Daily Digest

13 November
18 March 2021
2020

Market commentary Market review

 The PCOMP closed flat at 6,566.83 (+0.1% d-d) as investors appraise the
government's response to the continuing surge in COVID-19 cases. Net foreign PCOMP 6,566.83 +0.1%
selling continued at PHP256.4mn (from PHP300mn previously). Meanwhile, All shares 3,964.78 +0.3%
global stock markets closed mixed (Hang Seng +0.02% d-d, Nikkei 225 -0.02%,
S&P 500 +0.3% d-d, FTSE 100 -0.6%) ahead of the results of the Fed's policy Financials 1,404.28 +0.4%
meeting. Fed officials indicated that rate hikes are unlikely at least through 2023, Industrial 8,527.89 +0.3%
despite an improving outlook (i.e. FY21F GDP growth raised to 6.5% vs 4.2%
previously) and expectations for higher inflation this year (i.e. 2.2% vs the 2% goal Holding firms 6,698.36 +0.2%
over the long run). Fed Chair Jerome Powell also said that the Fed would need to Services 1,435.23 +0.7%
see a material and sustained move in inflation above 2% before considering
changes to its current easy policy stance. Mining & oil 8,484.85 +0.2%
Property 3,262.47 -0.5%
Macro news
 Private hospitals hit critical level. According to the Private Hospitals Association USD/PHP 48.57 -0.2%
of the Philippines Inc. (PHAPi), 20 hospitals in NCR are now at “critical level” while Net foreign* (256.43)
23 others are at the “higher risk level” due to the increasing occupancy rates of
their COVID-19 wards. PHAPi President Jose Rene de Grano said, “When you Value traded* 6,851.38
say high risk, 70 to 85% of their beds are occupied and it’s critical if at least 85% As of 17 March 2021
is up to its capacity.” Mr. De Grano also noted that if the trend continues, there Source: Bloomberg, BSP
might be a repeat of the situation back in August 2020, when COVID-19 beds *Note: Net foreign and value traded in PHPmn;
became full in almost every hospital. He also added that the health care utilization % change vs 16 March 2021
rate in NCR is around 52%, with 90% of cases comprised of mild and
asymptomatic patients that don’t need hospitalization. Health Undersecretary and Market movers
Treatment Czar Leopoldo Vega said the recent spike in COVID-19 cases has
prompted the One Hospital Command (OHC) to refer Metro Manila patients to Best Last price
% chg
health facilities in nearby central Luzon and Calabarzon. Mr. Vega added that from performers (in PHP)
around 80 calls in previous weeks, the OHC is now receiving around 250 calls a FLI PM 1.18 +2.6%
day, with most callers inquiring about COVID-19 hospitals that can still accept
patients. Source: PhilStar CEB PM 43.90 +2.6%
 Philippines bars entry of foreigners. The Philippines will close its border to RLC PM 18.40 +2.2%
foreigners anew and restrict the number of Filipinos entering the country starting
this Saturday, as authorities battle to contain a spike in coronavirus infections. This MPI PM 3.86 +2.1%
developed as the transmission of COVID-19 in Metro Manila has recently reached ICT PM 127.60 +2.1%
its highest level since May last year, the OCTA Research Group said on
Wednesday, describing the situation as a “serious surge” in infections. The group,
made up of university professors, noted that the NCR posted a 78% increase in Worst Last price
% chg
new cases on Tuesday compared to a week ago. The government’s temporary performers (in PHP)
measures come after the number of daily cases hit a seven-month high of 5,404 BLOOM PM 6.82 -2.8%
on Monday, and experts predict the figure could double by the end of March.
Overseas Filipino workers will be exempt, but the number of passenger arrivals MAC PM 4.82 -2.6%
will be limited to 1,500 a day. Source: Manila Standard GLO PM 1,930.00 -2.5%
 Government incurred PHP14.1bn budget deficit in Jan 2021. Data from the
Bureau of Treasury (BTr) showed that the government incurred a PHP14.1bn PCOR PM 3.12 -1.9%
budget deficit in Jan 2021 (vs PHP23bn surplus a year ago), as government SMPH PM 35.00 -1.4%
spending increased 1.18% y-y, while revenue collection sank 11.51% y-y during
the month. Revenue collection in Jan 2021 amounted to PHP260.7bn, 89% of As of 17 March 2021
which pertained to tax collections, while the remaining 11% came from non-tax Source: Bloomberg
sources. Bureau of Internal Revenue (BIR) collections declined 6.54% y-y to Note: % change vs 16 March 2021
PHP182.2bn, while Bureau of Customs (BOC) collections slipped 15.41% to
PHP8.6bn in Jan 2021 on continued economic disruptions amid the pandemic. COVID-19
9,000
updates
The BTr also posted a 34.27% contraction in revenue to PHP18.7bn due to a high World Cases % chg
base effect of dividend remittances from government-owned or -controlled
corporations (GOCCs) and the 58.69% drop in the government’s share in Confirmed 121,032,282 0.3%
Philippine Amusement and Gaming Corp’s (PAGCOR) income. Meanwhile,
government expenditures stood at PHP274.8bn in Jan 2021, up only by a modest Deaths 2,676,274 0.2%
1.18% y-y, as the uptick was moderated by lower interest payments, which Philippines Cases % chg
declined 23.43% y-y to PHP47bn due to global bond redemptions in FY20 and the
settlement of premiums on reissued treasury bonds. Net of interest payments, Confirmed 635,698 0.7%
spending grew by 8.37% y-y, to PHP227.8bn on higher allocations for local Deaths 12,866 0.1%
government units and disbursements by line agencies. Source: Manila Standard
As of 18 March 2021
OctoberJohns
Source: 2020 Hopkins University
Note: % change vs 17 March 2021

