Stocks in Focus: FRI 07 MAY 2021

ICT: 1Q21 core operating performance

beats estimates
1Q21 core operating performance beats estimates. ICT’s 1Q21 core net income (AS OF MAY 06, 2020)
rose 51.2% to US$90.1Mil, representing, higher than forecasts, representing 29% of INDICES
COL forecast and 34.5% of consensus forecast. In terms of core operating performance,
Close Points % YTD%
revenues 15.9% to US$435.6Mil, representing 25.8% of our full year forecast and 27.9% PSEi 6,282.78 -16.91 -0.27 -12.00
of consensus forecast. Throughput volume rose 7.9% y/y during 1Q21 to 2.7Mil TEU All Shares 3,879.65 -2.78 -0.07 -9.20
while average yield rose by 7.4% to US$160.9/TEU. EBITDA rose 24.8% to US$264.8Mil, Financials 1,397.79 3.71 0.27 -3.44
representing 27.7% of COL forecast. Cash operating cost rose 4.4% to US$170.8Mil, Holding Firms 6,269.00 -105.09 -1.65 -14.76
representing 23.3% of our full year forecast. Industrial 8,610.28 53.68 0.63 -8.34
Mining & Oil 9,451.47 -122.19 -1.28 -0.80
Property 3,074.24 44.33 1.46 -16.11

Top Stories: Services 1,425.42 -4.81 -0.34 -5.86

Dow Jones 34,230.34 97 0.29 11.84

S&P 500 4,167.59 2.93 0.07 10.96
SCC: 1Q21 net income above expectation Nasdaq 13,582.42 -51.08 -0.37 5.39

TEL: 1Q21 core income up 9.1% on higher data-related revenues, in line

INDEX GAINERS
with estimates
Ticker Company Price %
GLO: 1Q21 core income up 13.4% y/y on higher share of income from JGS JG Summit Hldgs Inc 52.45 3.05
URC Universal Robina Corp 131.70 2.89
affiliates SMPH SM Prime Hldgs Inc 34.50 2.53
MEG Megaworld Corporation 3.06 2.00
NIKL: 1Q21 earnings rise on higher selling prices, in line to meet full year MPI Metro Pacific Inv Corp 4.08 2.00

forecast
INDEX LOSERS
MONDE: MONDE sets final IPO price at Php13.5/sh
Ticker Company Price %
PGOLD Puregold Price Club Inc 35.00 -4.63
SM SM Investments Corp 921.00 -3.15
BLOOM Bloomberry Resorts 6.25 -3.10
Other News: AC Ayala Corporation 725.00 -2.68
GTCAP GT Capital Hldgs Inc 510.00 -2.30

MBT: MBT eyes Php10Bil from 5.25-year bonds

TOP 5 MOST ACTIVE STOCKS
Economy: Unemployment rate eases in March Ticker Company Turnover
ALI Ayala Land Inc 769,652,400
SM SM Investments Corp 367,777,700
AC Ayala Corporation 337,362,400
BDO BDO Unibank Inc 225,327,800
SMPH SM Prime Hldgs Inc 212,650,800

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of the
COL Financial website as these may be subject to tampering or unauthorized alterations.
 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

COVID-19 Update:
Total Cases Total Deaths Total Recoveries

Philippines 1,080,172 (+6,637) 17,991 (+33) 999,011 (+7,093)

USA 33,366,338 (+44,965) 593,986 (+839) 26,094,501 (+59,187)

Worldwide 156,666,947 (+855,506) 3,268,875 (+14,065) 134,022,990 (+830,671)

Market Summary:

The local equities market fell to a new low this year as investors awaited better news on
the country’s COVID-19 vaccine rollout.

The PSEi declined by 16.91 points or 0.26% to close at 6,282.78. The main drags were
PGOLD (-4.63%), SM (-3.15%), BLOOM (-3.10%), AC (-2.68%), and GTCAP (-2.30%). On the
other hand, these were partially offset by gainers such as JGS (+3.05%), URC (+2.89%),
SMPH (+2.53%), MEG (+2.00%), and MPI (+2.00%).

