FRI 27 AUG 2021

Top Stories:

FGEN: FGEN announces 1 day trading suspension (AS OF AUG 26, 2020)
ACEN: ACEN expands domestic solar power generation capacity INDICES
Cement Sector: Cement companies’ profits surge on easing of restrictions Close Points % YTD%
PSEi 6,820.53 -1.62 -0.02 -4.47
All Shares 4,205.00 6.49 0.15 -1.58
Financials 1,434.86 -9.40 -0.65 -0.88
Other News: Holding Firms 6,781.90 -55.51 -0.81 -7.79
Industrial 9,799.56 -65.72 -0.67 4.32
Economy: Cement imports rising despite safeguard measures Mining & Oil 9,262.87 74.61 0.81 -2.78
Property 3,143.19 -4.19 -0.13 -14.23
Economy: NEDA says PH may return to pre-pandemic level by end-2022
Services 1,761.77 53.20 3.11 16.36

Dow Jones 35,405.50 39 0.11 15.68

COVID-19 Update: S&P 500 4,496.19 9.96 0.22 19.70

Nasdaq 15,041.86 22.06 0.15 16.71
Total Cases Total Deaths Total Recoveries

Philippines 1,899,200 (+16,313) 32,728 (+236) 1,734,551 (+9,659) INDEX GAINERS

Ticker Company Price %
USA 39,337,717 (+165,610) 651,912 (+1,186) 30,728,939 (+45,727)
GLO Globe Telecom Inc 2948.00 13.38
TEL PLDT Inc 7.73
Worldwide 215,428,417 (+707,049) 4,487,283 (+10,673) 192,614,891 (+582,576) 1449.00
AC Ayala Corporation 778.00 4.99
GTCAP GT Capital Hldgs Inc 551.00 4.95
CNVRG Converge ICT Solutions Inc 31.00 4.38

Market Summary:
INDEX LOSERS
Ticker Company Price %
The local stock market initially rose on Thursday, but retreated later in the session as
JGS JG Summit Hldgs Inc 64.95 -3.99
investors took profit from the recent rally. FGEN First Gen Corp 28.30 -3.41
SM SM Investments Corp 982.00 -2.77
The PSEi inched down by 1.62 points or 0.02% to close at 6,820.53. The main drags were JFC Jollibee Foods Corp 199.40 -2.73
RRHI Robinsons Retail Hldgs Inc 50.00 -2.53
FGEN (-3.41%), SM (-2.77%), JFC (-2.73%), RRHI (-2.53%), and AGI (-1.55%). On the other
hand, these were mostly offset by gainers such as GLO (+13.38%), TEL (+7.73%), AC
(+4.99%), GTCAP (+4.95%), and CNVRG (+4.38%). TOP 5 MOST ACTIVE STOCKS
Ticker Company Turnover
GLO Globe Telecom Inc 1,614,647,000
Value turnover went up to Php9.1Bil from the Php6.5Bil traded in the previous day.
TEL PLDT Inc 1,158,168,000
Meanwhile, net foreign buying declined to Php190.9Mil from the Php814.6Mil registered CNVRG Converge ICT Solutions Inc 686,787,900
on Wednesday. AC Ayala Corpporation 438,345,600
MPI Metro Pacific Inv Corp 308,333,000

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 27 AUG 2021

Top Stories:

George Ching FGEN: FGEN announces 1 day trading suspension

Senior Research Manager
FGEN announces 1 day trading suspension. FGEN today announced a 1 day voluntary
First Gen Corporation trading suspension due to the publication in the Phil. Daily Inquirer of a notice from
BUY Philippines Clean Energy Holding Inc. of their intention to acquire through a public
Php32.90
and voluntary tender offer (TO) a minimum of 3% and up to 5.70% of total issued and
outstanding common shares of FGEN. FGEN said it has yet to receive the TO report.

The pricing and other details of the potential tender offer will likely be disclosed by
FGEN within the day. The tender offer could further reduce FGEN’s free float level which
currently stands at 18.7%.

