine growth story comes at a steep
price; bargains are increasingly hard to find
Despite sluggish corporate profit growth, rising rates, and PHP weakness, Philippine stocks continue to trade
at historical and relative (to peers) premiums
PCOMP 12M forward PERx versus historical levels PCOMP 12M forward PERx versus most regional markets
Bloomberg, Nomura Research as of 14 Aug 2017

18
What concerns us? Positive macro backdrop has not
translated into broad, accelerating corporate profit growth
Corporate profit growth trajectory this year has been sluggish despite a healthy macro environment. We
expect big cap property, banks, and conglomerates to lead a strong earnings recovery in 2018F, however.
Index weighted YoY earnings per share (EPS ) growth 2013A-18F vs. GDP growth
14.0%
13.2%
11.1%
10.5%
9.4%
7.6%
6.9% 6.7% 6.8%
7.0%
6.1% 6.1%
5.6%
5.2%
4.2%
3.5%
0.0%
2013A 2014A 2015A 2016A 2017F 2018F
Real GDP Growth Core EPS Growth
Source: Bloomberg, Nomura estimates

19
Bottom-up analysis needed to identify attractive risk-
reward opportunities
Big-cap consumer, utility, and telecom stocks appear to be drags to growth while big-cap property, banks,
industrials, and conglomerates should deliver earnings.
3-year EPS CAGR (%) by Sector
16.0%
10.5%
5.0%
-0.5%
-6.0%
Property Banking Industrials Conglomerates Consumer Power & Utilities Telecom
Simple Average Mkt Cap Weighted

20
Sector views
Sectors we like include conglomerates, industrials and property. We remain cautious on consumer
and underweight utilities/power and telecoms.
Sector Relative View Comments Analysts

Industry remains attractive in long term with GDP activity to support loan
growth while rising rates provide near to medium-term NIM boost. Sector
Banks Neutral Abigail Chiw
valuations look pricey in the short run, however. MBT as a "catch up play"
represents our top pick.
Scale and diversified businesses benefit from broadening growth and mitigate
Dante Tinga Jr,
Conglomerates Overweight competitive risks. AC and SM are appropriate core holdings but YTD laggard
Thomas Earll Huang
GTCAP also looks interesting from a valuation perspective.
Companies face difficulty translating strong macro backdrop into profit growth
due to intensifying competition and rising input costs. Tax reform (lower PIT)
Consumer Neutral Angelo Torres
positive in the long-run but a "double edged sword" in the near-term. We favor
mid-cap names RRHI and PIZZA.
High capex companies with dominant franchises are seeing cash flows,
earnings, and balance sheets at positive inflection point. Valuations still Thomas Earll Huang,
Industrials Overweight
reasonable with most stocks trading at a discount versus regional peers. ICT Ahmad Maghfur Usman
and PCOR remain our top picks in the space.
Tax reform and accelerated infrastructure spending should provide long-term
Property Overweight tailwinds to the sector. Concerns on residential oversupply have eased. Real Abigail Chiw
estate remains a direct proxy for the PH economy. ALI is our top pick.
Industry undergoing structural shift. Capex elevated. Margins under pressure.
Competitive pressures appear to be stabilizing but growth picture still unclear Gopa Kumar,
Telecoms Underweight
while dividend payouts exposed to downside risk. We remain cautious on TEL Thomas Earll Huang
and GLO.
Beware regulatory and quasi-regulatory risks. Power rates soft due to supply
overhang and weak commodity prices. Concentrate exposure to cost
Utility/Power Underweight Dante Tinga Jr
competitive gencos with clear development pipelines. At current share price
levels, AP provides best risk reward play.
Source: BDO Nomura research 21

Top picks
We have narrowed our top picks to five stocks: Overall equity valuations have become more
pricey, bargains are harder to find.
Stock Share Price (PHP) Upside PERx EPS Growth
Comments
(Rating) 9/15/2017 Target (%) 2017F 2018F 2017F 2018F
Philippine core holding. At 25x PER, stock is trading at a
discount to 31x historical average, despite healthy EPS
ALI (Buy) 45.00 49.00 8.9% 26.4 23.5 14.8% 12.2% growth, above trend ROEs; and extensive project
pipeline/land bank.
EBITDA, ROE, and EPS poised to sustain improvement as

new concessions ramp-up operations. Balance sheet and
ICT (Buy) 108.80 118.00 8.5% 27.7 22.0 16.9% 27.0%
cash flow past positive inflection point. Surprisingly strong
global trade provides upside bonus.
Profits and ROEs depressed by regulatory environment.

MPI (Buy) 23.0% 15.3 14.2 9.2% 8.0% Risks priced in but not rewards. Stock undervalued even
6.79 8.35
w/o improvement in regulatory environment.
Multi-format model proxy for broad private consumption

growth; net cash balance sheet and RLC link add value.
RRHI (Buy) 95.40 108.00 13.2% 28.2 24.8 13.9% 13.4%
Premium valuations warranted given superior growth
relative to peers.
Philippine core holding. Dominance in key sectors.

Increasing contribution of SM Retail to overall
SM (Buy) 835.00 10.2% 29.2 24.8 10.4% 17.5%
920 conglomerate valuations. M&A catalysts provide upside
surprises.
Source: BDO Nomura estimates, data as of 15 September 2017 22

1H17 earnings results review
Earnings for several consumer related companies disappointed relative to Nomura forecasts in 1H17. Conversely, property
developers delivered much of the earnings outperformance, while the deterioration in telecom profits appears to have abated.
Exceeded vs Expectations Met Expectations Disappointed vs Expectations
1. Aboitiz Power 1. Aboitiz Equity Ventures 1. Alliance Global Group

2. Ayala Corporation 2. Bank of the Philippine Islands 2. Cemex Holdings Philippines
3. Ayala Land 3. Cebu Pacific Air 3. Century Pacific Food
4. Jollibee Foods Corp. 4. DMC Holdings Inc. 4. D&L Industries
5. Megaworld Corporation 5. Energy Development Corp 5. Emperador Inc.
6. Metro Pacific Investments 6. Globe Telecom 6. GT Capital Holdings
7. Petron Corporation 7. International Container Terminal Services Inc. 7. JG Summit Holdings
8. San Miguel Corp. 8. Manila Electric Company 8. LT Group
9. Security Bank 9. Metropolitan Bank & Trust Company 9. Manila Water Company
10. PLDT Inc. 10. Puregold Price Club
11. Robinsons Retail Holdings 11. Robinsons Land
12. Semirara Mining and Power 12. Universal Robina
13. Shakeys Pizza
14. SSI Group
15. SM Investments
16. SM Prime Holdings
17. Vista Land
Source: Nomura estimates

23
Banks
Fundamental sector outlook improving, especially with margins recovering. Recent run-up in the share prices may cap the near-
term upside for the sector. MBT looks most attractive from a valuation perspective.
MBT is our top pick, driven by its peer-leading NIMs (3.72% vs. 3.29% industry average) and our projected net-interest income
yield to overall assets (3% vs. 2.7%-2.8% of peers). Good branch coverage outside Metro Manila to benefit from the
governments push to fast-track infrastructure and countryside development. Key data: Branches = 959 (46% MM, 30% Luzon,
24% VisMin); Market share of 16% for loans, 14% for deposits; stock is trading at 1.2x P/B vs. 1.5x historical average. We
believe MBT valuation multiples will recover as it delivers better earnings starting this year.
BPI appears near fair value, with its forward P/E surpassing its historical mean of 17.5x, leaving limited implied upside in the
next 12 months after advancing 14% YTD. Despite a flattish earnings outlook for 2017 (due to significant trading gains in 2016),
market seems to look forward to 2018 prospects. We estimate an EPS growth of 18% for 2018 with loan growth assumptions of
15% and potential NIM improvements of 10bps. Key data: Branches = 826 (55% MM, 27% Luzon, 18% VisMin; Market share of
16% for loans, 14% for deposits; stock is trading at 2.3x P/B vs 2.5x historical average)
SECB also seems near fair value following a 30% YTD share price run-up, which we suspect partly incorporate its increased
MSCI weighting effective Aug 31. SECB aims to be a top-5 Philippine bank and double market share by 2020F with the gradual
deployment of BTMUs PHP37bn capital infusion for a 20% stake in SECB. Expansion-related expenses and possible increases
in loan provisioning (on the build-up of retail loan books) could weigh on near-term profits. Key data: branches = 296 (59% MM,
24% Luzon, 17% VisMin; market share of 4% for loans, 3% for deposits; stock is trading at 1.8x P/B vs. 1.7x historical average.
BBG Mkt Cap Last Price Target Upside/ P/E (x) EPS Growth Div Yield ROE
Company Ticker (USD mn) Rating 9/15/2017 Price Downside FY17F FY18F FY17F FY18F FY17F FY17F
Bank of the Philippine Islands BPI PM 7,771 Neutral 101.00 103.67 2.6% 17.8 15.0 1.2% 18.3% 1.8% 12.9%
Metropolitan Bank & Trust Company MBT PM 5,465 Buy 88.00 102.23 16.2% 13.5 11.5 11.4% 17.2% 1.3% 9.9%
Security Bank Corporation SECB PM 3,641 Neutral 247.40 259.40 4.9% 16.5 15.4 5.8% 6.9% 1.2% 10.6%

24
Banks
Philippines is attractive as a long-term market for financial services. We forecast 16.5% 2015A-18F loan CAGR, especially with
the annual GDP growth above 6%.
A healthy economy fuels loan growth Low financial inclusion rates

Loan growth tracking 2.5x of GDP PH underbanked vs. Asian Peers
Source: Philippine Statistics Authority, Bangko Sentral ng Pilipinas (BSP), Company Data
25
Banks
Rebased ROEs to creep up as NIMs recover and operating efficiencies improve. However, reduced trading gains, intermittent
opex and provisioning hikes may curb growth.
Focus on lending growth rather than trading income BPI ROE buoyed by significant trading gains in 2016
Onset of rising rates to improve NIMs Reviving branch expansion to tap growth outside MM
Expansion costs and provisioning hikes may curb profits Loan growth est of 13-16% yoy, improving NIMs to aid ROEs
1H17 Trends BDO* MBT BPI SECB
Loan growth (%) 17.0 21.8 16.9 27.7
Net interest income growth (%) 22.0 15.7 13.6 25.5
Fee-related income growth (%) 13.0 0.6 17.8 3.5
Trading-related income growth (%) -21.0 -30.1 -67.9 -35.6
Revenue growth (%) 15.0 7.0 0.4 12.9
Opex growth (%) 14.0 9.0 5.4 15.5
PPOP growth (%) 21.0 4.0 -4.5 10.5
Provisioning (% of PPOP) 14.6 14.7 14.4 3.9
EPS growth (%) 16.0 8.0 -7.8 2.8
ROE (%) 10.2 9.5 13.7 10.6
NIM (%) 3.4 3.7 2.9 3.2
CIR (%) 65.0 58.7 51.6 48.8
Branch Network 1,134 959 826 296
*BDO - comparable basis, excluding impact of BDO Life adjustments
Source: Bangko Sentral ng Pilipinas (BSP), Company data, Nomura estimates

