Market Talk (EW, CHIB, ANS, GMA7)

Banks: EW to issue up to PHP5b preferred shares, plans new ventures. East West Banking Corp (EW – BUY) disclosed yesterday it will issue up to PHP5b worth of preferred shares which will qualify as additional Tier 1 capital under Basel III rules. We estimate this to boost Tier 1 capital by 3pps to 15.7%. Other details have yet to be disclosed. The bank also plans to engage in bancassurance and non-life insurance as well as establish a wholly-owned finance and leasing company.

Banks: CHIB PHP8b rights offering priced at PHP49.50. China Banking Corp’s (CHIB – HOLD) PHP8b worth of rights offering was priced at PHP49.50/sh. Eligible shareholders will get one rights share for every existing 8.83 common shares. This means around 162m new common shares could be offered, increasing total shares by 11% to 1,589m. Proceeds will be used to support CHIB’s expansion plans and hike its capital base in accordance with Basel III regulations. Ex-rights date is on 21 April, record date is on 14 April. Offer period is from 30 April to 7 May.

Conglomerates: ANS profit down 7.5% YoY to PHP1.34b. A. Soriano Corp’s (ANS – BUY) reported net income went down 7.5% YoY to PHP1.34b in 2013, lower than our forecast of PHP1.75b. The company registered a net loss of PHP54m in 4Q13. The decline was primarily driven by lower service revenues and investment gains in 4Q13 which
both went down 41% and 95%, respectively. We will look at the full financials and issue a more detailed report shortly. For now, we have a BUY rating on ANS based on a TP of PHP7.64.

Media: GMA7 posts 3% earnings growth in 2013. GMA Network Inc (GMA7/ GMAP – SELL) disclosed its 2013 net income grew 3.1% to PHP1.67b, in line with our expectation. Total revenues went up 7.2% to PHP13b, 3% higher than our PHP12.6b estimate and implying 4Q13 top line increased 16% to PHP3.2b. Full-year airtime revenues, which accounted for more than 90% of total top line, grew 8.1% to PHP11.7b boosted by PHP724m in election-related ads. Excluding this, regular airtime revenues grew only 1.4% to PHP11b. Subscription and other revenues dropped 1% to PHP1.2b on flattish international revenues and lower theatrical receipts. Total operating expenses went up 7.8% to PHP10.6b driven mainly by higher production costs while general and admin expenses increased by only 2%. We will be issuing a more detailed report but for now maintain our SELL rating on the stock with implied downside of 12% to our PHP7/sh target price.

-ATR Kim Eng