Maintaining BUY rating. We have a BUY rating on FGEN with a FV estimate of Php32.9/
sh. We continue like FGEN given its relatively stable cash flow since bulk of its capacity is
contracted. Furthermore, with the Department of Energy’s moratorium on new coal power
plants, this could potentially push forward the projected power shortage beginning in
2024, increase in the competitiveness of FGEN’s gas and renewables plants, and improve
the feasibility of FGEN’s LNG regasification project which will enable its gas plants to
remain viable after the depletion of the Malampaya gas field. FGEN’s share price has
declined by 7.5% in the YTD period. The stock is trading at a 2022E P/E of 7.8X, below
the 13.6X P/E of industry peers. At FGEN’s market price of Php28.3/sh., upside to our FV
estimate is significant at 16.2%.

George Ching ACEN: ACEN expands domestic solar power

Senior Research Manager generation capacity
AC Energy Philippines
ACEN expands domestic solar power generation capacity. ACEN’s executive
HOLD
committee yesterday announced that it has approved the capital expenditure (capex)
Php5.06
budget for 2 new solar power projects. Without disclosing the amount of the capex, the
company has set the capex for the proposed ~ 288MW of solar project in Buguey and
Lal-lo in Cagayan, as well as the budget for 275MW expansion of its Gigasol Palauig solar
in Zambales. The timetable for the completion of these projects have not yet disclosed.
In addition to the capex for the 2 new solar projects, the executive committee has also
approved to enter into a joint venture with an affiliate of German solar firm Ib Vogt
GmbH to develop solar projects in the country with an initial 300MW of capacity.

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 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 27 AUG 2021

The proposed 288MW Buguey and Lal-lo Solar Project has not yet been factored-in to
our forecast as this is the first instance that the company discussed about the project.
Meanwhile, the 275MW expansion of the Palauig Solar Project is an upgrade in terms
of capacity compared to our earlier estimated capacity of 75MW. Together, the two
projects will boost ACEN’s attributable capacity by 563MW, representing 22% of ACEN’s
current attributable capacity, and positions ACEN in line to achieve its goal of attaining
5,000MW in attributable capacity by 2025. We estimate that the new projects could
contribute ~ Php800Mil in earnings by 2024, representing 6.3% of ACEN profits.

Reiterate HOLD rating. We are raising our FV estimate for ACEN by 3.1% to Php5.06/sh
after factoring-in the two new solar projects into our forecast. We are maintaining our
HOLD rating on ACEN. We continue to like ACEN given the rapid growth of its power
generation portfolio and its focus on renewable energy. From ~2,589MW currently, the
company plans to grow its attributable capacity to 5,000MW by FY25, and the capital
raised from the recent FOO should help the company achieve this goal. However,
valuations are no longer attractive as the positives are priced in. At Php9.20/sh, ACEN
is trading at 36.3X FY22E P/E, which is significantly above the 13.6X average 22E P/E of
local power companies.

Fances Rolfa Nicolas Cement Sector: Cement companies’ profits surge

Research Analyst
on easing of restrictions
Cemex Holdings Phils. Inc.
Cement companies’ profits surge on easing of restrictions. All cement companies
BUY
PHP1.70 registered higher profits in 2Q21. CHP’s and HLCM’s 2Q21 bottom lines swung to a
profit of Php643Mil and Php721Mil respectively, from core net losses registered in 2Q20.
Holcim Philippines, Inc. Meanwhile, EAGLE’s earnings surged to Php1.9Bil from Php77Mil in the same period
N/A last year. The huge improvement was brought about by the full scale of operations
N/A during the quarter. Recall that cement companies suspended their operations during the
enhanced community quarantine (ECQ) in April and May last year. This year, despite the
Eagle Cement Corporation re-imposition of the ECQ in the second quarter, cement companies and the construction
BUY industry were allowed to continue operating. CHP’s and EAGLE’s results both ended ahead
PHP17.00 of COL estimates, accounting for 109.5% and 76.8% of full year forecasts respectively.

Exhibit 1: Earnings Summary

% of COL
in PhpMil 2Q20 2Q21 % change 1H20 1H21 % change
forecast
CHP -7 643 - 137 882 545.1 109.5
EAGLE 77 1,924 - 1,298 3,591 176.7 76.8
HLCM -88 721 - 413 1,630 294.6 -

source: CHP. HLCM, EAGLE, COL estimates

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 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 27 AUG 2021

Revenues improve on higher volumes. All cement companies registered higher revenues
mainly due to the low base last year. Note that the easing of restrictions significantly
improved sales volumes. CHP’s volumes grew by 45% y/y, while EAGLE’s rose by more
than ~300%. We also estimate that HLCM’s volumes grew by ~70% y/y. Meanwhile, we
estimate that ASP dropped by low single digit during the quarter.