Value turnover increased to Php5.3Bil from the Php3.9Bil traded on Wednesday.

Meanwhile, net foreign selling went down to Php460.7Mil from the Php653.4Mil in net
outflows during the previous session.

COL Financial Group, Inc. 2

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Stocks in Focus:

George Ching ICT: 1Q21 core operating performance beats

Senior Research Manager
estimates
Int’l Container Terminal Services
1Q21 core operating performance beats estimates. ICT’s 1Q21 core net income rose
HOLD
Php142.30 51.2% to US$90.1Mil, representing, higher than forecasts, representing 29% of COL
forecast and 34.5% of consensus forecast. In terms of core operating performance,
revenues 15.9% to US$435.6Mil, representing 25.8% of our full year forecast and 27.9%
of consensus forecast. Throughput volume rose 7.9% y/y during 1Q21 to 2.7Mil TEU
while average yield rose by 7.4% to US$160.9/TEU. EBITDA rose 24.8% to US$264.8Mil,
representing 27.7% of COL forecast. Cash operating cost rose 4.4% to US$170.8Mil,
representing 23.3% of our full year forecast.

Exhibit 1: 1Q21 Results Summary

% of FY Forecast
in US$Mil 1Q20 1Q21 %Change
COL Consensus
Revenue 375.8 435.6 15.9 25.8 26.3
EBITDA 212.2 264.8 24.8 27.7 27.9
EBITDA margin (%) 56.5 60.8 4.3 4.3 3.5
Net Income 59.6 90.1 51.2 29.0 34.5
Net margin (%) 15.9 20.7 4.8 2.3 4.9
source: ICT, COL estimates,Bloomberg

Exhibit 2: 1Q21 Revenue Breakdown

Revenue Container volume Implied yield
1Q20 1Q21 % change 1Q20 1Q21 % change 1Q20 1Q21 % change
Asia 166.1 186.5 12.3 1,107.1 1,185.0 7.0 150.1 157.4 4.9
Americas 120.4 148.1 23.0 787.9 872.8 10.8 152.9 169.7 11.0
EMEA 89.2 101.0 13.2 613.9 650.0 5.9 145.3 155.3 6.9
Total 375.8 435.6 15.9 2,509.0 2,707.8 7.9 149.8 160.9 7.4
source: ICT, COL estimates,Bloomberg

Volume recovery gains traction in 1Q21. ICT’s volume recovery gained raction in
1Q21, posting a 7.9% growth y/y (following 6.9% growth in 4Q20, 3.1% growth in 3Q20).
Ports in Asia registered a 7% increase in volume during the period, brought about by the
recovery of flagship port MICT (higher single digit volume growth), as well as the strong
performance of its ports in Australia and China. Europe/Middle East/Africa (EMEA)
volume increased 5.9% y/y, driven by growth in ports in Croatia, Poland and Madagscar,
but offset by the decline of ports in Iraq and Georgia. ICT’s ports in Americas rose 10.8%
brought about by the growth in the volume of ports in Ecuador, Brazil and Mexico.

COL Financial Group, Inc. 3

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

ICT’s yield/TEU rose 7.4% y/y in 1Q21 to US$160.9/TEU. The y/y rise in yield was
mainly due to tariff adjustments in key ports such as MICT, increase in storage in ancillary
services at a number of terminals particularly in the Americas segment, as well as the
favorable overall impact of currency appreciation against the US Dollar: Philippine Peso
(5.24%), Euro (9.27%), RMB (7.69%), AUD (17.4%) against the US Dollar.