Disclaimer: The information, opinions and analysis contained herein are based on sources and data believed to be reliable but no representation, expressed or
implied, is made as to its accuracy, completeness or correctness. This material is only for the general information of the authorized recipients. In no event shall
BDO or its officers and employees, including the author(s), be liable for any loss/damage resulting from reliance, directly or indirectly, or information found within
this report.
 Sector/company news
 Airline losses hit PHP65bn in 2020. Local airlines have been left to survive on
their own amid
01 December 2020the onslaught of the pandemic, with combined losses reaching
PHP65bn last year, according to the Air Carriers Association of the Philippines
(ACAP). ACAP Executive Director and Vice Chairman Roberto Lim said the
country’s aviation sector has so far received only PHP800mn in terms of benefits
in the form of waiver of navigational fees under the Bayanihan 2 Act. Mr. Lim said
the amount is small compared to those extended by governments in neighboring
Asian countries, as well as in Europe and US, which have provided “a lot more
cash support and guarantees early on.” He added, “So for the Philippine aviation
sector, they have really been left alone to survive, and have been able to do so
due to the dedication of their respective management and the dedication of their
owners.” Mr. Lim added that about 33% or some 5,000 employees of local airlines
had already been terminated. Citing projections from the International Air
Transport Association, Mr. Lim said the global airline industry is expected to
recover by 2023 or 2024, subject to many factors such as government policies and
the rate of success of the vaccination process, among others. Mr. Lim further
added, “It’s a confidence game. The more success we have in vaccination process,
the more risk management approach is used by governments than just shutting
borders to travel mobility, the better it would be in terms of reviving the travel
sector”. Source: PhilStar
Commentary: We continue to remain cautious on tourism-related names amid
continued travel impediments and restrictions. We maintain our Neutral stance on
BLOOM, CEB, MAC, and MWIDE due to lingering pandemic fears and a
challenging operating environment. We note that though progress may be made
on the Philippine's vaccination program in the coming months, a negative
perception on the country's tackling of the virus may dissuade a speedy return of
tourists.
 MER awaits ERC approval on PSAs with SMC. The Manila Electric Co. (MER,
Buy) and two subsidiaries of San Miguel Corp. (SMC, Neutral) are currently
awaiting approval from the Energy Regulatory Commission (ERC) to implement
their power supply agreements (PSAs) that were successfully bid out recently. If
approved, savings to consumers will reportedly amount to an estimated total of
PHP20.93bn. Recall that SMC’s wholly owned power generation subs Excellent
Energy Resources Inc. (EERI, unlisted) and Masinloc Power Partners Co. Ltd.
(MPPCL, unlisted;) were recently named the best possible bids for MER's recently
concluded 1.8GW competitive selection process (CSP) last 26 Feb. EERI was
awarded a 1.2GW PSA for its gas-fired plant with a bid of PHP4.1462/kWh, while
MPPCL a 0.6GW PSA with a bid price of PHP4.2605/kWh. Based on the terms of
the CSP, both firms will supply MER starting FY24. Source: BusinessMirror,
Company data
Commentary: The approval of the PSAs by the ERC should allow MER to meet
its 2024/2025 energy requirements and ensure supply security for its distribution
franchise area. We have a Buy on MER as we expect distribution volumes to
continue recovering through this year. Meanwhile, we see SMC’s winning bids as
positive for earnings over the long-term though still subject to execution risks. The
positive development already appears priced-in however as SMC valuations are
already at a premium to peers (33.8x FY21F P/E vs 12.8x peer avg) supporting
our Neutral recommendation on the name.
 EDC’s PHP3bn green bonds to partly fund geothermal project. First Gen
Corp.’s (FGEN) wholly owned subsidiary, Energy Development Corp. (EDC)
reported that the net proceeds of its first tranche worth PHP3bn of fixed rate
ASEAN green bonds will partly fund its 29MW Palayan Bayan Binary Project
(PBBP). The first tranche, which will consist of three-year bonds due in 2024 and
five-year bonds due 2026, will have an oversubscription option of up to PHP2bn.
“Proceeds of the Bonds will be used primarily by the Company to finance or
refinance new and existing renewable energy projects that are considered ‘Eligible
Green Projects’ under the EDC Green Bond Framework,” according to EDC
management. Source: BusinessWorld
Commentary: Upside risks to our FGEN estimates from the timely completion of
the PBBP project may be limited given that the plant is estimated to contribute less
than 1% to the company’s total plant capacity as of 9M20. We have a Neutral on
FGEN given limited potential upside after its 9% ytd rally vs the PCOMP's -8%.

