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TUESDAY, 23 FEBRUARY 2016

STOCKS IN FOCUS:

SMPH: FY15 income meets COL estimates

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

(As of February 22, 2016)

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

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

Dow Jones
S&P 500
Nasdaq

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

AEV: Increasing estimates on lower income tax rate for AP
and cement business JV

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

INDEX GAINERS
Ticker
URC
PCOR
ALI

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

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

Price
194.40
9.49
31.90
4.33
12.46

%
3.29
3.15
1.75
1.41
1.30

INDEX LOSERS
INDEX LOSERS

PX: Releases inferred mineral resource estimates for Bumolo project

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

-4.62
-4.82
-8.72

INDEX GAINERS

TOP STORY:

MARKET SUMMARY:

1.40
1.45
1.47

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

Ticker
MBT
BPI
AGI
SMC
MPI

Company
Metrobank
Bank of the Phil Islan
Alliance Global Inc

San Miguel Corporation

Metro Pacific Inv Corp

Price
76.45
87.60
14.32
70.00
5.79

%
-3.29
-3.10
-1.92
-1.89
-1.86

TOP 5 MOST ACTIVE STOCKS
TOP 5 MOST ACTIVE STOCKS
Ticker
URC
SMPH
JFC
ALI
MPI

Company
Universal Robina Corp

SM Prime Hldgs Inc
Jollibee Foods Corp
Ayala Land Inc

Metro Pacific Inv Corp

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

Growth in rental revenus came from the 12.8 Bil from Php34.75.8% 36.391 71. SMPH’s revenue and income growth slowed to 4. SMPH is the biggest mall operator in the Philippines and continues to grow its portfolio at a good pace. CFA Ticker: SMPH Rating: HOLD Target Price: Php21.152 40.90 Bil and this is equal to our estimate but missed consensus estimate on lower than expected revenues.9% 13. real estate revenues were flat compared to 2014.6% source: SMPH.055 6.70 Exhibit 1: Results summary in Php Mil Revenues Core Net income 4Q14 4Q15 % change FY14 FY15 % change 18.781 12.380 37.9% as of 9M15.445 1. Nevertheless.2% -9.934 19.3% respectively in 4Q15 from 9. upside to our fair value estimate is limited to 4.203 18. TUESDAY.240 3. Projects of SMDC continued to enjoy strong sales which boosted its reservation sales in 2015 by 15% to Php39.500 20.059 19.2% and 37.323 66.900 7.200 11.6% to Php20. This was due to lower revenue recognition from the almost-completed projects that were launched in 2011 and 2012.819 71.9% in Php Mil source: SMPH Maintain HOLD and FV estimate of Php21. among property companies.44 Bil.PHILIPPINE EQUITY RESEARCH STOCKS IN FOCUS: SMPH: FY15 income meets COL estimates 4Q15 earnings up 10.8% decline in real estate revenues. Excluding new malls and expansion.269 4.5% respectively.0% 95.0% Other revenues Total 1. COL estimates. 23 FEBRUARY 2016 page 2 .3% to Php5. other core businesses maintained their strong performance during the quarter with revenues from rental and cinema and event ticket sales respectively growing 12.441 4.9% 4.6% in 4Q15 due to a 9. full-year net income was up 13.9% 7.301 5. Because of the drop in 4Q15.497 22. same-store rentals grew 7% y/y.0% 91.183 11.444 4.240 18.5% therefore we maintain a HOLD rating despite strong fundamentals of the company.65% y/y expansion in Philippine mall GFA from 6.285 5.70.3 Mil sqm as of end last year.2% Cinema and event ticket sales 1.70.700 22. SMPH remains optimistic this year as they expect to see an acceleration in booking of revenues from projects launched in tha past three years. of the strong consumption in the Philippines.3% 100. We maintain our HOLD rating on SMPH with a fair value estimate of Php21. Bloomberg Residential revenues drop in 4Q15 while rentals remain strong.7% 10. Exhibit 2: FY15 Revenue breakdown 4Q14 4Q15 % change FY14 FY15 % change Rental revenues Real estate 10.5% 0.6 Bil. Despite this.6% 3.5 Mil sqm as of end FY14 to 7.6% % of estimate COL Consensus 100.5% 4. We like SMPH for being the biggest beneficiary. Richard Lañeda. However at the current price of Php20.301 -11.500 14. This was due to a drop in real estate revenues in 4Q15.004 1.576 12. Total revenue growth dropped to 4.3% 66. On the other hand.2% and 14.7% and 10.

