Banks: Strong core operations in 1Q14 for BDO. BDO Unibank Inc’s (BDO – HOLD) 1Q14 net income of PHP5.5b was down 46% YoY, but generally in line with our expectations. We anticipated easing in treasury gains, and these indeed fell 76% to PHP2.2b in 1Q14 from an exceptional 1Q13 trading income of PHP9.2b. Nevertheless, strong performance from the bank’s core businesses supported the bottom line. BDO also declared a special cash dividend of PHP0.90/sh, bringing annual cash dividend to PHP2.10/sh. This is higher than expected and translates to a dividend yield of 2.4%. Management has also set an earnings target of PHP22.8b in FY14, only 0.8% higher YoY and close to our forecast of PHP22.7b. (Details on page 4).
Banks: UBP 1Q14 earnings down on lower trading gains. Union Bank of the Philippines (UBP – HOLD) posted lower-than-expected 1Q14 net income of PHP1.5b, down 61.5% YoY. This accounts for 18% of our FY forecast and 20% of market consensus estimate. Treasury income fell 87.5% to PHP422m from PHP3.4b in 1Q13. However, loans expanded 45% YoY to PHP142.5b, boosting net interest income by 25%. Fee-based earnings also gained traction as it surged 73% to PHP882m. Thrift bank unit City Savings Bank reportedly contributed PHP400m in net profit. For now, we keep our HOLD rating on the bank based on our TP of PHP127/sh.
Cement: HLCM posts 17% profit growth in 1Q14. Holcim Philippines Inc (HLCM – BUY) disclosed its 1Q14 net income grew 17% YoY to PHP1.67b or 33% of our 2014 profit forecast of PHP5.1b. Excluding one-off gains of PHP99m relating mainly to the gain on sale of investment in 1Q13, recurring revenues increased 25%. Total revenues went up 12.4% to PHP8b as overall industry volume grew 8.6% on sustained growth in public and private construction activities nationwide. Operating income grew faster at 25% to PHP2.4b, resulting in a 3pptoperating margin improvement due to production and distribution efficiency enhancements undertaken by the company. We will be coming up with a more detailed report but for now maintain our BUY rating.
Consumer: EMP 1Q14 earnings up 19% YoY. Emperador Inc (EMP – Not rated) disclosed 1Q14 net income of PHP1.7b, up 19% YoY and 25% of Bloomberg consensus profit estimate of PHP6.9b for 2014. Total revenues went up 17% to PHP7.7b from 1Q13’s PHP6.6b on higher volumes. No other details were provided by the company.
Utilities: TA signs PHP500m 10-year note. Trans-Asia Oil and Energy Development Corp (TA – BUY) disclosed it executed last 25 April a PHP500m 10-year fixed rate corporate notes facility. The note was signed with China Bank Corp (CHIB – HOLD) and Banco De Oro Unibank Inc (BDO – HOLD). Proceeds will be used to fund projects and working capital. However, terms of the loan were not disclosed.
Mining: MARC responds to MGB’s mine operations suspension order. In response to the Mines and Geosciences Bureau’s (MGB) suspension of its Carrascal, Surigao del Sur operations, Marcventures Mining and Development Corp (MARC – Not rated) disclosed that contrary to MGB’s claim, the company has validly obtained all the necessary permits from the bureau and its current mine operations in Carrascal are within the approved mining area. MGB argues the 300-ha portion of the contract area approved under the Partial Declaration of Mining Project Feasibility (DMPF) should be situated only in the Cantilan area. However, according to MARC, the said DMPF was issued in connection with Mineral Production Sharing Agreement (MPSA) No. 016-93-XI which covers a total mining area of 4,799 ha and that the DMPF did not state that the 300-ha portion is limited only to the Cantilan area. Likewise, Environmental Compliance Certificates were issued in 2008 and 2013 which represents the entire 4,799-ha area under the MPSA. MARC reiterates it has consistently acted in good faith and has been in constant coordination and compliance with the MGB and the company is set to pursue all remedies available to protect its stakeholders’ interests.
- ATR
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