HOUSE is on fire? Let's see

Today, HOUSE closed with -0.63% from its previous price and the support from 78.6% Fibonacci level was broken. Next support will be at 7.66 (61.8% Fibo level) and may be a weak support because there's not much activities on this level based on the daily chart below.

Overall, HOUSE's daily chart is in bullish mood. Its cloud started to crossover (turns green) where it gives us a strong bullish sign because the current price is above the cloud.

Is this the time to rise for PGOLD ?

PGOLD closed with a doji candlestick which tells that there is an indecision on the price of the stock. Since this happens during a downtrend, this may signify a reversal sign. Observe on the RSI trendline below, it shows a buy sign.

But we need a confirmation tomorrow if it's really a buy.

EMP to go up tomorrow?

EMP closed today above the 23.6% fibonacci line which is now acting as support. This close was supported with huge volume as you can see on the daily chart below.

Relative Strength Index or RSI is value at 42.73 which is very far from overbought and has a long way to go.

Market Talk (PNB, RCB, AGI, DMC, SMC, FGEN)

Banks: PNB’s merger benefts on the horizon. Maintain BUY on Philippine National Bank (PNB) on post-rights TP of PHP109. PNB posted 1Q14 net income of PHP1.34b, down 52.6% YoY and resulted in 

ROE of 6.3%. This is in line with our full-year estimate of PHP5.43b (25% of FY14F) but lower than consensus forecast of PHP7.28b (18%). Growth mainly came from its core lending business with interest income on loans improving 29.1%. Meanhwile ongoing integration is seen to provide some savings of about PHP500m annually once the bank fully relocates its corporate headquarters to Makati City from Pasay City, which might happen next year. We believe PNB’s main attraction as an acquisition target will continue to support its share price. 

Banks: Reaping investment benefits for RCB. Maintain BUY on Rizal Commercial Banking Corp (RCB) on revised TP of 65, equivalent to 1.6x 2015F PBV. RCB posted a 25% YoY drop in 1Q14 net profits to PHP1.33b. This was mainly due to an 80% slump in trading gains to PHP433m (21% of FY forecast). Nevertheless, net interest income came in line with expectations at PHP3.8b (25% of forecast), up 26.3% on the back of a 24% loan growth. Strong lending seen in 1Q14 is a good indication of a favourable return on investments in network expansion and new core banking system. Need for capital remains a 

catalyst for M&A oppostunities. 

Conglomerates: AGI grows 1Q14 profits 11% to PHP3.9b. Alliance Global Group Inc’s (AGI – Under review) 1Q14 net income was PHP3.9b, 11% higher YoY driven mainly by higher profits from Megaworld Corp. (MEG – BUY),Travellers International Hotel Group (RWM – BUY) and Emperador Inc (EMP – not rated). MEG’s net income rose 49% to PHP2.69b supported by strong residential sales from its various townships and higher leasing income from its office and retail portfolio. Meanwhile RWM, benefited from lower junket commissions and salaries which underpinned a core earnings growth of 86% to PHP1.9b. EMP grew earnings 19% to PHP1.72b driven by higher sales volume and lower advertising expenses Overall profit growth was tempered by a decline in profits from Golden Arches Development Corp (GADC) which suffered from higher raw materials costs. 

Conglomerates: DMC grows 1Q14 core profit 39% to PHP2.5b. DMCI Holdings Inc. (DMC – Under review) reported 1Q14 net income of PHP2.5b, down 75% YoY due to onetime gains in 1Q13 from the sale of their stake in Maynilad Water Services Inc. Excluding these, core net income grew 39%. Growth was underpinned by higher profits from coal mining (+756% YoY profit growth to PHP558m), construction (+87% to PHP161m) and real estate (+20% to PHP762m). Coal mining benefited from higher sales volume and higher composite average price per metric ton. Construction margins expanded from building and

infrastructure projects while real estate recognized higher sales for the period. Core profit growth was tempered by the temporary stoppage of nickel operations, scheduled maintenance of Calaca Unit 2 and lower profit contribution from Maynilad. 