Disclaimer: The information, opinions and analysis contained herein are based on sources and data believed to be reliable but no representation, expressed or
implied, is made as to its accuracy, completeness or correctness. This material is only for the general information of the authorized recipients. In no event shall
BDO or its officers and employees, including the author(s), be liable for any loss/damage resulting from reliance, directly or indirectly, or information found within
this report.
 Fig. 1: 52-week PCOMP performance Fig. 2: Net foreign buying / (selling) on the PSE
6,000
8,000
01 December 2020 4,000
7,500
7,000 2,000

6,500 -
6,000

PHP mn
(2,000)
5,500
(4,000)
5,000
4,500 (6,000)

4,000 (8,000)
3,500 (10,000)
3,000
(12,000)
Mar 2020

Apr 2020

May 2020

Jun 2020

Jul 2020

Aug 2020

Sep 2020

Oct 2020

Nov 2020

Dec 2020

Jan 2021

Feb 2021

Mar 2021

Sep 2020

Oct 2020

Oct 2020

Oct 2020

Nov 2020

Nov 2020

Dec 2020

Dec 2020

Jan 2021

Jan 2021

Feb 2021

Feb 2021

Mar 2021

Mar 2021
Source: Philippine Stock Exchange Source: Philippine Stock Exchange

Fig. 3: PCOMP vs regional indices (% YTD) Fig. 4: Confirmed COVID-19 cases in the PH

10.1% Taiwan
Number of Cases % d-d chg (RHS)
9.3% Singapore 660,000 5%
8.1% Thailand
7.4% Vietnam 630,000
4%
6.6% Hong Kong
600,000
6.1% South Korea 3%
5.8% China H-Shares 570,000
5.3% India 2%
5.0% Indonesia 540,000