26
Banks
NIM expansion and earnings recovery underpin our positive outlook for top pick MBT. We expect slower growth trajectory for
SECB because of expansion related expenses.
Conclusion of non-core asset sales (during 2013-16) SECB aims to double market share by 2020
should trigger MBT profit recovery using capital infused by BTMU
Loan growth est of 15-18%, peer-leading NIMs to drive ROE Loan growth est of 22-25% yoy, rising NIMs to push ROE
Source: Bangko Sentral ng Pilipinas (BSP), Company data, Nomura estimates

27
Property
The Philippine property sector remains the most straightforward proxy for the strong domestic economy, in our view. Risks
associated with a BPO and remittance slowdown is likely priced in, while the market may be overlooking positive catalysts such
as a ramp-up in infrastructure spending. ALI is our top pick in the sector.
We forecast a mid-teens ROE for ALI, still trending higher on the back of its extensive pipeline of huge mixed-use projects. ALI
is also trading at an attractive 25x P/E vs. its historical average of 31x. ALIs expansive land bank also stands to gain from
successful rollout of infrastructure projects.
MEG has a strategic land bank with a growing portfolio of rental income as it aims to expand and replicate its township
development strategy outside Metro Manila. Stock is also trading at 12x P/E vs 21x peer average, and we believe concerns
regarding a possible BPO slowdown are weighing on its share price. Even so, our valuations for MEG already assume below-
trend growth in office space.
We have a Buy rating on RLC considering resilient rental income growth at reasonable valuations. RLC is projected to post
stronger earnings growth next year, driven by its continuous focus on leasing portfolio expansion. RLCs footprint for malls,
offices and hotels are slated to expand by 9%, 22% and 19%, respectively, for 2017, and the material impact will be felt in 2018.
SMPH is the countrys largest landlord. Stable leasing income accounts for over 80% of total EBITDA, allowing SMPH to post
steady core earnings growth of 13-15% y/y. We believe SMPH deserves premium valuations but further multiple expansion
above current levels (~40x P/E) is unlikely without earnings outperformance or fresh growth catalysts.
We think VLL (current P/E of 9x) deserves higher valuations, considering our forecast for healthy 14% earnings CAGR 2016A-
2019F with demand for its core business of affordable housing supported by improving incomes and resilient OFW remittances.
BBG Mkt Cap Last Price Target Upside/ P/E (x) EPS Growth Div Yield EV/EBITDA (x) ROE
Company Ticker (USD mn) Rating 9/15/2017 Price Downside FY17F FY18F FY17F FY18F FY17F FY17F FY18F FY17F
Ayala Land ALI PM 12,942 Buy 45.00 49.00 8.9% 26.4 23.5 14.8% 12.2% 1.3% 17.8 16.4 15.4%
Megaworld MEG PM 3,381 Buy 5.37 5.70 6.1% 13.3 11.2 14.1% 18.4% 1.0% 11.8 10.9 9.9%
Robinsons Land RLC PM 2,027 Buy 25.35 29.10 14.8% 17.6 14.9 8.2% 18.0% 1.4% 11.2 9.8 9.1%
SM Prime Holdings SMPH PM 19,597 Neutral 34.80 35.00 0.6% 41.8 36.2 14.6% 15.5% 0.8% 23.4 20.7 11.6%
Vista Land & Lifescapes VLL PM 1,596 Buy 6.37 6.90 8.3% 9.1 8.1 16.0% 12.4% 2.0% 11.0 10.5 11.7%

28
Property
Real estate to benefit from a strong economy, favourable demographics and the push to upgrade infrastructure. Urbanisation a
key growth driver.
Property earnings tracks strong GDP growth Philippines still in catch-up phase
GDP versus Property sector EPS growth (%) GDP per capita and urbanization level (PH vs peers)
Source: Bloomberg, Philippine Statistics Authority, World Bank, Nomura research

29
Property
Earnings CAGR (2016-19F) at mid-teens with a balanced mix of developmental and rental project launches as players diversify to
new growth areas outside Metro Manila.
Land bank and rental assets to sustain growth Rent income build-up augment residential recovery
Increasing rental flows support capex requirements Aggregate ALI, SMPH, MEG, RLC, VLL data (PHP bn)
Data as of June 2017 ALI MEG SMPH RLC VLL

Landbank Has 9,852 3,704 1,247 619 2,658
2017 Capex Budget (Php'bn) 88.0 60.0 50.0 16.0 35.3
Recurring earnings mix 36% 50% 76% 78% 23%
Retail GLA ('000 sqm) 1,660 273 5,460 1,290 456
Office GLA ('000 sqm) 836 851 326 331 114
1H17 residential presales growth 11.0% 44.8% 22.0% -22.0% 12.0%
1H17 residential revenue growth 25.0% 1.0% 5.0% -9.0% 14.0%
1H17 rental revenue growth 11.0% 20.0% 12.9% 9.0% 37.0%
1H17 total revenue growth 18.0% 5.0% 10.2% 1.0% 16.0%
1H17 earnings growth 18.0% 11.0% 14.3% -9.0% 15.0%
1H17 ROE 15.2% 9.9% 12.0% 10.1% 11.1%
Source: Company Data, Nomura estimates

30
Consumer
The benefits of strong economic growth do not impact consumer companies evenly. Margins are at risk from rising input costs,
intensifying competition and the need for additional A&P spending. Tax reform (lower PIT) positive for the sector over the long-
term but introduction of revenue-enhancing measures may serve as near-term drags. We favor RRHI PM and PIZZA PM.
Rising affluence should translate into sustained consumption growth, benefitting the sector over the long term. However, sector
valuations are already pricey relative to the broader market, with margins under pressure in the near term due to: 1) intensifying
competition, 2) rising commodity prices, 3) FX volatility, and 4) excise tax overhang.
RRHI PM is our top sector pick. Unique multi-retail format allows it to capture broad-based private spending growth. Play on
basic consumption and discretionary spending. Net cash position and RLC PM link add value.
We like PIZZA PM given its dominance (<50% market share) in a fast-growing chained full-service pizza segment (+9% 3Y
sector revenue CAGR). Growth is underpinned by continued new store rollouts augmented by healthy SSSG (3-5%).
We have a cautious outlook on large-cap consumer stocks URC PM (Reduce) and JFC PM (Neutral). Significant cost
pressures exacerbated by problematic topline growth in key markets continue to impact on URCs margins. Meanwhile, JFC
PM appears to be fairly valued at current share price levels. The market appears to have already priced in JFCs ability to
deliver consistent EPS growth which is reflected by its premium valuations.
Century Pacific Food CNPF PM 1,204 Neutral 17.40 18.15 4.3% 22.1 20.0 5.2% 10.1% 1.3% 15.0 13.4 20.6%
Emperador Inc. EMP PM 2,267 Neutral 7.20 7.65 6.3% 16.1 15.2 -6.1% 5.9% 2.7% 13.1 12.1 13.3%
Jollibee Foods Corp JFC PM 5,139 Neutral 243 252 3.7% 37.6 33.1 13.5% 13.5% 1.2% 20.7 18.5 19.7%
Puregold Price Club PGOLD PM 2,768 Neutral 51.25 50.00 -2.4% 23.3 21.0 10.3% 10.6% 0.6% 13.0 11.4 13.3%
Shakey's Pizza Asia Ventures PIZZA PM 380 Buy 12.72 16.00 25.8% 25.8 22.6 12.8% 14.3% 0.6% 16.3 14.1 20.5%
Robinsons Retail Holdings, Inc. RRHI PM 2,581 Buy 95.40 108.00 13.2% 28.2 24.8 13.9% 13.4% 0.7% 14.7 12.4 9.4%
SSI Group, Inc. SSI PM 278 Reduce 4.30 3.30 -23.3% 22.1 20.2 10.8% 9.7% NA 7.3 6.8 6.3%
Universal Robina Corporation URC PM 6,625 Reduce 154 138 -10.3% 29.2 26.8 1.8% 9.0% 1.9% 16.7 15.1 14.5%

31
Consumer
Healthy macro fundamentals underpin the positive long-term outlook for the sector as consumer sentiment remains upbeat
while incomes and GDP per capita continue to improve. However, the positive macro picture fails to translate into robust profit
growth for consumer companies under our coverage.
Consumer confidence still upbeat Strong consumption growth appears sustainable

BSP Consumer Expectations Survey Basic vs discretionary spending growth
Source: Bangko Sentral ng Pilipinas (BSP), Philippine Statistics Authority (PSA) CEIC, Bloomberg
32
Consumer
Valuations look pricey, especially given the headwinds of intensifying competition, rising inflation, peso volatility and potential
near-term regulatory overhang from tax reform. The sector trades at 23x 2018F earnings.
Unspectacular EPS growth Sector pricey relative to the broader market

2016-19F EPS CAGR 2018F PER
Sector ave. 3Y EPS CAGR: +9.8% Sector ave. 2018F PER: 23x
2016-19F 2018F PER

EPS CAGR 35.0x 33.1x
15% 14.0%
13.3% 13.6%
30.0x
26.8x
12% 24.8x
10.8% 25.0x 22.6x
10.0% 21.0x
20.0x 20.2x
8.7% 20.0x
9%
15.2x
6.6%
15.0x
6%
10.0x
3%
1.5% 5.0x
0% .0x
EMP URC CNPF SSI PGOLD PIZZA RRHI JFC EMP CNPF SSI PGOLD PIZZA RRHI URC JFC
Source: Nomura estimates (prices as of 15 September 2017)

33
Industrials
Sector composed of unique companies with dominant franchises that benefit from broad economic growth. Deleveraging
benefits may also provide upside surprise as the capex for most of these companies has already peaked. ICT and PCOR
particularly well positioned to capitalise on the recent investment spree.
The sector composed of companies with high capital investment requirements that result in elevated gearing levels but also
provide barriers for competitors. Top picks, ICT & PCOR, should enjoy improving EBITDA outlook that translates to bottom-line
and balance sheet improvements, especially as capex has peaked.
We downgraded our rating on CHP to Neutral due to a more cautious outlook on Philippine cement industry supply-demand
fundamentals.
CEB should enjoy EBITDARF growth, though bottom line will be dampened by higher depreciation from refleeting program.
Maintain Buy as the stock continues to trade at a discount vs regional peers.
Bullish outlook on growing online retail penetration benefits last-mile delivery player LBC.
DNL 2Q17 results disappointed with +1% y-y net income growth vs expectations of 7% growth. Though our new forecast still
shows healthy FY16-19F EPS CAGR of 12.3%, its multiples vs average Philippine QSR & FMCG of clients (FY18F PER:
26.1x) combined with volatility from its commodity exposure imply limited upside.
What concerns us? Earnings for most of these companies may be significantly impacted by external factors (commodity price
and exchange rate fluctuations, global and regional supply-demand dynamics, etc).
Cebu Pacific CEB PM 1,325 Buy 112.00 133.20 18.9% 7.6 12.6 -18.9% -40.1% 1.4% 5.4 6.6 23.9%
Cemex Holdings Philippines CHP PM 589 Neutral 5.80 6.60 13.8% 18.4 15.2 -59.8% 20.9% NA 10.0 9.1 5.6%
D&L Industries DNL PM 1,451 Neutral 10.40 11.00 5.8% 26.0 22.7 8.7% 14.7% 2.1% 18.9 16.8 19.6%
Intl Container Terminal Services ICT PM 4,322 Buy 108.80 118.00 8.5% 27.7 22.0 16.9% 27.0% 1.0% 11.2 9.6 17.4%
LBC Express Holdings Inc LBC PM 508 Buy 15.96 21.16 32.6% 22.8 19.3 14.8% 18.7% 3.6% 12.2 9.7 31.4%
Petron Corporation PCOR PM 1,945 Buy 10.62 12.00 13.0% 11.4 8.1 54.7% 40.8% 0.9% 7.5 6.2 18.3%