Exhibit 2: Revenues Summary

% of COL
in PhpMil 2Q20 2Q21 % change 1H20 1H21 % change
forecast
CHP 3,993 5,692 42.5 9,623 10,894 13.2 53.3
EAGLE 1,388 5,790 317.1 5,912 11,057 87.0 60.8
HLCM 4,148 6,856 65.3 11,419 13,661 19.6 -

source: CHP. HLCM, EAGLE, COL estimates

Moving forward, we expect volumes to slow down q/q as a result of the inclement
weather. Nevertheless, we believe that construction activity will continue to pick up as
the government ramps up infrastructure spending to help the economy recover. We also
expect ASP to slightly decline as a result of the intense competition in the industry from
imports and other manufacturers.

Margins continue to improve. EBITDA margins of all companies improved in 2Q21

mainly due to higher volumes, allowing companies to enjoy economies of scale. Input
costs were also stable as most commodity requirements are already hedged or have
contracts in place for the year. Moreover, most of the companies operating expenses
grew at a slower pace due to savings in distribution and personnel costs. CHP’s and
HLCM’s EBITDA margins grew by 3.7pp to 22.9%, and by 8.6pp to 20.9% respectively.
Meanwhile, EAGLE’s EBITDA margin grew the most, up by 15.1pp to 42.8%.

Moving forward, we expect margins to slightly weaken due to expected lower ASP as
mentioned above. Moreover, CHP will be implementing a maintenance shutdown in one
of its plants which would incur additional costs.

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 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 27 AUG 2021

Exhibit 3: EBITDA margins (%)

Source: CHP, EAGLE, HLCM

Other News:

Research Analysts Economy: Cement imports rising despite safeguard measures

John Martin Luciano, CFA The Cement Manufacturers Association of the Philippines, (CeMAP) Inc. said that
Frances Rolfa Nicolas Vietnam’s cement exports to the Philippines rose by 17% year on year to 2.51Mil tons in
Justin Richmond Cheng the first four months of 2021, making the Philippines its second-largest export destination.
Adrian Alexander Yu
This is despite the imposition of safeguard duties on imported cement. Recall that the
Kerwin Malcolm Chan
Department of Trade and Industry (DTI) imposed three years of safeguard duties on
imported cement after concluding that the cement industry has been harmed. CeMAP
also said that Vietnam exporters will likely continue to flood the Philippine domestic
market due to the former’s huge surplus and lower domestic demand. Note that the
DTI is already conducting a probe on the possible imposition of anti-dumping duty on
cement imports from Vietnam. (source: Businessworld)

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 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 27 AUG 2021

Economy: NEDA says PH may return to pre-pandemic level by

end-2022

The National Economic and Development Authority (NEDA) expects the economy
to return to its pre-pandemic level by the end of 2022 or early 2023, as quarantine
restrictions continued to hamper growth. NEDA noted that a sustainable recovery would
depend on a fast vaccine rollout, safe reopening of the economy, and full implementation
of the recovery package that includes this year’s Php4.5Tril budget and recently passed
tax reform measures. Based on NEDA’s estimates, economic losses averaged Php73Bil
for every week of the implementation of a modified enhanced community quarantine
(MECQ) in Metro Manila. This is 50% lower than the estimated Php144Bil economic losses
incurred for each week that the capital region is under enhanced community quarantine
(ECQ). (Source: Businessworld)

Changes in Shareholdings

Date of Acquired or Price per

Stock Volume Person (Designation)
Disclosure Disposed share
5,000 4.26
Alexander C. Yu
25-Aug COL 1,000 A 4.30
(Vice Chairman)
1,000 4.31
James L. Go
26-Aug TEL 8,000 A 1,246.75
(Director)
Necisto Y. Sytengco, II
26-Apr SBS 50,000 A 4.15 (Vice Chairman, SVP Marketing
Operations, & Assistant Treasurer)
Mary Rose L. Dela Paz
27-Aug TEL 300 A 1,270.00 (Senior Vice President & Chief
Procurement Officer)

COL Financial Group, Inc. 6

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

FRI 27 AUG 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

CHIEF EQUITY STRATEGIST
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

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 SENIOR RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN

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

C OL F INANC IAL G R O UP, IN C.

24/F EAST TOWER, TEKTITE TOWERS,
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. 8