EBITDA increases by 24.8% driven by revenue growth and cost reduction initiatives. Cash
operating cost rose 4.4% to US$170.8Mil, representing 23.3% of our full year forecast.
The moderate rise in cash operating cost (compared to revenue growth of 15.9%) was
primarily driven by the company’s cash operating cost reduction initiatives (which began
in 2020 at the onset of the Covid-19 pandemic). Management expects that these cost
control measures will be sustained throughout FY21 and will continue to support ICT’s
EBITDA margin going forward. EBITDA rose by 24.8% to US$264.8Mil, equivalent to
27.7% of our full year forecast, while EBITDA margin improve to 60.8% from 56.5%
during the same period of last year. In light of the strong EBITDA margin in 1Q21
and management guidance that the cost reduction initiatives will be sustained, we are
increasing our FY21 EBITDA by 2.7% to US$980.6Mil, and our FY22 EBITDA by 2.6% to
US$1.03Bil.

Sustained volume growth seen in 2Q21. Management indicated that while the
economic recovery in different parts of the world will remain uneven in the succeeding
quarters, the company is seeing signs that overall throughput volume growth will gain
further traction for the remaining of the year. For the MICT, even with the imposition of
the MECQ in April, the port’s volume continue to grow to near pre-pandemic level. Most
ports in the Americas also continue to register strong volume growth numbers in April.

Maintaining HOLD rating. In line with the increase in our EBITDA forecast and the
passage of the CREATE Bill, we are increasing our FY21E earnings forecast by 8.6% to
US$337Mil, and our FY22E forecast by 8.4% to US$372.6Mil. We are also raising our
FV estimate by 6.8% to Php142.3/sh. We are maintaining our HOLD rating on ICT. We
continue like ICT given the success of ICT’s greenfield ports in Australia, Congo and Rio as
these ports will be the key earnings growth driver for the company in the next few years.
Despite the lingering impact of the COVID-19 pandemic on global trade, we believe that
the company’s earnings is set to rebound in FY21 following the recovery in global trade
and the company’s cost reduction initiatives. However, ICT’s share price has increased by
55% in the past 12 months, outperforming the PSEi’s 11.4% increase during the period.
Based on its current market price of Php128.5/sh, upside to our FV estimate is at 10.8%.

COL Financial Group, Inc. 4

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Top Stories:

George Ching SCC: 1Q21 net income above expectation

Senior Research Manager

1Q21 net income above expectation. SCC’s 1Q21 earnings increased 93.4% to
Semirara Mining Corporation
Php2.3Bil, above COL forecasts (40.9%), and consensus forecast (32%). Earnings beat
BUY
estimates due to the coal business’ better than expected earnings. Total revenues during
Php31.36
1Q21 before eliminations rose 19.2% y/y to Php9.9Bil, in line with forecasts (25.9% of COL
full year forecast). Revenues from the coal mining segment increased 15.7% to Php7.1Bil,
representing 30.4% of our full year forecast. Meanwhile, power generation revenue
rose by 28.9% to Php2.8Bil, representing 18.8% of our full year forecast. Earnings beat
estimates due to the coal business’ better than expected earnings, but this was partially
offset by the power generation business’ lower than expected profits.

Exhibit 1: SCC 1Q21 Results Summary

% of COL
in PhpMil 1Q20 1Q21 %Change
FY forecast
Revenue (gross) 8,310 9,902 19.2 25.9
Coal (gross) 6,139 7,104 15.7 30.4
Power (gross) 2,171 2,798 28.9 18.8
Operating Income 1,219 2,419 98.4 30.6
Operating Margin (%) 14.7 24.4 9.8 N/A
Net Income 1,192 2,305 93.4 40.9
Net Margin (%) 14.3 23.3 8.9 N/A

source: SCC, COL estimates

Coal business earnings beat forecast on higher sales volume and ASP. Coal mining
revenues in 1Q21 rose 15.7% y/y to Php7.1Bil, equivalent to 30.4% of our full year
forecast. Sales volume for the period rose 21% to 3.9Mil MT (representing 30% of our
full year forecast) as China eased its import quota restriction and as export sales to other
markets such as Korea and Cambodia increased. Sales volume to local customers rose
11% to 1.8Mil MT, while export sales rose 31% to 2.1Mil MT. SCC’s average selling
price for coal declined 4% to 1,829/MT, but was still 1.6% higher than our ASP forecast
for the year. Average selling price would have been higher if not for the 600,000MT
deferred shipment from December 2020 (which was based on 3Q20 coal pricing) that
was delivered during 1Q21. Operating cost rose 15% to Php5.1Bil, representing only
24% of our full year forecast. As a result, the coal segment’s net income amounted to
Php1.95Bil(+22% y/y), exceeding forecast, representing 74% of our full year forecast.
We are raising our FY21 ASP forecast by 5.6% to Php1,900/MT in light of the better than
expected outlook for coal pricing this year. This increased our net income forecast for
the coal mining business by 42% to Php3.7Bil.