34
Industrials
Continued growth in economic activity should be supportive for industrials. ICT and PCOR positioned to capitalise on
recovering world trade and broad GDP growth, respectively.
ICT expansion complements organic revenue growth PCOR volume growth also looks healthy
ICT revenues by region (USDmn) PH and MY operations in growth mode
1,500 120 8%
1,125 90 6%
Million Barrels
USD Millions
750 60 4%
375 30 2%
- - 0%
FY12 FY13 FY14 FY15 FY16 FY17F FY18F FY19F FY13A FY14A FY15A FY16F FY17F FY18F FY19F
Asia Americas EMEA Philippines Malaysia
PH GDP Growth MY GDP Growth
Source: World Bank, Nomura estimates

35
Industrials
Capex for ICT and PCOR have peaked, EBITDA on the upswing. Deleveraging benefits likely overlooked by investors.
ICT free cash flow generation looks healthy PCOR should see benefits of deleveraging
EBITDA improving as capex is in decline PCOR EBITDA versus Interest Cover
1,400 600 50 7
6
1,050 450 38
USD Millions
PHP Billions
4
700 300 25
350 150 13
1
- - - (1)
FY12 FY13 FY14 FY15 FY16 FY17F FY18F FY19F FY13A FY14A FY15A FY16F FY17F FY18F FY19F
Finance Charges EBITDA Interest Coverage

EBITDA (LHS) Gross Revenues (LHS) Capex & Investments (RHS)

36
Telecoms
We remain UW on the Philippine telecom sector. Competition and ongoing revenue cannibalisation translate to a weak growth
outook, in our view. While data remains the long-term growth driver, the need to maintain elevated capex also puts pressure on
balance sheets and dividend pay outs.
PLDTs 2017 (TEL PM, Neutral, PHP1,800 TP) outlook suggests its earnings decline (on a recurring basis) could reverse this
year. We believe recapturing growth may not be easy especially given that legacy (voice and SMS) businesses still account for
70% of wireless revenue and market share losses may persist. Upside surprises would be dependent on fixed/enterprise
business (44% of service revenues) as well as cost controls and potential asset sales which are subject to execution risk.
PLDT was one of the worst-performing AeJ telcos last year (down ~30%) so the uncertain outlook appears priced in. We
believe that it is too early to be bullish on the stock; however, as any EBITDA and profit recovery will likely be back-ended
anyway.
Globes (GLO PM, Neutral, PHP2,100 TP) operational performance has been more appealing than PLDT's. However, we
believe that the overall growth outlook is likely to be tempered given the challenges in growing mobile revenue in the context of
broadly equal market share for PLDT and GLO, legacy revenue slowdown, and overall pricing pressure in data. Further, similar
to other telcos in the region, there is a decline in IDD revenue as well (10% of mobile). Hence, the mid-single-digit growth for
2017F comes largely from fixed line, where GLO is expanding on data/broadband. Also a concern, leverage is on an uptrend
(2x+ now) in the medium term, which would see higher interest costs this year. The companys capex outlook is lower for 2017,
but if history is a guide, this could very well pick up, driven by demand/network expansion.
Globe Telecom GLO PM 5,296 Neutral 2,040 2,100 2.9% 18.8 18.0 -9.8% 4.6% 4.4% 7.4 6.9 22.4%
PLDT Inc. TEL PM 7,131 Neutral 1,690 1,800 6.5% 18.3 18.2 -28.6% 0.8% 3.3% 7.6 7.1 19.6%

37
Telecoms
Competition has stabilised, but other concerns remain. Capex likely to remain elevated over the medium term. This presents
downside risk to the dividend payout outlook for TEL and GLO. The cannibalisation of legacy revenues continue as well.
Industry growth and margins Capex levels and dividend payouts
Growth in industry revenues, but not in profitability Sustained investments needed to service still growing data market
350 43% 50 180
PHP bn
PHP bn
263 41% 38 135
175 40% 25 90
88 38% 13 45
- 36% - -
FY14 FY15 FY16 FY17F FY18F FY19F FY14 FY15 FY16 FY17F FY18F FY19F
TEL Revenues GLO Revenues Blended EBITDA Margin TEL Capex GLO Capex TEL DPS GLO DPS

38
Power & Utilities
We are UW the Philippine power and utility sector, as regulatory and quasi-regulatory risks as well as a weak pricing
environment weigh on profits and valuations. AP is our lone Buy rated stock in the sector. We recently lowered ratings on EDC
(from Neutral to Reduce, due to looming delisting) and SCC (from Buy to Neutral, given YTD share price run-up).
AP is an attractive proxy for the Philippine power sector given the companys integrated business model, diverse portfolio of
generation assets, and defined project pipeline. The company is targeting a 4,000 MW genco portfolio by 2020 (versus 2,975
MWs at end-2016).
The entry of strategic investors GIC/Macquarie initiates a tender offer (from 10 August to 18 September) that is likely to lead to
EDCs eventual delisting from the Philippine Stock Market. We cut our rating to Reduce especially since EDCs share price is
up almost 20% - and above our fair value target - following the tender offer announcement.
MERs healthy dividend yield should be supportive of the stock. However, the uncertain regulatory outlook for the core
electricity distribution business (85% of bottom line) should limit medium-term earnings growth trajectory and cap valuation
upside.
Water services firm MWC is looking to double net profits over the 2015-2020 period by expanding outside its Metro Manila East
Zone concession (83% of bottom line). We see the stock fully valued at current levels, however, with execution risk on
expansion plans and regulatory risk on the East Zone concession our key concerns.
SCCs integrated power generation model (coal mine + power plant) helps mitigate development and offtake risks in a difficult
overall environment for power and utility companies. At current share price levels, however, the stock is trading close to our
estimated fair value for the company.
Aboitiz Power Corporation AP PM 5,878 Buy 40.90 47.00 14.9% 13.9 12.8 4.8% 9.0% 3.3% 10.3 9.3 19.5%
Energy Development Corporation EDC PM 2,562 Reduce 7.00 6.50 -7.1% 13.4 12.4 7.1% 8.4% 3.1% 9.5 8.7 18.2%
Manila Electric Company MER PM 6,076 Neutral 276 310 12.3% 16.1 16.8 -1.5% -3.7% 5.6% 8.7 9.1 23.4%
Manila Water Company, Inc. MWC PM 1,260 Neutral 31.40 32.00 1.9% 11.6 11.3 10.3% 2.8% 2.7% 7.2 7.0 14.8%
Semirara Mining and Power Corporation SCC PM 3,995 Neutral 48 46.75 -2.6% 12.6 11.7 34.7% 8.1% 2.1% 10.7 9.4 40.3%

39
Power and Utilities
We remain cautious on the Philippine power and utility sector, given regulatory and quasi-regulatory risks as
well as a subdued outlook for power rates.
Luzon spot market rates (PHP/mwh) show signs of bottoming out but remain well off recent highs
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
-2,000
Peak Off Peak All Hours

-4,000
Sources: WESM, Nomura research.

40
Power and Utilities
We favour companies with predictable development pipelines, diverse generation portfolios and integrated business models. AP
meets these qualifications and the YTD underperformance suggests the stock is under-owned.
AP genco mix by capacity (MWs) YTD share price performance of power stocks*
Target 4,000 MWs by 2020 AP has lagged
60%
50% 48%
40% 36%
30%
20%
10% 8%
4%
0%
-2%
-10%
SCC EDC MWC MER AP
Source: Company Data

41
Conglomerates
We are OW conglomerates, as we believe companies with national footprints and large, diverse business models are well
positioned for the broadening of growth in the domestic economy. M&A catalysts should also help underpin valuations.
SMs retail arm, the biggest in the country, should benefit from higher disposable income levels, especially if tax reforms push
through. SMs dominant retail, property, and banking subsidiaries are valid proxies for the growth drivers of the Philippine
economy.
ACs emerging businesses (energy, infrastructure, and industrial technologies) provide fresh growth catalysts that complement
the groups traditional property, telecom, and banking subsidiaries.
Though possibly negatively impacted by higher automobile taxes, we believe concerns are currently overdone with regards to
Philippine leader, Toyota Motor Philippines, a unit of GTCAP. We believe negatives are priced in as the stock has lagged YTD.
We downgraded DMC from Buy to Neutral as the YTD share price run-up limits upside relative to fair value. Accelerated
government infrastructure spending may provide a fresh re-rating catalyst, however.
Wide discount versus NAV (which assumes status quo on tariffs) suggests MPI valuations already discount regulatory risks.
Maintain Buy as we include MPI among our top picks.
We also suggest switch opportunities as some conglomerate subsidiaries (CEB and RLC over JGS) and (AP over AEV) look
more attractively valued than the parent firms.
Ayala Corporation AC PM 11,266 Buy 929 1,020 9.9% 20.8 18.0 12.5% 15.4% 0.6% 12.4 11.6 12.8%
Aboitiz Equity Ventures AEV PM 8,142 Neutral 74.00 73.80 -0.3% 17.5 15.8 5.2% 10.7% 2.0% 13.1 11.9 16.1%
Alliance Global Group, Inc. AGI PM 2,889 Buy 14.58 17.40 19.3% 10.4 9.1 -4.0% 13.8% 2.4% 8.3 8.1 9.0%
DMC Holdings DMC PM 4,284 Neutral 16.52 16.70 1.1% 14.3 13.1 27.1% 9.3% 3.1% 8.6 8.0 21.4%
GT Capital Holdings, Inc. GTCAP PM 4,416 Buy 1,174 1,340 14.1% 15.7 13.8 -0.8% 13.8% 0.3% 9.8 8.3 13.1%
JG Summit Holdings, Inc. JGS PM 10,534 Neutral 75.30 73.00 -3.1% 23.2 20.8 -14.3% 11.7% 0.2% 12.1 10.7 9.3%
LT Group, Inc. LTG PM 3,699 Reduce 17.50 16.30 -6.9% 20.8 19.3 -3.0% 7.9% 1.2% 3.2 1.3 6.5%
Metro Pacific Investments MPI PM 4,179 Buy 6.79 8.35 23.0% 15.3 14.2 9.2% 8.0% 2.1% 11.3 11.0 8.9%
San Miguel Corporation SMC PM 4,536 Buy 98 120 23.1% 8.9 8.3 13.2% 7.6% 1.4% 5.6 5.7 9.6%
SM Investments Corporation SM PM 19,645 Buy 835.0 920.0 10.2% 29.2 24.8 10.4% 17.5% 1.6% 16.8 15.1 11.2%