Utilities: SMC and FGEN to partner with K-water for Angat hydro plant. As reported by Business World, San Miguel Corp (SMC – Not rated) is in talks with First Gen Corp (FGEN – HOLD) to partner with Korea Water Resources Corp (K-water) for the operations and management (O&M) of the 218-MW privatized segment of the Angat hydroelectric power plant. According to SMC’s president and CEO Ramon Ang, SMC and FGEN will take 30-30 interest while K-water will own 40%. However, no definitive agreements with FGEN have been signed yet. Further, Mr Ang said he is expecting the turnover of the asset to K-water next month. Angat dam provides water for the Angat hydro power plant as well as for

irrigation and potable water in Metro Manila.

Banks: Moody’s raises outlook on PNB and RCB. Credit rating agency Moody’s Investors Service raised its outlook on Philippine National Bank (PNB – BUY) and Rizal Commercial Banking Corp (RCB – BUY) to positive from stable on expectations both will have better profitability and financial health. urrently, PNB is rated as Ba2 or two notches below investment grade. PNB’s baseline credit assessments was raised to ba3 from b1, comparable with regional peers as Moody’s sees improvement in PNB’s financial profile following its merger with Allied Banking Corp. Meanwhile RCB’s credit profile is expected to improve, specially once it implements its announced PHP10b Basel III-compliant Tier 2 capital-raising plan. Moody’s notes RCB’s ability to implement capital-raising and maintain capital levels above minimum requirements will enable the bank to support its business growth targets.

Banks: Real estate exposure of 21.8% at end-2013, may push for stress test. The central bank (BSP) is planning to require banks to submit an exit plan if real estate stress test on banks result in significant impact on their credit standing. The stress test looks at the effect of changes in interest rates and other factors that affect the real estate sector. Data released from the central bank show the total real estate exposure of universal, commercial and thrift banks rose 7.1% higher QoQ to PHP1t at end-2013, driven by a 7% rise in real estate loans to PHP843m. Of this, 60% of loans were granted to commercial entities like land developers and construction firms and the rest were made up by loans to borrowers buying residential properties. Meanwhile investments in real estate securities grew 7.8% to PHP163.6b. In all, banks’ real estate exposure represented 21.8% of their total loan portfolio. NPLs were manageable at 2.8%, lower than 3.2% posted last quarter. 

Banks: Consumer credit continues growth. As of end-2013, consumer loans of universal, commercial and thrift banks jumped 15% YoY and 2.7% QoQ to PHP721.5b. Consumer lending made up 15.8% of total loan portfolio, lower than regional peers with Malaysia at 60.9%, Indonesia at 28.8%, Thailand at 27%, and Singapore at 26%. Residential real estate loans accounted for 44% of consumer loans and expanded 21.1% to PHP320b. The central bank notes this suggests a notable increase in the purchase or rent of residences near business districts by young professionals, of luxury homes (condominiums) by high-income expatriates, and of properties for the use or investment by OFWs. Auto loans (26% of consumer) rose 16.5% to PHP186.3b, while credit card receivables (22% of consumer) climbed 5.9% to PHP157b. Other consumer loans which include personal and salary loans (8% of consumer) grew 2% to PHP57b. Meanwhile, nonperforming loans (NPL) fell 7% to PHP118b. NPL ratio improved to 5.34% from 6.13% last quarter and 6.71% in end-2012. NPL cover ratio was better at 70.6%. Notably, consumer NPLs are just 0.84% of banks’ total loan portfolio.

Will HOUSE bounce this week?

Observing in the daily chart below, you can see that the RSI is touching the trendline which indicates a buy signal. Last candlestick seen on Friday is clinging at the 78.6% Fibo line. Is this going to hold and bounce or will it go down to 6.01? Let's see...

Here's the very interesting part, observe the Kijun-sen line, the 50% Fibo line and the Senkou line are all sync in 7.20. There's a big chance that the price will be attracted to this levels and may act as a strong resistance.