COL Financial Group, Inc. 5

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

SCPC results disappoint on unit 2 unplanned outage. 1Q21 revenue from Calaca
units 1 and 2 (SCPC) declined 30% to Php1.05Bil, representing only 11.7% of our full year
forecast. This was mainly due the unplanned outage of unit 2 since December 2020.
Energy sales declined 36% to 286Gwh (12% of full year forecast), while average selling
price rose 9% to Php3.66/kwh (2.7% lower than forecast). SCPC sold 15% of its output
to the spot market at an average price of Php2.77/kwh (-6% lower y/y). Meanwhile,
operating cost declined by 26% to Php1.15Bil, equivalent to 19% of our full year forecast.
As a result, SCPC posted a net loss of Php163Mil during 1Q21 (full year net income
forecast of Php1.9Bil).

SLPGC earnings above forecast on higher than expected output and selling price.
Revenues generated by the Calaca unit 3 and 4 (SLPGC) rose 160% to Php1.75Bil,
representing 29.6% of our full year forecast. Total volume sold increased 107% to
510Gwh mainly due to better plant availability as unplanned outage hours declined.
1Q21 sales volume represents 28% of our full year forecast. Average selling price rose
25% to Php3.43/kwh mainly due to higher contracted capacity level, as well as better
WESM prices. 21% was output was sold to the WESM. Cost of power generation rose18%
to Php1.2Bil, representing 31% of our full year forecast. As a result, SLPGC posted a net
income of Php553Mil during 1Q21, representing 49% of our full year forecast.

Coal mining business’ outlook improves on higher pricing. Management said that
the outlook for its coal mining business has improved for this year as China’s (accounting
for 85% of SCC’s coal exports) coal consumption increases due to its sharp economic
rebound. Meanwhile, production constraints due to the water seepage issue in the
Molave Mine since 4Q20 have already been addressed, and the company is in line to
meet its coal production target of 13-13.5Mil MT this year.

Maintaining BUY rating. In light of the increase in our estimates for SCC’s coal mining
business and in line with the passage of the CREATE Bill, we are increasing our FY21E
earnings forecast by 19.8% to Php6.75Bil, and our FY22E forecast by 14.4% to Php11.2Bil.
We are also raising our FV estimate by 9.2% to Php31.26/sh. We are maintaining our
BUY rating on SCC. Despite the poor outlook of its power generation business due to
unplanned outages, we believe that much of the negative news is already priced-in.
Meanwhile, the selling price of coal have already recovered. If the higher coal price is
sustained, this will improve the earnings outlook of SCC’s coal mining business going
forward. The stock is the trading at only 4.8X 22E P/E, below the industry average of
12.6X. Capital appreciation is also significant at 146% based on our fair value estimate.

COL Financial Group, Inc. 6

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Adrian Alexander Yu TEL: 1Q21 core income up 9.1% on higher data-

Research Analyst
related revenues, in line with estimates
Kerwin Malcolm Chan
Research Analyst 1Q21 core earnings rise 9.1% y/y. TEL’s 1Q21 core income rose by 9.1% y/y to Php7.5Bil
PLDT Inc. from Php6.9Bil, in line with COL (24.8%) FY21 estimates. The strong performance was
BUY primarily driven by the robust revenue growth in its consumer wireless and home
Php1,820 broadband segments. 1Q21 service revenues grew by 8.1% y/y to Php44.8Bil, accounting
for 24.0% of COL estimates. Data-related revenues accounted for a higher share of
service revenues at 74.2% compared to 70.2% in 1Q20. Likewise, EBITDA increased by
7.5% y/y to Php23.3Bil despite the 200bps margin contraction to 51.9%, in line with both
COL (24.6%) and consensus (24.6%) estimates.