42
Conglomerates
Notwithstanding the YTD rally in conglomerate share prices, most still trade at a discount versus net asset
value (NAV).
YTD share price performance (%) Discount to NAV (%)
YTD performance Discount to NAV

45% 35%
41.0%
31.2%
30.0%
26% 25.2%
31% 29.7%
27.5% 27.1% 21.2%
18.3% 18.0%
18%
18%
14.1% 11.0%
9.7%
11.3%
9% 7.0%
6.4% 6.0%
3.1% 2.9%
4%
0%
-7.2%
-10%
Sources: Bloomberg, Nomura research as of 15 September 2017

43
BDO Nomura Equity Coverage Universe
Aboitiz Equity Ventures AEV PM 8,142 Neutral 74.00 73.80 -0.3% 17.5 15.8 5.2% 10.7% 2.0% 13.1 11.9 16.1%
Aboitiz Power Corporation AP PM 5,878 Buy 40.90 47.00 14.9% 13.9 12.8 4.8% 9.0% 3.3% 10.3 9.3 19.5%
Alliance Global Group, Inc. AGI PM 2,889 Buy 14.58 17.40 19.3% 10.4 9.1 -4.0% 13.8% 2.4% 8.3 8.1 9.0%
Ayala Corporation AC PM 11,266 Buy 929 1,020 9.9% 20.8 18.0 12.5% 15.4% 0.6% 12.4 11.6 12.8%
Ayala Land ALI PM 12,942 Buy 45.00 49.00 8.9% 26.4 23.5 14.8% 12.2% 1.3% 17.8 16.4 15.4%
Bank of the Philippine Islands BPI PM 7,771 Neutral 101.00 103.67 2.6% 17.8 15.0 1.2% 18.3% 1.8% - - 12.9%
BDO Unibank BDO PM No Rating
Cebu Pacific CEB PM 1,325 Buy 112.00 133.20 18.9% 7.6 12.6 -18.9% -40.1% 1.4% 5.4 6.6 23.9%
Cemex Holdings Philippines CHP PM 589 Neutral 5.80 6.60 13.8% 18.4 15.2 -59.8% 20.9% NA 10.0 9.1 5.6%
Century Pacific Food CNPF PM 1,204 Neutral 17.40 18.15 4.3% 22.1 20.0 5.2% 10.1% 1.3% 15.0 13.4 20.6%
D&L Industries DNL PM 1,451 Neutral 10.40 11.00 5.8% 26.0 22.7 8.7% 14.7% 2.1% 18.9 16.8 19.6%
DMC Holdings DMC PM 4,284 Neutral 16.52 16.70 1.1% 14.3 13.1 27.1% 9.3% 3.1% 8.6 8.0 21.4%
Emperador Inc. EMP PM 2,267 Neutral 7.20 7.65 6.3% 16.1 15.2 -6.1% 5.9% 2.7% 13.1 12.1 13.3%
Energy Development Corporation EDC PM 2,562 Reduce 7.00 6.50 -7.1% 13.4 12.4 7.1% 8.4% 3.1% 9.5 8.7 18.2%
Globe Telecom GLO PM 5,296 Neutral 2,040 2,100 2.9% 18.8 18.0 -9.8% 4.6% 4.4% 7.4 6.9 22.4%
GT Capital Holdings, Inc. GTCAP PM 4,416 Buy 1,174 1,340 14.1% 15.7 13.8 -0.8% 13.8% 0.3% 9.8 8.3 13.1%
Intl Container Terminal Services ICT PM 4,322 Buy 108.80 118.00 8.5% 27.7 22.0 16.9% 27.0% 1.0% 11.2 9.6 17.4%
JG Summit Holdings, Inc. JGS PM 10,534 Neutral 75.30 73.00 -3.1% 23.2 20.8 -14.3% 11.7% 0.2% 12.1 10.7 9.3%
Jollibee Foods Corp JFC PM 5,139 Neutral 243 252 3.7% 37.6 33.1 13.5% 13.5% 1.2% 20.7 18.5 19.7%
LBC Express Holdings Inc LBC PM 508 Buy 15.96 21.16 32.6% 22.8 19.3 14.8% 18.7% 3.6% 12.2 9.7 31.4%
LT Group, Inc. LTG PM 3,699 Reduce 17.50 16.30 -6.9% 20.8 19.3 -3.0% 7.9% 1.2% 3.2 1.3 6.5%
Manila Electric Company MER PM 6,076 Neutral 276 310 12.3% 16.1 16.8 -1.5% -3.7% 5.6% 8.7 9.1 23.4%
Manila Water Company, Inc. MWC PM 1,260 Neutral 31.40 32.00 1.9% 11.6 11.3 10.3% 2.8% 2.7% 7.2 7.0 14.8%
Megaworld MEG PM 3,381 Buy 5.37 5.70 6.1% 13.3 11.2 14.1% 18.4% 1.0% 11.8 10.9 9.9%
Metro Pacific Investments MPI PM 4,179 Buy 6.79 8.35 23.0% 15.3 14.2 9.2% 8.0% 2.1% 11.3 11.0 8.9%
Metropolitan Bank & Trust Company MBT PM 5,465 Buy 88.00 102.23 16.2% 13.5 11.5 11.4% 17.2% 1.3% - - 9.9%
Petron Corporation PCOR PM 1,945 Buy 10.62 12.00 13.0% 11.4 8.1 54.7% 40.8% 0.9% 7.5 6.2 18.3%
PLDT Inc. TEL PM 7,131 Neutral 1,690 1,800 6.5% 18.3 18.2 -28.6% 0.8% 3.3% 7.6 7.1 19.6%
Puregold Price Club PGOLD PM 2,768 Neutral 51.25 50.00 -2.4% 23.3 21.0 10.3% 10.6% 0.6% 13.0 11.4 13.3%
Robinsons Land RLC PM 2,027 Buy 25.35 29.10 14.8% 17.6 14.9 8.2% 18.0% 1.4% 11.2 9.8 9.1%
Robinsons Retail Holdings, Inc. RRHI PM 2,581 Buy 95.40 108.00 13.2% 28.2 24.8 13.9% 13.4% 0.7% 14.7 12.4 9.4%
San Miguel Corporation SMC PM 4,536 Buy 97.50 120.00 23.1% 8.9 8.3 13.2% 7.6% 1.4% 5.6 5.7 9.6%
Security Bank Corporation SECB PM 3,641 Neutral 247 259 4.9% 16.5 15.4 5.8% 6.9% 1.2% - - 10.6%
Semirara Mining and Power Corporation SCC PM 3,995 Neutral 48 47 -2.6% 12.6 11.7 34.7% 8.1% 2.1% 10.7 9.4 40.3%
Shakey's Pizza Asia Ventures PIZZA PM 380 Buy 12.72 16.00 25.8% 25.8 22.6 12.8% 14.3% 0.6% 16.3 14.1 20.5%
SM Investments Corporation SM PM 19,645 Buy 835 920 10.2% 29.2 24.8 10.4% 17.5% 1.6% 16.8 15.1 11.2%
SM Prime Holdings SMPH PM 19,597 Neutral 34.80 35.00 0.6% 41.8 36.2 14.6% 15.5% 0.8% 23.4 20.7 11.6%
SSI Group, Inc. SSI PM 278 Reduce 4.30 3.30 -23.3% 22.1 20.2 10.8% 9.7% NA 7.3 6.8 6.3%
Universal Robina Corporation URC PM 6,625 Reduce 154 138 -10.3% 29.2 26.8 1.8% 9.0% 1.9% 16.7 15.1 14.5%
Vista Land & Lifescapes VLL PM 1,596 Buy 6.37 6.90 8.3% 9.1 8.1 16.0% 12.4% 2.0% 11.0 10.5 11.7%
Sources: Bloomberg, Nomura estimates as of 15 September 2017 44
BDO Nomura Equity Coverage Universe
Share Price % Change Relative vs PCOMP Equity 1Y Ave TO
BB Code 9/15/2017 1 Week 1 Month 3 Months YTD YoY 1 Week 1 Month 6 Months YTD YoY Free Float (USDmn)
PCOMP Index PCOMP 8180.85 2.0% 2.7% 12.7% 19.6% 8.4%
Aboitiz Equity Ventures AEV PM 74.00 1.7% 0.4% 0.1% 4.5% -0.8% -0.3% -2.3% -12.5% -15.1% -9.2% 44.6% 2.28
Aboitiz Power Corporation AP PM 40.90 2.8% 4.2% -5.1% -1.9% -8.4% 0.8% 1.5% -17.8% -21.5% -16.8% 18.9% 1.35
Alliance Global Group, Inc. AGI PM 14.58 -0.8% 7.2% 16.1% 14.1% -10.7% -2.8% 4.5% 3.4% -5.5% -19.1% 42.0% 2.34
Ayala Corporation AC PM 928.50 1.7% 4.9% 13.2% 27.1% 8.3% -0.3% 2.2% 0.6% 7.5% -0.1% 40.6% 5.26
Ayala Land ALI PM 45.00 4.2% 6.6% 25.0% 40.6% 21.1% 2.2% 3.9% 12.3% 21.0% 12.7% 52.3% 9.51
Bank of the Philippine Islands BPI PM 101.00 -2.4% -3.6% 3.5% 13.7% -2.5% -4.4% -6.4% -9.2% -5.9% -10.9% 49.1% 3.03
BDO Unibank BDO PM 128.90 0.9% -0.1% 5.4% 20.3% 23.8% -1.0% -2.8% -7.3% 0.7% 15.3% 37.9% 5.89
Cebu Pacific CEB PM 112.00 2.1% 9.9% 23.1% 20.4% -5.2% 0.1% 7.2% 10.4% 0.8% -13.6% 32.8% 0.92
Cemex Holdings Philippines CHP PM 5.80 -3.3% 1.2% -30.9% -47.7% -50.1% -5.3% -1.5% -43.5% -67.3% -58.5% 45.0% 1.96
Century Pacific Food CNPF PM 17.40 0.2% 5.6% -0.5% 7.5% 5.6% -1.7% 2.8% -13.1% -12.1% -2.8% 31.3% 0.72
D&L Industries DNL PM 10.40 0.8% 0.0% -18.2% -8.8% -8.0% -1.2% -2.7% -30.9% -28.4% -16.4% 34.3% 1.25
DMC Holdings DMC PM 16.52 4.8% 4.2% 33.7% 24.6% 42.4% 2.9% 1.4% 21.0% 5.0% 34.0% 28.5% 2.63
Emperador Inc. EMP PM 7.20 2.4% 1.0% 10.8% 2.9% 1.4% 0.4% -1.8% -1.9% -16.7% -7.0% 15.8% 0.33
Energy Development Corp EDC PM 7.00 1.6% 2.6% 16.9% 35.9% 17.6% -0.4% -0.1% 4.2% 16.3% 9.2% 49.0% 1.62
Globe Telecom GLO PM 2040.00 2.0% 0.0% 4.7% 35.2% 2.2% 0.0% -2.7% -8.0% 15.6% -6.3% 21.7% 2.91
GT Capital Holdings, Inc. GTCAP PM 1174.00 5.8% 0.6% -1.3% -7.6% -17.9% 3.8% -2.1% -14.0% -27.2% -26.3% 43.8% 4.36
Intl Container Terminal Svcs ICT PM 108.80 2.6% 5.6% 37.4% 51.2% 38.6% 0.7% 2.9% 24.7% 31.6% 30.2% 51.0% 3.55
JG Summit Holdings, Inc. JGS PM 75.30 2.4% 7.5% -0.5% 11.3% 1.7% 0.5% 4.7% -13.2% -8.3% -6.7% 55.4% 2.76
Jollibee Foods Corp JFC PM 243.00 -0.4% 9.5% 23.4% 25.3% 0.0% -2.4% 6.7% 10.7% 5.7% -8.4% 43.1% 2.92
LBC Express Holdings Inc LBC PM 15.96 1.7% 3.6% 10.2% 0.5% 28.7% -0.3% 0.9% -2.4% -19.1% 20.3% 14.5% 0.01
LT Group, Inc. LTG PM 17.50 0.0% -1.0% 21.7% 39.3% 4.7% -2.0% -3.8% 9.0% 19.7% -3.7% 25.6% 1.30
Manila Electric Company MER PM 276.00 2.4% -1.0% -4.8% 4.2% -11.5% 0.4% -3.8% -17.5% -15.4% -19.9% 20.7% 1.96
Manila Water Company, Inc. MWC PM 31.40 1.9% -1.3% 4.3% 8.3% 9.2% 0.0% -4.0% -8.3% -11.3% 0.8% 56.3% 1.19
Megaworld MEG PM 5.37 1.9% 11.2% 47.5% 50.4% 16.7% -0.1% 8.4% 34.9% 30.8% 8.3% 33.7% 3.12
Metro Pacific Investments MPI PM 6.79 0.4% 3.8% 1.2% 2.0% 2.0% -1.5% 1.1% -11.5% -17.6% -6.5% 42.2% 4.00
Metropolitan Bank & Trust MBT PM 88.00 1.8% 2.5% 11.3% 21.2% 1.3% -0.2% -0.2% -1.4% 1.6% -7.1% 49.0% 5.45
Petron Corporation PCOR PM 10.62 2.7% 11.2% 22.1% 6.7% 13.0% 0.7% 8.5% 9.4% -12.9% 4.6% 23.9% 1.03
PLDT Inc. TEL PM 1690.00 -0.3% -2.3% 11.1% 23.8% -2.9% -2.3% -5.1% -1.5% 4.2% -11.3% 53.8% 5.17
Puregold Price Club PGOLD PM 51.25 0.2% 9.0% 12.6% 31.4% 16.5% -1.8% 6.3% 0.0% 11.8% 8.1% 32.6% 1.95
Robinsons Land RLC PM 25.35 8.6% 4.5% 11.2% -2.5% -15.9% 6.6% 1.8% -1.5% -22.1% -24.3% 38.6% 1.18
Robinsons Retail Holdings, Inc. RRHI PM 95.40 0.4% 10.3% 15.8% 28.5% 21.5% -1.5% 7.5% 3.2% 8.9% 13.1% 40.1% 1.50
San Miguel Corporation SMC PM 97.50 0.5% -3.8% -7.5% 5.6% 16.1% -1.5% -6.6% -20.2% -14.0% 7.7% 17.1% 0.45
Security Bank Corporation SECB PM 247.40 1.6% -3.4% 23.7% 30.2% 0.6% -0.3% -6.1% 11.0% 10.6% -7.8% 59.2% 3.75
Semirara Mining and Power SCC PM 48.00 7.9% 12.9% 30.2% 47.7% 75.8% 5.9% 10.2% 17.5% 28.1% 67.4% 26.6% 2.71
Shakey's Pizza Asia PIZZA PM 12.72 1.8% 0.8% -12.6% 10.6% NA -0.2% -2.0% -25.3% -9.0% NA 26.1% 0.73
SM Investments Corporation SM PM 835.00 2.1% 0.7% 28.0% 27.5% 25.8% 0.1% -2.1% 15.3% 7.9% 17.3% 46.2% 5.82
SM Prime Holdings SMPH PM 34.80 3.9% 1.2% 20.6% 22.8% 28.9% 1.9% -1.6% 8.0% 3.2% 20.5% 31.9% 6.12
SSI Group, Inc. SSI PM 4.30 -3.8% 4.4% 83.8% 68.6% 40.1% -5.8% 1.6% 71.1% 49.0% 31.7% 29.5% 0.48
Universal Robina Corporation URC PM 153.90 0.3% 8.2% -6.5% -5.9% -15.9% -1.7% 5.4% -19.2% -25.5% -24.3% 44.1% 5.68
Vista Land & Lifescapes VLL PM 6.37 6.3% 9.6% 32.4% 28.7% 15.8% 4.4% 6.9% 19.8% 9.1% 7.4% 28.6% 0.55
Sources: Bloomberg, as of 15 September 2017. 45
Appendix A-1
Analyst Certification
We, Dante Tinga Jr, Angelo Torres, Euben Paracuelles, Abigail Chiw and Thomas Earll Huang, hereby certify (1) that the views expressed in this Research report accurately reflect our personal views about
any or all of the subject securities or issuers referred to in this Research report, (2) no part of our compensation was, is or will be directly or indirectly related to the specific recommendations or views
expressed in this Research report and (3) no part of our compensation is tied to any specific investment banking transactions performed by Nomura Securities International, Inc., Nomura International plc or
any other Nomura Group company.
Issuer Specific Regulatory Disclosures