4.0% MSCI EM 1%
510,000
-0.1% Malaysia
-2.1% China 480,000 0%
15-Feb

17-Feb

19-Feb

21-Feb

23-Feb

25-Feb

27-Feb

1-Mar

3-Mar

5-Mar

7-Mar

9-Mar

11-Mar

13-Mar

15-Mar

17-Mar
-8.0% Philippines

-20% -15% -10% -5% 0% 5% 10% 15% 20%

Source: Bloomberg Source: Philippine Department of Health

Disclaimer: The information, opinions and analysis contained herein are based on sources and data believed to be reliable but no representation, expressed or
implied, is made as to its accuracy, completeness or correctness. This material is only for the general information of the authorized recipients. In no event shall
BDO or its officers and employees, including the author(s), be liable for any loss/damage resulting from reliance, directly or indirectly, or information found within
this report.
 Stock coverage
Mkt Cap Last Price Target Upside/ d-d % 5D % 1M % YTD %
Company Ticker (USD mn) Rating 17-Mar-2021 Price Dow nside change change change change
01 December 2020
Aboitiz Equity Ventures AEV 4,184 Neutral 36.10 47.00 30.2% 1.4% -14.0% -17.7% -23.6%
Aboitiz Pow er Corporation AP 3,787 Buy 25.00 30.00 20.0% -0.4% -0.8% -4.6% -5.8%
Alliance Global Group, Inc. AGI 2,027 Buy 10.18 11.20 10.0% 0.6% -5.4% -3.8% -4.0%
Ayala Corporation AC 9,770 Neutral 756.50 800.00 5.8% -0.1% -2.9% -4.2% -8.5%
Ayala Land ALI 10,810 Buy 35.65 45.00 26.2% -0.3% -4.6% -9.9% -12.8%
Bank of the Philippine Islands BPI 7,785 Buy 83.80 92.00 9.8% 1.6% 1.8% -1.6% 3.0%
BDO Unibank BDO 9,368 Not Rated 103.80 -0.8% -2.0% -1.7% -2.8%
Bloomberry Resorts Corporation BLOOM 1,539 Neutral 6.82 8.30 21.7% -2.8% -12.6% -10.6% -15.9%
Cebu Air CEB 542 Neutral 43.90 48.50 10.5% 2.6% -6.3% -12.4% -13.1%
Cemex Holdings Philippines CHP 319 Reduce 1.15 1.10 -4.3% 1.8% -0.9% -19.6% -20.7%
Century Pacific Food CNPF 1,257 Buy 17.24 22.00 27.6% 0.0% -1.0% -3.1% -1.5%
Converge ICT Solutions Inc. CNVRG 2,690 Buy 17.36 24.40 40.6% 1.6% -0.8% -4.3% 16.5%
D&L Industries DNL 1,082 Buy 7.36 9.20 25.0% 1.5% -4.9% 0.8% -4.4%
DMC Holdings DMC 1,421 Neutral 5.20 5.60 7.7% -0.8% -2.4% -4.1% -8.1%
Emperador Inc. EMP 3,352 Neutral 10.28 10.00 -2.7% 0.8% 1.2% 2.8% 1.8%
Filinvest Land Inc. FLI 589 Buy 1.18 1.30 10.2% 2.6% 0.9% 0.0% 5.4%
First Gen Corporation FGEN 2,281 Neutral 30.80 31.25 1.5% 0.0% 2.3% 2.8% 9.4%
Globe Telecom GLO 5,301 Neutral 1,930.00 2,205.00 14.2% -2.5% -4.4% -5.9% -4.9%
GT Capital Holdings, Inc. GTCAP 2,311 Neutral 521.50 550.00 5.5% 1.3% -5.5% -7.2% -10.9%
Intl Container Terminal Services ICT 5,370 Buy 127.60 135.00 5.8% 2.1% -0.6% 4.6% 3.3%
JG Summit Holdings, Inc. JGS 9,359 Reduce 60.45 60.00 -0.7% -1.1% -6.9% -9.4% -15.6%