Exhibit 1: Results Summary

source: TEL, Bloomberg, COL estimates

Mobile data drives consumer wireless growth. TEL’s 1Q21 consumer wireless revenues
increased by 6.8% y/y to Php22.1Bil from Php20.7Bil on the back of higher mobile data
usage. Mobile data revenues grew by 13.4% y/y to Php17.5Bil from Php15.5Bil in 1Q20
as prepaid top-ups maintained its upward trajectory during the period. Although TEL’s
mobile subscriber base fell by 1.7% y/y, management saw more active users top up to
TEL’s GIGA packages, which are customized to fit the data requirements of its broad
customer base including students, workers, gamers, and others. Also, TEL noted that
top-ups remained resilient against the effect of tighter restrictions in March compared
to 1Q20 as more subscribers topped up through TEL’s online channels like the Smart
platform and PayMaya. As a result, mobile data’s contribution to consumer wireless
revenues reached 79.3%, much larger than the 74.6% share recorded in 1Q20.

For 2Q21, management mentioned that the consumer wireless segment may be hurt by
the extension of stricter lockdowns and slow vaccination rollout as these would result to
limited mobility. Nonetheless, top-ups are expected to remain strong as TEL maintains
its online channels to make topping up more convenient and accessible to its mobile
subscribers.

COL Financial Group, Inc. 7

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Home broadband still enjoys high demand. Meanwhile, home broadband revenues
grew by a robust 18.5% y/y to Php10.9Bil, recording the strongest growth out of TEL’s
business segments. Home broadband data packages sustained its popularity as people
continued to work and study from home, especially with COVID-19 cases rising rapidly in
March. During the quarter, TEL connected an average of 90,000 new homes per month,
higher than the 74,000 monthly installations in 4Q20. Moreover, churn rates saw a q/q
improvement as TEL pursued more initiatives to improve customer experience. As a result,
TEL’s broadband subscriber base increased by 43.5% y/y and 6.0% q/q to 3.1 million users
as of end March 2021.

Due to the elevated demand for data, TEL plans to continue ramping up its home
installations while improving customer experience to reduce churn. One of their initiatives
to reduce churn include upgrading its network and repair capabilities to improve user
connectivity. TEL is also in the process of migrating its remaining 500,000 copper-based
broadband subscribers to the faster and more reliable fiber network, which is expected
to be completed by the end of the year.

Exhibit 2: Cumulative Broadband Subscriber

source: TEL

Enterprise segment shows modest growth. During 1Q21, TEL’s enterprise revenues
increased by 4.0%y/y to Php10.3Bil from Php10.0Bil despite the difficult economic
conditions for its MSME clients. The modest growth is mainly attributable to the growing
number of hyperscalers or large-scale cloud companies who are setting up their data
centers here in the country. Management mentioned that this new market could serve as
a potential growth driver in the enterprise segment, which could also offset the weaker
demand of its other clients that are struggling amid the pandemic.

Elevated OPEX on the back of higher depreciation and provisions. TEL’s 1Q21
operating expenses increased by 16.0% y/y to Php37.7Bil from Php32.5Bil due to higher
depreciation expense and provisions booked during the period. Depreciation expense
grew by 14.0% y/y to Php11.7Bil as the company continued with its aggressive network
expansion program. Provisions also increased by 50.2% y/y to Php1.6Bil from Php1.1Bil
in 1Q20. Nonetheless, provisions were lower than the quarterly average of Php1.9Bil in
FY20. Meanwhile, cash operating expenses increased by 9.7% y/y to Php19.7Bil from
Php17.9Bil due to higher salaries and selling and promotions expenses.