The terms "Nomura" and "Nomura Group" used herein refers to Nomura Holdings, Inc. and its affiliates and subsidiaries, including Nomura Securities International, Inc. ('NSI') and Instinet, LLC('ILLC'), U. S.
registered broker dealers and members of SIPC.
Materially mentioned issuers

Issuer Ticker Price Price date Stock rating Previous rating Date of change Sector Rating
Aboitiz Equity Ventures AEV PM 73.75 PHP 16-Aug-2017 Neutral Not Rated 14-Feb-2017 N/A
Aboitiz Power Corporation AP PM 39.3 PHP 16-Aug-2017 Buy Not Rated 12-Apr-2017 N/A
Alliance Global Group, Inc. AGI PM 13.6 PHP 16-Aug-2017 Buy Not Rated 12-Apr-2017 N/A
Ayala Corporation AC PM 900 PHP 16-Aug-2017 Buy Not Rated 14-Feb-2017 N/A
Ayala Land ALI PM 42.5 PHP 16-Aug-2017 Buy Not Rated 14-Feb-2017 N/A
Bank of the Philippine Islands BPI PM 106.1 PHP 16-Aug-2017 Neutral Not Rated 11-Apr-2017 N/A
Cebu Pacific CEB PM 101 PHP 16-Aug-2017 Buy Neutral 23-Aug-2016 N/A
Cemex Holdings Philippines CHP PM 5.7 PHP 16-Aug-2017 Neutral Buy 31-Jul-2017 N/A
Century Pacific Food CNPF PM 16.92 PHP 16-Aug-2017 Neutral Buy 14-Aug-2017 N/A
D&L Industries DNL PM 10.04 PHP 16-Aug-2017 Neutral Not Rated 20-Jan-2017 N/A
Emperador Inc. EMP PM 7.3 PHP 16-Aug-2017 Neutral Not Rated 12-Apr-2017 N/A
Energy Development Corporation EDC PM 6.93 PHP 16-Aug-2017 Reduce Neutral 08-Aug-2017 N/A
GT Capital Holdings, Inc. GTCAP PM 1180 PHP 16-Aug-2017 Buy Not Rated 12-Apr-2017 N/A
Intl Container Terminal Services ICT PM 103.3 PHP 16-Aug-2017 Buy Not Rated 14-Feb-2017 N/A
JG Summit Holdings, Inc. JGS PM 72.55 PHP 16-Aug-2017 Neutral Not Rated 12-Apr-2017 N/A
Jollibee Foods Corp JFC PM 239 PHP 16-Aug-2017 Neutral Not Rated 20-Jan-2017 N/A
LBC Express Holdings Inc LBC PM 15.4 PHP 16-Aug-2017 Buy Not Rated 06-Oct-2016 N/A
LT Group, Inc. LTG PM 17.58 PHP 16-Aug-2017 Neutral Not Rated 12-Apr-2017 N/A
Manila Electric Company MER PM 277.4 PHP 16-Aug-2017 Neutral Not Rated 12-Apr-2017 N/A
46
Manila Water Company, Inc. MWC PM 31.6 PHP 16-Aug-2017 Neutral Not Rated 12-Apr-2017 N/A
Megaworld MEG PM 4.98 PHP 16-Aug-2017 Buy Not Rated 14-Feb-2017 N/A
Metro Pacific Investments MPI PM 6.62 PHP 16-Aug-2017 Buy Not Rated 14-Feb-2017 N/A
Metropolitan Bank & Trust Company MBT PM 86.2 PHP 16-Aug-2017 Buy Not Rated 11-Apr-2017 N/A
Petron Corporation PCOR PM 9.6 PHP 16-Aug-2017 Buy Not Rated 12-Apr-2017 N/A
Puregold Price Club PGOLD PM 48.15 PHP 16-Aug-2017 Buy Not Rated 20-Jan-2017 N/A
Robinsons Land RLC PM 24 PHP 16-Aug-2017 Buy Not Rated 14-Feb-2017 N/A
Robinsons Retail Holdings, Inc. RRHI PM 88 PHP 16-Aug-2017 Buy Not Rated 20-Jan-2017 N/A
San Miguel Corporation SMC PM 100 PHP 16-Aug-2017 Buy Neutral 14-Aug-2017 N/A
Security Bank Corporation SECB PM 255 PHP 16-Aug-2017 Neutral Not Rated 11-Apr-2017 N/A
Semirara Mining and Power Corporation SCC PM 176 PHP 16-Aug-2017 Neutral Buy 02-Aug-2017 N/A
Shakey's Pizza Asia Ventures PIZZA PM 12.4 PHP 16-Aug-2017 Buy Not Rated 20-Jan-2017 N/A
SM Investments Corporation SM PM 831 PHP 16-Aug-2017 Buy Not Rated 12-Apr-2017 N/A
SM Prime Holdings SMPH PM 34.7 PHP 16-Aug-2017 Neutral Not Rated 14-Feb-2017 N/A
SSI Group, Inc. SSI PM 4.21 PHP 16-Aug-2017 Reduce Neutral 21-Jun-2017 N/A
Universal Robina Corporation URC PM 147 PHP 16-Aug-2017 Reduce Neutral 10-Aug-2017 N/A
Vista Land & Lifescapes VLL PM 6.02 PHP 16-Aug-2017 Buy Not Rated 14-Feb-2017 N/A
DMC Holdings DMC PM 15.9 PHP 16-Aug-2017 Neutral Buy 04-Aug-2017 N/A
Globe Telecom GLO PM 2050 PHP 16-Aug-2017 Neutral Buy 23-Sep-2016 N/A
PLDT Inc. TEL PM 1740 PHP 16-Aug-2017 Neutral Reduce 08-Mar-2017 N/A
Important Disclosures
Online availability of research and conflict-of-interest disclosures
Nomura Group research is available on www.nomuranow.com/research, Bloomberg, Capital IQ, Factset, MarkitHub, Reuters and ThomsonOne.
Important disclosures may be read at http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx or requested from Nomura Securities International, Inc., or Instinet, LLC on
1-877-865-5752. If you have any difficulties with the website, please email grpsupport@nomura.com for help.
The analysts responsible for preparing this report have received compensation based upon various factors including the firm's total revenues, a portion of which is generated by Investment Banking activities.
Unless otherwise noted, the non-US analysts listed at the front of this report are not registered/qualified as research analysts under FINRA rules, may not be associated persons of NSI or ILLC, and may not
be subject to FINRA Rule 2241 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account.
Nomura Global Financial Products Inc. (NGFP) Nomura Derivative Products Inc. (NDPI) and Nomura International plc. (NIplc) are registered with the Commodities Futures Trading Commission and the
National Futures Association (NFA) as swap dealers. NGFP, NDPI, and NIplc are generally engaged in the trading of swaps and other derivative products, any of which may be the subject of this report.
47
Distribution of ratings (Nomura Group)
The distribution of all ratings published by Nomura Group Global Equity Research is as follows:
50% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; 37% of companies with this rating are investment banking clients of the Nomura Group*. 0%
of companies (which are admitted to trading on a regulated market in the EEA) with this rating were supplied material services** by the Nomura Group.
42% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; 51% of companies with this rating are investment banking clients of the Nomura Group*.
0% of companies (which are admitted to trading on a regulated market in the EEA) with this rating were supplied material services by the Nomura Group
8% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; 8% of companies with this rating are investment banking clients of the Nomura Group*.
0% of companies (which are admitted to trading on a regulated market in the EEA) with this rating were supplied material services by the Nomura Group.
As at 30 June 2017.
*The Nomura Group as defined in the Disclaimer section at the end of this report.
** As defined by the EU Market Abuse Regulation
Distribution of ratings (Instinet, LLC)