Jollibee Foods Corp JFC 4,218 Neutral 185.00 172.00 -7.0% 2.0% 0.5% 3.5% -5.2%
LT Group, Inc. LTG 2,909 Buy 13.06 16.50 26.3% 0.5% -0.9% -8.2% -0.3%
MacroAsia Corporation MAC 188 Neutral 4.82 6.50 34.9% -2.6% -3.6% -12.8% -29.1%
Manila Electric Company MER 6,218 Buy 268.00 370.00 38.1% 0.2% -3.6% -6.9% -8.2%
Manila Water Company, Inc. MWC 627 Rating Suspended 14.74 1.7% 0.3% -7.8% -7.8%
Megaw ide Construction Corp. MWIDE 257 Neutral 6.20 6.00 -3.2% 1.0% -6.8% -21.0% -21.9%
Megaw orld MEG 2,283 Buy 3.48 4.30 23.6% 1.8% -4.9% -11.0% -14.7%
Metro Pacific Investments MPI 2,437 Buy 3.86 5.30 37.3% 2.1% -3.7% -8.3% -9.8%
Metropolitan Bank & Trust Company MBT 4,259 Buy 46.00 58.00 26.1% 1.1% -3.2% -4.6% -6.2%
Petron Corporation PCOR 602 Reduce 3.12 3.00 -3.8% -1.9% -8.5% -16.6% -21.8%
PLDT Inc. TEL 5,839 Buy 1,313.00 1,603.00 22.1% 1.7% -1.1% -2.9% -2.0%
Puregold Price Club PGOLD 2,042 Buy 34.40 54.00 57.0% -0.3% -3.1% -10.6% -16.1%
Robinsons Land RLC 1,967 Buy 18.40 23.00 25.0% 2.2% -3.1% -5.1% -13.2%
Robinsons Retail Holdings, Inc. RRHI 1,688 Buy 52.90 76.00 43.7% -1.1% -2.0% -8.6% -18.6%
San Miguel Corporation SMC 5,768 Neutral 117.80 125.00 6.1% 0.3% -5.0% -6.5% -8.0%
San Miguel Food and Beverage Inc. FB 7,420 Buy 61.00 80.00 31.1% 1.8% -5.0% -10.6% -9.0%
Security Bank Corporation SECB 1,869 Neutral 120.50 131.00 8.7% 0.8% -4.1% -6.5% -10.1%
Semirara Mining and Pow er Corporation SCC 1,048 Neutral 11.98 14.20 18.5% 0.0% -4.3% -6.7% -13.1%
Shakey's Pizza Asia Ventures PIZZA 217 Neutral 6.90 9.00 30.4% -0.1% -1.4% -8.0% -10.4%
SM Investments Corporation SM 24,920 Neutral 1,005.00 950.00 -5.5% 0.2% -4.9% -5.2% -4.2%
SM Prime Holdings SMPH 20,806 Neutral 35.00 36.00 2.9% -1.4% -2.2% -6.0% -9.1%
Universal Robina Corporation URC 5,671 Buy 125.00 185.00 48.0% -0.4% -2.8% -10.7% -18.0%
Vista Land & Lifescapes VLL 1,046 Buy 4.00 4.60 15.0% 1.3% -5.7% -7.4% -14.5%
Wilcon Depot, Inc. WLCON 1,477 Buy 17.50 21.00 20.0% 1.7% 1.9% -2.8% 3.6%
Source: BDO Securities estimates, Bloomberg
Note: Prices as of 17 March 2021

Disclaimer: Our rating system is a relative system indicating expected performance against the PSEi (PCOMP:IND) Benchmark. "Buy” indicates that the
analyst expects the stock to outperform the Benchmark over the next 12 months, “Neutral” in line with the Benchmark, “Reduce” to underperform the
Benchmark, and “Suspended” for a halt on company coverage to comply with applicable regulations and/or firm policies. An analyst’s Target Price (TP), is
an assessment of the current intrinsic fair value of the stock based on an appropriate valuation methodology determined by the analyst. 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.