COL Financial Group, Inc. 8

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Year starts on a positive note. After the strong performance in 1Q21, management
expects the upward trend in earnings to continue. As such, TEL is maintaining its FY21
core income guidance of Php29-30Bil, driven by high single-digit growth of service
revenues. Although the consumer wireless segment may face some headwinds with the
prolonged lockdown and limited mobility in 2Q21, management still expects high single-
digit growth for the year. Moreover, home broadband revenues are expected to sustain
its robust growth as people rely on broadband connection to work, study, and keep in
touch with other people.

For 2021, TEL intends to maintain its dividend payout policy which is equivalent to 60%
of past year’s profits. TEL is also considering paying out another 5% special dividend this
year, bringing its payout ratio to 65%. During its 1Q21 analyst briefing, TEL mentioned
that they are earmarking Php88-92Bil for capex this year. This would include rolling out
more fiber lines and expanding their 5G presence in the country. TEL is putting more
focus on projects that will improve the network quality and user experience for both its
wireless and broadband subscribers.

Maintaining estimates, reiterating BUY rating. We reiterate our BUY rating on TEL with
an FV estimate of Php1,820/sh. At TEL’s current price of Php1,264/sh, capital appreciation
potential is attractive at 44.0%. The stock also provides a very attractive dividend yield of
6.4%. We continue to like TEL due to the strong growth of its mobile data business and
its dominant position in the home broadband business.

Adrian Alexander Yu GLO: 1Q21 core income up 13.4% y/y on higher

Research Analyst
share of income from affiliates
Kerwin Malcolm Chan
Research Analyst Core income up 13.4% y/y to Php7.4Bil. 1Q21 core net income rose by 13.4% y/y to
Globe Telecom Inc. Php7.4Bil from Php6.6Bil. The strong bottom-line performance was mainly due to GLO’s
BUY higher equity share in net income of affiliates and lower taxes. During 1Q21, GLO’s share
Php2,470 of income from its affiliates reached Php744Mil, a turnaround from the Php197Mil net
loss recorded in 1Q20. This is mainly attributable to the significant increase in its share
of Vega’s earnings to Php932Mil from Php30Mil. Also, losses from Mynt shrunk by 61.7%
y/y to Php282Mil from the Php737Mil net loss recorded in 1Q20.

GLO’s 1Q21 service revenues grew 2.5% y/y to Php37.8Bil from Php36.9Bil, accounting
for 24.5% of COL’s full year estimates. Data-related revenues increased by 8.2% y/y,
completely offsetting the drop in non-data revenues. On the other hand, EBITDA margin
contracted by 710bps to 48.4% from 55.5% in 1Q20 due to higher operating expenses.
This brought 1Q21 EBITDA to Php18.3Bil, down 10.7% y/y, accounting for 24.0% of COL
and 23.9% of consensus estimates.

COL Financial Group, Inc. 9

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Exhibit 1: Results Summary

source: GLO, Bloomberg, COL estimates

Growth in mobile data revenues not enough to offset decline in legacy revenues.
1Q21 service revenues grew by only 2.5% y/y to Php37.8Bil due to the soft growth
in its mobile data revenues, which increased by 3.6% y/y to Php19.2Bil. According to
management, the growth in the mobile data segment was mainly attributable to the
higher demand for data despite the limited mobility from the prolonged lockdowns.
However, this was not enough to offset the large 14.8% y/y decline in its mobile SMS and
voice revenues. As a result, consolidated mobile revenues fell by 2.1% y/y to Php26.3Bil
from Php26.9Bil.

Home broadband maintains growth. On a positive note, GLO’s home broadband

revenues rose by 27.2% y/y to Php7.4Bil from Php5.8Bil on the back of higher data
requirements to work and study from home during the pandemic. GLO’s broadband
subscriber base expanded by 81.0% y/y and 7.7% q/q to 4.1 million users, brought about
by the significant increase in its fixed wireless broadband users. Meanwhile, corporate
data revenues remained flattish at Php3.3Bil as MSMEs try to stay afloat after being hard
hit by the lockdowns and weaker economic environment.