The distribution of all ratings published by Instinet, LLC Equity Research is as follows:
54% have been assigned a Buy rating which, for purposes of mandatory disclosures, are classified as a Buy rating; Instinet LLC has provided investment banking services to 0% of companies with this rating
within the previous 12 months.
41% have been assigned a Neutral rating which, for purposes of mandatory disclosures, is classified as a Hold rating; Instinet LLC has provided investment banking services to 0% of companies with this
rating within the previous 12 months.
5% have been assigned a Reduce rating which, for purposes of mandatory disclosures, are classified as a Sell rating; Instinet LLC has provided investment banking services to 0% of companies with this
rating within the previous 12 months.
Definition of Nomura Group's equity research rating system and sectors

The rating system is a relative system, indicating expected performance against a specific benchmark identified for each individual stock, subject to limited management discretion. An analysts target price is
an assessment of the current intrinsic fair value of the stock based on an appropriate valuation methodology determined by the analyst. Valuation methodologies include, but are not limited to, discounted cash
flow analysis, expected return on equity and multiple analysis. Analysts may also indicate expected absolute upside/downside relative to the stated target price, defined as (target price - current price)/current
price.
STOCKS
A rating of 'Buy', indicates that the analyst expects the stock to outperform the Benchmark over the next 12 months. A rating of 'Neutral', indicates that the analyst expects the stock to perform in line with the
Benchmark over the next 12 months. A rating of 'Reduce', indicates that the analyst expects the stock to underperform the Benchmark over the next 12 months. A rating of 'Suspended', indicates that the
rating, target price and estimates have been suspended temporarily to comply with applicable regulations and/or firm policies. Securities and/or companies that are labelled as 'Not rated' or shown as 'No
rating' are not in regular research coverage. Investors should not expect continuing or additional information from Nomura relating to such securities and/or companies. Benchmarks are as follows: United
States/Europe/Asia ex-Japan: please see valuation methodologies for explanations of relevant benchmarks for stocks, which can be accessed at:
http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia, unless otherwise stated in the valuation
methodology; Japan: Russell/Nomura Large Cap.
SECTORS
A 'Bullish' stance, indicates that the analyst expects the sector to outperform the Benchmark during the next 12 months. A 'Neutral' stance, indicates that the analyst expects the sector to perform in line with
the Benchmark during the next 12 months. A 'Bearish' stance, indicates that the analyst expects the sector to underperform the Benchmark during the next 12 months. Sectors that are labelled as 'Not rated'
or shown as 'N/A' are not assigned ratings. Benchmarks are as follows: United States: S&P 500; Europe: Dow Jones STOXX 600; Global Emerging Markets (ex-Asia): MSCI Emerging Markets ex-Asia.
Japan/Asia ex-Japan: Sector ratings are not assigned.
Target Price
A Target Price, if discussed, indicates the analysts forecast for the share price with a 12-month time horizon, reflecting in part the analyst's estimates for the company's earnings. The achievement of any
target price may be impeded by general market and macroeconomic trends, and by other risks related to the company or the market, and may not occur if the company's earnings differ from estimates.
48
Disclaimers
This publication contains material that has been prepared by the Nomura Group entity identified on page 1 and, if applicable, with the contributions of one or more Nomura Group entities whose employees
and their respective affiliations are specified on page 1 or identified elsewhere in the publication. The term "Nomura Group" used herein refers to Nomura Holdings, Inc. and its affiliates and subsidiaries
including: Nomura Securities Co., Ltd. ('NSC') Tokyo, Japan; Nomura International plc ('NIplc'), UK; Nomura Securities International, Inc. ('NSI'), New York, US; Instinet, LLC ('ILLC'); Nomura International
(Hong Kong) Ltd. (NIHK), Hong Kong; Nomura Financial Investment (Korea) Co., Ltd. (NFIK), Korea (Information on Nomura analysts registered with the Korea Financial Investment Association ('KOFIA')
can be found on the KOFIA Intranet at http://dis.kofia.or.kr); Nomura Singapore Ltd. (NSL), Singapore (Registration number 197201440E, regulated by the Monetary Authority of Singapore); Nomura Australia
Ltd. (NAL), Australia (ABN 48 003 032 513), regulated by the Australian Securities and Investment Commission ('ASIC') and holder of an Australian financial services licence number 246412; PT Nomura
Sekuritas Indonesia (PTNSI); Nomura Securities Malaysia Sdn. Bhd. (NSM), Malaysia; NIHK, Taipei Branch (NITB), Taiwan; Nomura Financial Advisory and Securities (India) Private Limited (NFASL),
Mumbai, India (Registered Address: Ceejay House, Level 11, Plot F, Shivsagar Estate, Dr. Annie Besant Road, Worli, Mumbai- 400 018, India; Tel: +91 22 4037 4037, Fax: +91 22 4037 4111; CIN No:
U74140MH2007PTC169116, SEBI Registration No. for Stock Broking activities : BSE INB011299030, NSE INB231299034, INF231299034, INE 231299034, MCX: INE261299034; SEBI Registration No. for
Merchant Banking : INM000011419; SEBI Registration No. for Research: INH000001014 and NIplc, Madrid Branch (NIplc, Madrid). CNS Thailand next to an analysts name on the front page of a research
report indicates that the analyst is employed by Capital Nomura Securities Public Company Limited (CNS) to provide research assistance services to NSL under an agreement between CNS and NSL.
NSFSPL next to an employees name on the front page of a research report indicates that the individual is employed by Nomura Structured Finance Services Private Limited to provide assistance to certain
Nomura entities under inter-company agreements. The "BDO-NS" (which stands for "BDO Nomura Securities, Inc.") placed next to an analysts name on the front page of a research report indicates that the
analyst is employed by BDO Unibank Inc. ("BDO Unibank") who has been seconded to BDO-NS, to provide research assistance services to NSL under an agreement between BDO Unibank, NSL and BDO-
NS. BDO-NS is a Philippines securities dealer, which is a joint venture between BDO Unibank and the Nomura Group.
THIS MATERIAL IS: (I) FOR YOUR PRIVATE INFORMATION, AND WE ARE NOT SOLICITING ANY ACTION BASED UPON IT; (II) NOT TO BE CONSTRUED AS AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY IN ANY JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE ILLEGAL; AND (III) OTHER THAN DISCLOSURES RELATING TO
THE NOMURA GROUP, BASED UPON INFORMATION FROM SOURCES THAT WE CONSIDER RELIABLE, BUT HAS NOT BEEN INDEPENDENTLY VERIFIED BY NOMURA GROUP.
Other than disclosures relating to the Nomura Group, the Nomura Group does not warrant or represent that the document is accurate, complete, reliable, fit for any particular purpose or merchantable and
does not accept liability for any act (or decision not to act) resulting from use of this document and related data. To the maximum extent permissible all warranties and other assurances by the Nomura Group
are hereby excluded and the Nomura Group shall have no liability for the use, misuse, or distribution of this information.
Opinions or estimates expressed are current opinions as of the original publication date appearing on this material and the information, including the opinions and estimates contained herein, are subject to
change without notice. The Nomura Group is under no duty to update this document. Any comments or statements made herein are those of the author(s) and may differ from views held by other parties within
Nomura Group. Clients should consider whether any advice or recommendation in this report is suitable for their particular circumstances and, if appropriate, seek professional advice, including tax advice. The
Nomura Group does not provide tax advice.
The Nomura Group, and/or its officers, directors and employees, may, to the extent permitted by applicable law and/or regulation, deal as principal, agent, or otherwise, or have long or short positions in, or
buy or sell, the securities, commodities or instruments, or options or other derivative instruments based thereon, of issuers or securities mentioned herein. The Nomura Group companies may also act as
market maker or liquidity provider (within the meaning of applicable regulations in the UK) in the financial instruments of the issuer. Where the activity of market maker is carried out in accordance with the
definition given to it by specific laws and regulations of the US or other jurisdictions, this will be separately disclosed within the specific issuer disclosures.
This document may contain information obtained from third parties, including ratings from credit ratings agencies such as Standard & Poors. Reproduction and distribution of third-party content in any form is
prohibited except with the prior written permission of the related third-party. Third-party content providers do not guarantee the accuracy, completeness, timeliness or availability of any information, including
ratings, and are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, or for the results obtained from the use of such content. Third-party content providers give no
express or implied warranties, including, but not limited to, any warranties of merchantability or fitness for a particular purpose or use. Third-party content providers shall not be liable for any direct, indirect,
incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including lost income or profits and opportunity costs) in connection with any use of
their content, including ratings. Credit ratings are statements of opinions and are not statements of fact or recommendations to purchase hold or sell securities. They do not address the suitability of securities
or the suitability of securities for investment purposes, and should not be relied on as investment advice.
49
Any MSCI sourced information in this document is the exclusive property of MSCI Inc. (MSCI). Without prior written permission of MSCI, this information and any other MSCI intellectual property may not be
reproduced, re-disseminated or used to create any financial products, including any indices. This information is provided on an "as is" basis. The user assumes the entire risk of any use made of this
information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness,
merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any third party involved in, or related
to, computing or compiling the information have any liability for any damages of any kind. MSCI and the MSCI indexes are services marks of MSCI and its affiliates.
The intellectual property rights and any other rights, in Russell/Nomura Japan Equity Index belong to Nomura Securities Co., Ltd. ("Nomura") and Frank Russell Company ("Russell"). Nomura and Russell do
not guarantee accuracy, completeness, reliability, usefulness, marketability, merchantability or fitness of the Index, and do not account for business activities or services that any index user and/or its affiliates
undertakes with the use of the Index.
Investors should consider this document as only a single factor in making their investment decision and, as such, the report should not be viewed as identifying or suggesting all risks, direct or indirect, that
may be associated with any investment decision. Nomura Group produces a number of different types of research product including, among others, fundamental analysis and quantitative analysis;
recommendations contained in one type of research product may differ from recommendations contained in other types of research product, whether as a result of differing time horizons, methodologies or
otherwise. The Nomura Group publishes research product in a number of different ways including the posting of product on the Nomura Group portals and/or distribution directly to clients. Different groups of
clients may receive different products and services from the research department depending on their individual requirements.
Figures presented herein may refer to past performance or simulations based on past performance which are not reliable indicators of future performance. Where the information contains an indication of
future performance, such forecasts may not be a reliable indicator of future performance. Moreover, simulations are based on models and simplifying assumptions which may oversimplify and not reflect the
future distribution of returns.
Certain securities are subject to fluctuations in exchange rates that could have an adverse effect on the value or price of, or income derived from, the investment.
With respect to Fixed Income Research: Recommendations fall into two categories: tactical, which typically last up to three months; or strategic, which typically last from 6-12 months. However, trade
recommendations may be reviewed at any time as circumstances change. Stop loss levels for trades are also provided; which, if hit, closes the trade recommendation automatically. Prices and yields shown
in recommendations are taken at the time of submission for publication and are based on either indicative Bloomberg, Reuters or Nomura prices and yields at that time. The prices and yields shown are not
necessarily those at which the trade recommendation can be implemented.
The securities described herein may not have been registered under the US Securities Act of 1933 (the 1933 Act), and, in such case, may not be offered or sold in the US or to US persons unless they have
been registered under the 1933 Act, or except in compliance with an exemption from the registration requirements of the 1933 Act. Unless governing law permits otherwise, any transaction should be executed
via a Nomura entity in your home jurisdiction.
This document has been approved for distribution in the UK and European Economic Area as investment research by NIplc. NIplc is authorised by the Prudential Regulation Authority and regulated by the
Financial Conduct Authority and the Prudential Regulation Authority. NIplc is a member of the London Stock Exchange. This document does not constitute a personal recommendation within the meaning of
applicable regulations in the UK, or take into account the particular investment objectives, financial situations, or needs of individual investors. This document is intended only for investors who are 'eligible
counterparties' or 'professional clients' for the purposes of applicable regulations in the UK, and may not, therefore, be redistributed to persons who are 'retail clients' for such purposes. This document has
been approved by NIHK, which is regulated by the Hong Kong Securities and Futures Commission, for distribution in Hong Kong by NIHK. This document has been approved for distribution in Australia by
NAL, which is authorized and regulated in Australia by the ASIC. This document has also been approved for distribution in Malaysia by NSM. In Singapore, this document has been distributed by NSL. NSL
accepts legal responsibility for the content of this document, where it concerns securities, futures and foreign exchange, issued by their foreign affiliates in respect of recipients who are not accredited, expert
or institutional investors as defined by the Securities and Futures Act (Chapter 289). Recipients of this document in Singapore should contact NSL in respect of matters arising from, or in connection with, this
document. Unless prohibited by the provisions of Regulation S of the 1933 Act, this material is distributed in the US, by NSI, a US-registered broker-dealer, which accepts responsibility for its contents in