the cement business joint venture of AEV and Irish building materials company CRH PLC.4% to Php19. given AEV’s 74% stake in AP and its earnings accretive investment in Republic Cement. 23 FEBRUARY 2016 page 3 . Republic Cement acquisition to be earnings accretive. it will only need to pay 10% income tax (vs the 30% income tax of traditional power producers) once its income tax holiday expires.5% of earnings).PHILIPPINE EQUITY RESEARCH AEV: Increasing estimates on lower income tax rate for AP and cement business JV Due to the lower than expected income tax rate of the Tiwi-Makban.2% copper and 0. completed the acquisition of a 99. We increased our FV estimate for AP by 3.3g/ton of gold.9% to Php20.00 Raising AP earnings estimates on Tiwi-Makban’s lower than expected income tax rate. George Ching Ticker: AEV Rating: HOLD Target Price: Php52.7Mil tonnes of ore at 0.0Bil in metals revenues.274% copper equivalent cut-off grade.4Bil and Php24Bil respectively. it will extend the Padcal Mine’s life by around two more years (or until 2024). PX is continuing the program to increase the inferred resources and to upgrade it to measured and indicated resource estimates. the disclosed figure is still an inferred estimate and further tests will need to be done to classify these resources as confirmed. Maintain HOLD rating. which is aimed to provide additional ore to the Padcal Mine. Philex Mining Corp. This is a positive development as we assumed a 30% income tax rate for the Tiwi-Makban. the acquisition of Republic Cement should boost AEV’s earnings by Php303Mil for 2016E (1.85/sh. TUESDAY. Angelo Lecaros Ticker: PX Rating: HOLD Target Price: Php4. Assuming that the inferred 21. disclosed the release of a maiden inferred mineral resource estimate (MRE) as a result of its on-going drilling at the Bumolo porphyry copper-gold project.4Bil and Php22. The income tax holiday of the Tiwi-Makban geothermal plant will end in June 2016.7Mil tonnes are proven to be mineable. In September 2015.2% and 4. However. AEV CRH Holdings Inc. Net of finance cost. or LRI). we are raising AP’s 2016E and 2017E net income forecast for the said years by 2.5% and 4.1% to Php45.7% of earnings).5km to the east of the Sto.85 Results positive but still needs to be confirmed. given that the plant already obtained the Certificate of Endorsement (COE) from the ERC as a renewable energy (RE) producer. The project is part of PX’s on-going resource definition drilling program. The MRE resulted to 21. Meanwhile. we are raising our 2016E and 2017E earnings forecast for AEV by 3. This translates to an estimated additional Php22.7% to Php52/sh.15/sh. Tomas II deposit of the Padcal Mine. TOP STORY: PX: Releases inferred mineral resource estimates for Bumolo project Releases inferred mineral resource estimates for Bumolo project . We are also raising our FV estimate on AEV by 5. However.09% stake of Republic Cement (formerly Lafarge Republic Inc. We are maintaining our HOLD rating on PX with a FV estimate of Php4.8Mil tons of ore as of end-2015. and by Php406Mil for 2017E (1. at a 0. with an estimated remaining reserve of 66.4Bil respectively. we remain cautious over its profitability because of the persistent decline in metal prices. Though the potential extension of the Padcal Mine’s life is positive for PX. The potential addition of resources bodes well for PX’s Padcal Mine given that it is currently estimated to last only until 2022. The Bumolo deposit is located in the Baguio Mineral District and is 1.

39 Cash Dividend 27 29 1 2 3 4 5 TUESDAY.00 Cash Dividend 18 IMI: Ex-date Php0.20 Cash Dividend 16 WEB: Ex-date Php0.PHILIPPINE EQUITY RESEARCH Calendar of Key Events FEBRUARY MON TUES WED THURS FRI SAT 1 2 VMC: Annual Shareholders Meeting 3 UBP: Ex-date Php1.60 Cash Dividend 5 6 8 9 TECH: Ex-date Php0.2204 Cash Dividend 19 MFC: Ex-date Php0.20 Cash Dividend 17 GLO: Ex-date Php22. 23 FEBRUARY 2016 page 4 .25 Cash Dividend 12 TFC: Annual Shareholders Meeting 13 15 PF: Ex-date Php1.15 Cash Dividend 24 25 26 SLF: Ex-date Php0.50 Cash Dividend 4 LOTO: Ex-date Php0.185 Cash Dividend 20 22 23 URC: Ex-date Php3.005 Cash Dividend 10 11 HOUSE: Ex-date Php0.

colfinancial. We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to outperform the market in the next six to twelve months.) attractive fundamentals but expensive valuations. 2. Although information has been obtained from and is based upon sources we believe to be reliable. Inc. including the possible loss of the principal amount invested. Important Disclaimers Securities recommended. 2401-B East Tower. We expect the share price to underperform in the next six to twelve months. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. the share price of the stock may perform merely inline or underperform the market in the next six to twelve months. 23 FEBRUARY 2016 Fax: +632 635-4632 Website: http://www.com page 5 . based on our analysis. offered or sold by COL Financial Group. Given the said factors. Stocks that have a HOLD rating have either 1.PHILIPPINE EQUITY RESEARCH Investment Rating Definitions BUY HOLD SELL Stocks that have a BUY rating have attractive fundamentals and valuations. Pasig City 1605 Philippines Tel: +632 636-5411 TUESDAY. COL Financial ans/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of securities of the companies mentioned in this report. Exchange Road. Philippine Stock Exchange Centre. and may trade them in ways different from those discussed in this report.are subject to investment risks. we do not guarantee its accuracy and it may be incomplete or condensed. Ortigas Center.) attractive valuations but near term earnings outlook might be poor or vulnerable to numerous risks. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are subject to change without notice.