Exhibit 2: Cumulative Broadband Subscribers

source: GLO

OPEX rises on higher depreciation and provisions in 1Q21. GLO’s 1Q21 total operating
expenses increased by 14.6% y/y to Php28.7Bil from Php25.0Bil due to higher depreciation
charges and provisions booked. Depreciation expense increased by 6.2% y/y to Php9.2Bil
from Php8.6Bil as GLO ramped up its network rollout and tower builds. Provisions also
grew by 52.8% y/y to Php1.6Bil from Php1.0Bil to account for potential losses. Meanwhile,
other operating expenses rose by 16.7% y/y, led by higher marketing and subsidy costs.

COL Financial Group, Inc. 10

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Valuations. We currently have a BUY recommendation on GLO with a FV estimate

of Php2,470/sh. We will submit a more detailed report following GLO’s 1Q21 analyst
briefing later.

George Ching
NIKL: 1Q21 earnings rise on higher selling prices,
Senior Research Manager
in line to meet full year forecast
Nickel Asia Corporation
HOLD 1Q21 earnings rise on higher selling prices, in line to meet full year forecast. NIKL
Php5.25
reported a net profit of Php584Mil in 1Q21, a turnaround from a net loss of Php89Mil
during the same period last year. This represents 10.1% of COL full year forecast. We
believe that while 1Q20 earnings represents only 10.1% of our full year forecast, NIKL is
still in line to meet our full year earnings forecast for the year. Note that the first quarter
is a seasonally weak quarter for NIKL’s shipment volume. During 1Q20, shipment volume
accounted only for 15.3% of NIKL’s full year shipment volume (compared to 1Q21’s
sales volume accounting for 16.8% of full year forecast). Ore revenues rose 49.7% to
Ph2.9Bil, representing 15.2% of our full year forecast, while operating expenses rose 4.6%
to Php1.85Bil, representing 18.1% of our full year forecast.

Exhibit 1: Results Summary

% of
in PhpMil 1Q20 1Q21 % Change
COL
Revenues 2,209 3,168 43.4 16.1
Operating income 441 1,317 198.8 13.9
Operating margin (%) 20.0 41.6 - -
Net income -89 584 N/A 10.1
Net margin (%) -4.0 18.4 - -

source: NIKL, Bloomberg, COL estimates

Ore prices beat estimates. 1Q21 ore revenues rose 49.7% y/y to Php2.9Bil, representing
15.2% of our full year forecast. Shipment volume rose 1.4% to 2.82Mil WMT, representing
16.8% of our full year forecast. In terms of pricing, NIKL’s results are better than expected
with average LME price rising 37.2% to US$7.96/lb, representing 114.2% of our full year
forecast, while average contract price increasing 56.5% to US$44.86/WMT, representing
128.9% of our full year forecast.

COL Financial Group, Inc. 11

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Operating costs rise by 4.6%. NIKL’s 1Q21 operating cost (including GAEX and
marketing) rose by 4.6% to Php1.85Bil, representing 18.1% of our full year forecast.
Operating cash cost per WMT rose by 5.2% to Php550/WMT.

Maintaining HOLD rating. In line with the passage of the CREATE Bill, we are increasing
our FY21E earnings forecast by 7.4% to Php6.2Bil, and our FY22E forecast by 7.6% to
Php7Bil. We are also raising our FV estimate by 5.6% to Php5.25/sh. We are maintaining
our HOLD rating on NIKL. We continue to like NIKL given that near term prices for nickel
will continue to be supported by the Indonesian nickel ore export ban. Furthermore, we
remain positive on the long term outlook for nickel due to the rising EV battery demand.
However, NIKL’s stock price has increased by 250% in the past 12 months, outperforming
the PSEi’s 11.4% increase during the same period. At its current price of Php5.5/sh, there
is no more upside to our FV estimate.

Justin Richmond Cheng, CFA

MONDE: MONDE sets final IPO price at Php13.5/sh
Research Analyst

MONDE sets final IPO price at Php13.5/sh. MONDE announced that it has set the final
offer price for its initial public offering at Php13.5/sh. Recall that MONDE will be offering
3.6 Billion primary shares, and the company would be able to raise as much as Php48.6Bil
from the primary share sale. This would bring the company’s market capitalization after
the offering to Php242.6Bil. MONDE also disclosed that it has yet to submit any revisions
to its timetable of offer activities. Hence, the offer period is still tentatively set at May 24
to May 28, while the listing date is currently scheduled on June 7, 2021.