accordance with the provisions of Rule 15a-6, under the US Securities Exchange Act of 1934. The entity that prepared this document permits its separately operated affiliates within the Nomura Group to
make copies of such documents available to their clients.
This document has not been approved for distribution to persons other than Authorised Persons, Exempt Persons or Institutions (as defined by the Capital Markets Authority) in the Kingdom of Saudi Arabia
(Saudi Arabia) or 'professional clients' (as defined by the Dubai Financial Services Authority) in the United Arab Emirates (UAE) or a Market Counterparty or Business Customers (as defined by the Qatar
Financial Centre Regulatory Authority) in the State of Qatar (Qatar) by Nomura Saudi Arabia, NIplc or any other member of the Nomura Group, as the case may be. Neither this document nor any copy
thereof may be taken or transmitted or distributed, directly or indirectly, by any person other than those authorised to do so into Saudi Arabia or in the UAE or in Qatar or to any person other than Authorised
Persons, Exempt Persons or Institutions located in Saudi Arabia or 'professional clients' in the UAE or a Market Counterparty or Business Customers in Qatar . By accepting to receive this document, you
represent that you are not located in Saudi Arabia or that you are an Authorised Person, an Exempt Person or an Institution in Saudi Arabia or that you are a 'professional client' in the UAE or a Market
Counterparty or Business Customers in Qatar and agree to comply with these restrictions. Any failure to comply with these restrictions may constitute a violation of the laws of the UAE or Saudi Arabia or
Qatar.
50
Notice to Canadian Investors: This research report is not a personal recommendation and does not take into account the investment objectives, financial situation or particular needs of any particular individual
or account. It is made available to you in reliance on NI 31-103, section 8.25.
For report with reference of TAIWAN public companies or authored by Taiwan based research analyst:
THIS DOCUMENT IS SOLELY FOR REFERENCE ONLY. You should independently evaluate the investment risks and are solely responsible for your investment decisions. NO PORTION OF THE REPORT
MAY BE REPRODUCED OR QUOTED BY THE PRESS OR ANY OTHER PERSON WITHOUT WRITTEN AUTHORIZATION FROM NOMURA GROUP. Pursuant to Operational Regulations Governing
Securities Firms Recommending Trades in Securities to Customers and/or other applicable laws or regulations in Taiwan, you are prohibited to provide the reports to others (including but not limited to related
parties, affiliated companies and any other third parties) or engage in any activities in connection with the reports which may involve conflicts of interests. INFORMATION ON SECURITIES / INSTRUMENTS
NOT EXECUTABLE BY NOMURA INTERNATIONAL (HONG KONG) LTD., TAIPEI BRANCH IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT BE CONSTRUED AS A RECOMMENDATION OR A
SOLICITATION TO TRADE IN SUCH SECURITIES / INSTRUMENTS.
NO PART OF THIS MATERIAL MAY BE (I) COPIED, PHOTOCOPIED, OR DUPLICATED IN ANY FORM, BY ANY MEANS; OR (II) REDISTRIBUTED WITHOUT THE PRIOR WRITTEN CONSENT OF A
MEMBER OF THE NOMURA GROUP. If this document has been distributed by electronic transmission, such as e-mail, then such transmission cannot be guaranteed to be secure or error-free as information
could be intercepted, corrupted, lost, destroyed, arrive late or incomplete, or contain viruses. The sender therefore does not accept liability for any errors or omissions in the contents of this document, which
may arise as a result of electronic transmission. If verification is required, please request a hard-copy version.
The Nomura Group manages conflicts with respect to the production of research through its compliance policies and procedures (including, but not limited to, Conflicts of Interest, Chinese Wall and
Confidentiality policies) as well as through the maintenance of Chinese walls and employee training.
Additional information regarding the methodologies or models used in the production of any investment recommendations contained within this document is available upon request by
contacting the Research Analysts listed on the front page. Disclosures information is available upon request and disclosure information is available at the Nomura Disclosure web page:
http://go.nomuranow.com/research/globalresearchportal/pages/disclosures/disclosures.aspx
Copyright 2017 Nomura International (Hong Kong) Ltd. All rights reserved.
Disclosures as of 16-Aug-2017.
51
Important Disclosures
The lists of issuers that are affiliates or subsidiaries of Nomura Holdings Inc., the parent company of Nomura Securities Co., Ltd., issuers that have officers who concurrently serve as officers of Nomura
Securities Co., Ltd., issuers in which the Nomura Group holds 1% or more of any class of common equity securities and issuers for which Nomura Securities Co., Ltd. has lead managed a public offering of
equity or equity linked securities in the past 12 months are available at http://www.nomuraholdings.com/report/. Please contact the Research Product Management Dept. of Nomura Securities Co., Ltd. for
additional information.
Disclaimers required in Japan
Credit ratings in the text that are marked with an asterisk (*) are issued by a rating agency not registered under Japans Financial Instruments and Exchange Act (Unregistered Ratings). For details on
Unregistered Ratings, please contact the Research Product Management Dept. of Nomura Securities Co., Ltd.
Investors in the financial products offered by Nomura Securities may incur fees and commissions specific to those products (for example, transactions involving Japanese equities are subject to a sales
commission of up to 1.404% on a tax-inclusive basis of the transaction amount or a commission of 2,808 for transactions of 200,000 or less, while transactions involving investment trusts are subject to
various fees, such as commissions at the time of purchase and asset management fees (trust fees), specific to each investment trust). In addition, all products carry the risk of losses owing to price fluctuations
or other factors. Fees and risks vary by product. Please thoroughly read the written materials provided, such as documents delivered before making a contract, listed securities documents, or prospectuses.-
Transactions involving Japanese equities (including Japanese REITs, Japanese ETFs, and Japanese ETNs) are subject to a sales commission of up to 1.404% of the transaction amount (or a commission of
2,808 for transactions of 200,000 or less). When Japanese equities are purchased via OTC transactions (including offerings), only the purchase price shall be paid, with no sales commission charged.
However, Nomura Securities may charge a separate fee for OTC transactions, as agreed with the customer. Japanese equities carry the risk of losses owing to price fluctuations. Japanese REITs carry the
risk of losses owing to fluctuations in price and/or earnings of underlying real estate. Japanese ETFs carry the risk of losses owing to fluctuations in the underlying indexes or other benchmarks.
Transactions involving foreign equities are subject to a domestic sales commission of up to 1.026% of the transaction amount (which equals the local transaction amount plus local fees and taxes in the case
of a purchase or the local transaction amount minus local fees and taxes in the case of a sale) (for transaction amounts of 750,000 and below, maximum domestic sales commission is 7,668). Local fees
and taxes in foreign financial instruments markets vary by country/territory. When foreign equities are purchased via OTC transactions (including offerings), only the purchase price shall be paid, with no sales
commission charged. However, Nomura Securities may charge a separate fee for OTC transactions, as agreed with the customer. Foreign equities carry the risk of losses owing to factors such as price
fluctuations and foreign exchange rate fluctuations.
Margin transactions are subject to a sales commission of up to 1.404% of the transaction amount (or a commission of 2,808 for transactions of 200,000 or less), as well as management fees and rights
handling fees. In addition, long margin transactions are subject to interest on the purchase amount, while short margin transactions are subject to fees for the lending of the shares borrowed. A margin equal to
at least 30% of the transaction amount and at least 300,000 is required. With margin transactions, an amount up to roughly 3.3x the margin may be traded. Margin transactions therefore carry the risk of
losses in excess of the margin owing to share price fluctuations. For details, please thoroughly read the written materials provided, such as listed securities documents or documents delivered before making a
contract.
Transactions involving convertible bonds are subject to a sales commission of up to 1.08% of the transaction amount (or a commission of 4,320 if this would be less than 4,320). When convertible bonds are
purchased via OTC transactions (including offerings), only the purchase price shall be paid, with no sales commission charged. However, Nomura Securities may charge a separate fee for OTC transactions,
as agreed with the customer. Convertible bonds carry the risk of losses owing to factors such as interest rate fluctuations and price fluctuations in the underlying stock. In addition, convertible bonds
denominated in foreign currencies also carry the risk of losses owing to factors such as foreign exchange rate fluctuations.
When bonds are purchased via public offerings, secondary distributions, or other OTC transactions with Nomura Securities, only the purchase price shall be paid, with no sales commission charged. Bonds
carry the risk of losses, as prices fluctuate in line with changes in market interest rates. Bond prices may also fall below the invested principal as a result of such factors as changes in the management and
financial circumstances of the issuer, or changes in third-party valuations of the bond in question. In addition, foreign currency-denominated bonds also carry the risk of losses owing to factors such as foreign
exchange rate fluctuations.
52
When Japanese government bonds (JGBs) for individual investors are purchased via public offerings, only the purchase price shall be paid, with no sales commission charged. As a rule, JGBs for individual
investors may not be sold in the first 12 months after issuance. When JGBs for individual investors are sold before maturity, an amount calculated via the following formula will be subtracted from the par value
of the bond plus accrued interest: (1) for 10-year variable rate bonds, an amount equal to the two preceding coupon payments (before tax) x 0.79685 will be used, (2) for 5-year and 3-year fixed rate bonds, an
amount equal to the two preceding coupon payments (before tax) x 0.79685 will be used.
When inflation-indexed JGBs are purchased via public offerings, secondary distributions (uridashi deals), or other OTC transactions with Nomura Securities, only the purchase price shall be paid, with no sales
commission charged. Inflation-indexed JGBs carry the risk of losses, as prices fluctuate in line with changes in market interest rates and fluctuations in the nationwide consumer price index.The notional
principal of inflation-indexed JGBs changes in line with the rate of change in nationwide CPI inflation from the time of its issuance. The amount of the coupon payment is calculated by multiplying the coupon
rate by the notional principal at the time of payment. The maturity value is the amount of the notional principal when the issue becomes due. For JI17 and subsequent issues, the maturity value shall not
undercut the face amount.
Purchases of investment trusts (and sales of some investment trusts) are subject to a purchase or sales fee of up to 5.4% of the transaction amount. Also, a direct cost that may be incurred when selling
investment trusts is a fee of up to 2.0% of the unit price at the time of redemption. Indirect costs that may be incurred during the course of holding investment trusts include, for domestic investment trusts, an
asset management fee (trust fee) of up to 5.4% (annualized basis) of the net assets in trust, as well as fees based on investment performance. Other indirect costs may also be incurred. For foreign
investment trusts, indirect fees may be incurred during the course of holding such as investment company compensation.
Investment trusts invest mainly in securities such as Japanese and foreign equities and bonds, whose prices fluctuate. Investment trust unit prices fluctuate owing to price fluctuations in the underlying assets
and to foreign exchange rate fluctuations. As such, investment trusts carry the risk of losses. Fees and risks vary by investment trust. Maximum applicable fees are subject to change; please thoroughly read
the written materials provided, such as prospectuses or documents delivered before making a contract.
In interest rate swap transactions and USD/JPY basis swap transactions (interest rate swap transactions, etc.), only the agreed transaction payments shall be made on the settlement dates. Some interest
rate swap transactions, etc. may require pledging of margin collateral. In some of these cases, transaction payments may exceed the amount of collateral. There shall be no advance notification of required
collateral value or collateral ratios as they vary depending on the transaction. Interest rate swap transactions, etc. carry the risk of losses owing to fluctuations in market prices in the interest rate, currency and
other markets, as well as reference indices. Losses incurred as such may exceed the value of margin collateral, in which case margin calls may be triggered. In the event that both parties agree to enter a
replacement (or termination) transaction, the interest rates received (paid) under the new arrangement may differ from those in the original arrangement, even if terms other than the interest rates are identical
to those in the original transaction. Risks vary by transaction. Please thoroughly read the written materials provided, such as documents delivered before making a contract and disclosure statements.
In OTC transactions of credit default swaps (CDS), no sales commission will be charged. When entering into CDS transactions, the protection buyer will be required to pledge or entrust an agreed amount of
margin collateral. In some of these cases, the transaction payments may exceed the amount of margin collateral. There shall be no advance notification of required collateral value or collateral ratios as they
vary depending on the financial position of the protection buyer. CDS transactions carry the risk of losses owing to changes in the credit position of some or all of the referenced entities, and/or fluctuations of
the interest rate market. The amount the protection buyer receives in the event that the CDS is triggered by a credit event may undercut the total amount of premiums that he/she has paid in the course of the
transaction. Similarly, the amount the protection seller pays in the event of a credit event may exceed the total amount of premiums that he/she has received in the transaction. All other conditions being equal,
the amount of premiums that the protection buyer pays and that received by the protection seller shall differ. In principle, CDS transactions will be limited to financial instruments business operators and
qualified institutional investors.
No account fee will be charged for marketable securities or monies deposited. Transfers of equities to another securities company via the Japan Securities Depository Center are subject to a transfer fee of up
to 10,800 per issue transferred depending on volume.
Nomura Securities Co., Ltd.