Priced attractively given strong growth prospects. At the offer price of Php13.5/sh, we
estimate MONDE would be trading at 25.5X 2021E P/E. This assumes MONDE’s earnings
would grow by 29% in 2021 driven by sales growth of 12% based on management’s
expectations of low-double digit growth for the Asia-Pacific business and 20-25% growth
for the meat alternative business. We also assumed that operating margins would be
maintained and that its debt obligations would be fully paid using the proceeds from the
IPO. At 25.5XE P/E, MONDE would be trading at a slight premium to URC’s 24.5X, and the
consumer average of 21X. In our view, MONDE may deserve to trade at a premium given
the strong growth potential of Quorn as it addresses key long-term concerns on health
and wellness combined with sustainable food and living. Quorn’s market leading position
in the UK also puts it in the best position to capitalize on the said opportunities.

COL Financial Group, Inc. 12

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

Other News:

Research Analysts MBT: MBT eyes Php10Bil from 5.25-year bonds

John Martin Luciano, CFA MBT is planning to raise Php10Bil though a bond offering. Proceeds will be used for
Frances Rolfa Nicolas general working capital needs and diversification of the bank’s funding sources.
Justin Richmond Cheng
Meanwhile, the papers will have a tenor of 5.25 years and a fixed rate of 3.6% per annum
Adrian Alexander Yu
that will be payable quarterly. The offer period is set to run from May 6 until May 24.
Kerwin Malcolm Chan
The minimum investment for the bonds is at Php500,000 and in additional increments
of Php100,000 thereafter. The bank also said they have the option to upsize the offer
beyond the Php10Bil plan. (Source: Businessworld)

Economy: Unemployment rate eases in March

The Philippine Statistics Authority (PSA) reported that the country’s unemployment rate
in March fell to its lowest level since the start of the coronavirus pandemic. The latest
labor report of the PSA showed that the unemployment rate eased to 7.1% in March,
equivalent to 3.4Mil unemployed Filipinos in the labor force. The latest jobless number
is a significant decrease from the 8.8% seen in February, which is equivalent to some
4.2Mil Filipinos who have no jobs. However, note that the March Labor Force Survey was
conducted prior to the reimposition of strict quarantine measures in Metro Manila and
nearby provinces due to surging COVID-19 cases. The country’s economic managers said
the lockdown from March 29 to May 14 is expected to reverse the employment gains
in the next round of labor force surveys, but the impact is expected to be less severe
compared to April 2020 given a more risk-managed approach to the present quarantines.
Meanwhile, underemployment rate, which pertains to the proportion of workers looking
for more hours of work, also went down to 16.2% or 7.3Mil Filipinos from 18.2% or 7.9Mil
in February. (Source: Businessworld, Philstar)

Changes in Shareholdings
Date of Acquired or Price per
Stock Volume Person (Designation)
Disclosure Disposed share
5,000 3.90
3,000 3.92
Alexander C. Yu
07-May COL 1,000 A 3.93
(Vice Chairman)
3,000 3.94
2,000 3.95
5,000 3.94 Alexander C. Yu
07-May COL D
5,000 3.95 (Vice Chairman)
Source: PSE

COL Financial Group, Inc. 13

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 07 MAY 2021

I M P O R TA N T R AT ING DEFINITIONS
BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the
next six to 12 months.

HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might
be poor or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the
next six to twelve months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

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

CO L R E S EAR C H T EAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

JOHN MARTIN LUCIANO, CFA FRANCES ROLFA NICOLAS JUSTIN RICHMOND CHENG, CFA
SENIOR RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN

RESEARCH ANALYST RESEARCH ANALYST
adrian.yu@colfinancial.com kerwin.chan@colfinancial.com

CO L F IN ANC IAL G R O UP, IN C.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 15