Financial instruments firm registered with the Kanto Local Finance Bureau (registration No. 142)
Member associations: Japan Securities Dealers Association; Japan Investment Advisers Association; The Financial Futures Association of Japan; and Type II Financial Instruments Firms Association.
The Nomura Group manages conflicts with respect to the production of research through its compliance policies and procedures (including, but not limited to, Conflicts of Interest, Chinese Wall and
Confidentiality policies) as well as through the maintenance of Chinese walls and employee training.
Additional information regarding the methodologies or models used in the production of any investment recommendations contained within this document is available upon request by
contacting the Research Analysts listed on the front page. Disclosures information is available upon request and disclosure information is available at the Nomura Disclosure web page:
Copyright 2017 Nomura Securities Co., Ltd. All rights reserved.
53

1%12
http://www.nomuraholdings.com/jp/report/

https://www.nomura.co.jp/retail/bond/noregistered.html
1.404202,808
REITETFETN1.404202,808
REITETF
1.026757,668
1.404202,808
30303.3
1.084,3204,320
1
1020.7968553 2
0.79685
3517
5.4
2.0
5.4
54

CDSCDS
CDS
CDS
10,800
() 142
/
Copyright 2017 Nomura Securities Co., Ltd. All rights reserved.
55

Nomura PH Strategy Sept 2017

Diunggah oleh

Informasi Dokumen

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Nomura PH Strategy Sept 2017

Diunggah oleh

Hak Cipta:

Format Tersedia

Connecting Markets East & West

Global Markets Research

Stay positive despite headwinds

Philippine Equity Strategy

Disruptive technologies may diminish

Sound economic policy management

Scope for higher rates, peso weakness

% Unemployment Rate (sa)

Source: UN, PSA, CEIC; Nomura Global Economics. 3

3mma, % y-o-y Capital goods imports % of GDP Savings rate

%GDP, 4 quarter rolling sum USDbn Net FDI Current account

Nomura Global Economics Research 5

Keep an eye on the big picture: rising potential growth in

Source: CEIC; Nomura Global Economics estimates.

Catalyst #1: Tax reform

Philippines needs a simpler, fairer, and more efficient tax system

Catalyst #2: Infrastructure rollout

Poor quality Philippine infrastructure a bottleneck to growth

Source: CEIC, DOF, Nomura Global Economics estimates

6 Cambodia 20% 7.6%

2 Thailand 23% 3.0%

Three reasons we see a further pick-up in FDI inflows on a trend basis:

Source: CEIC; Nomura Global Economics estimates. 9

Current Income Tax Schedule

Proposed Income Tax Schedule (2018, 2019)

Proposed Income Tax Schedule (2020 onwards)

Source: CEIC, DOF, Nomura Global Economics estimates

Philippines House of Representatives

Source: www.build.gov.ph, National Economic Development Agency (NEDA) as of June 2017

Sources: DOTr, MPI, SMC, ppp.gov.ph.

Government to ramp up annual infrastructure spending

Sources: Bloomberg, EPFR, Datastream, and Nomura Research.

Bloomberg, Nomura Research as of 14 Aug 2017

Real GDP Growth Core EPS Growth

Source: Bloomberg, Nomura estimates

Simple Average Mkt Cap Weighted

Sector Relative View Comments Analysts

Source: BDO Nomura research 21

EBITDA, ROE, and EPS poised to sustain improvement as

Profits and ROEs depressed by regulatory environment.

Multi-format model proxy for broad private consumption

Philippine core holding. Dominance in key sectors.

Source: BDO Nomura estimates, data as of 15 September 2017 22

Exceeded vs Expectations Met Expectations Disappointed vs Expectations

1. Aboitiz Power 1. Aboitiz Equity Ventures 1. Alliance Global Group

Source: Nomura estimates

Source: Bloomberg, Nomura estimates

A healthy economy fuels loan growth Low financial inclusion rates

Source: Bangko Sentral ng Pilipinas (BSP), Company data, Nomura estimates

Source: Bangko Sentral ng Pilipinas (BSP), Company data, Nomura estimates

Source: Bloomberg, Nomura estimates

Source: Bloomberg, Philippine Statistics Authority, World Bank, Nomura research

Data as of June 2017 ALI MEG SMPH RLC VLL

Source: Company Data, Nomura estimates

Source: Bloomberg, Nomura estimates

Consumer confidence still upbeat Strong consumption growth appears sustainable

Unspectacular EPS growth Sector pricey relative to the broader market

2016-19F 2018F PER

Source: Nomura estimates (prices as of 15 September 2017)

Source: Bloomberg, Nomura estimates

Source: World Bank, Nomura estimates

Finance Charges EBITDA Interest Coverage

Source: World Bank, Nomura estimates

Source: Bloomberg, Nomura estimates