Market Talk (CEB, PAL, EW, RCB, MBT, GLO, EDC)

Transport: Fare war over, time to make money on CEB. Management meetings with Cebu Pacific (CEB) and Philippine Airlines (PAL) affirmed that the fare war of 2H13 has abated. Industry supplydemand

is healthy; expect YoY improvement in load factor and yields. Profit outlook has improved. Maintain BUY, with 10% higher TP of PHP62.50. 

Banks: EW’s above-industry NIM maintained. Downgrade to HOLD and TP of PHP31.80 with limited 2% upside, equivalent to 1.6x 2014F P/BV relative to 12.9% ROE. Drop in 1Q14 earnings was expected due to normalizing trading gains. Core lending business remains strong with 38% loan growth and 8% NIM. (Details on page 5.)

Banks: RCB 1Q14 earnings down 25%. Rizal Commercial Banking Corp (RCB – BUY) posted a 25% YoY decline in 1Q14 net profits to PHP1.33b. This accounts for 22% of our FY estimate of PHP6b. Net

interest income came in line with expectations at PHP3.8b (25% of forecast), up 26.3% on the back of a 24% loan growth. All market segments remain robust as corporate, SME and consumer lending jumped 16%, 38%, and 23% respectively. Microfinance also increased with 28% growth in loan disbursements and 93% surge in loan demand. NIMs reportedly improved to 4.23% in 1Q14 from 4.11% in 1Q13. The bank has yet to disclose trading income which was quite strong at PHP2.1b in the same period last year. Excluding this account, gross revenue increased 11.4% YoY to PHP5b in 1Q14. Meanwhile, total deposits grew 30% with low-cost rising 27%. This led to a lower loan-todeposit ratio of 81.7% from 85.4% in 1Q13. We shall provide more details once the line-by-line results are available.

Banks: MBT earnings reached PHP5.7b in 1Q14. Metrobank (MBT – HOLD) reported 1Q14 net income of PHP5.7b, down 50% YoY and accounts for 36% of our FY estimate. Net interest income surged 36% to PHP11.2b as loans grew 19% on steady NIMs of 3.9%. Non-interest income fell 52% on a 92% drop in trading gains. Recall that MBT gained a record PHP11.3b in treasury income in 1Q13. Other the other hand, the bank posted higher-than-expected miscellaneous income of PHP6b in 1Q14 which came from gains on sale of real asset properties and investments of non-core assets. Operating expenses fell 5% while provision for credit losses was relatively flat at PHP1.15b. Meanwhile, MBT’s PHP256b in available-for-sale securities at end-March 2014 resulted in net unrealized losses of PHP4.09b in the balance sheet. 

Telecom: GLO to expand services in Spain. In a disclosure, Globe Telecom Inc (GLO – HOLD) through Globetel Internacional European Espana S.L. (Globetel Espana) plans to launch mobile communications services in Spain within 2014 in collaboration with Ingenium Outsourcing Services S.L.U (IOS). Globetel Espana and IOS already signed a memorandum of understanding. The services to be offered include voice calling, SMS, load top-up and mobile data and are targeted to Filipinos based in or visiting Spain.

Utilities: EDC targets completion of Burgos wind expansion in March 2015. As reported by Business World, Energy Development Corp (EDC – BUY) expects start of operations of the 63-MW expansion of its Burgos wind farm in March 2015, while the first 87-MW segment is scheduled in 4Q14. The Burgos wind project is estimated to cost USD450m with a 70-30 debt-equity structure. Project financing is expected to be closed within 4Q14. The Burgos wind project is vying for the feed-in-tariff (FIT) under the government’s renewable energy program. However, only the first 200 MW wind projects to complete will be awarded with FIT under the first round of installation targets. As of 31 January, ten wind projects with a total equivalent capacity of 563.5 MW already received certificates of confirmation of commerciality under the FIT system.

Market Talk (GMA, TEL, MWC, PCOR, AP, AEV, NIKL, TA, PBB,

Media: GMA’s lower ad revenues hit earnings. 1Q14 net income down 46% to PHP325m as revenues fall 12% due to lower regular ads and absence of election-related ads. 1Q14 income is 19% of our 2014F

forecast of PHP1.75b. Maintain SELL with 10% potential downside to our PHP7.00 TP. (Details on page 4).

Telecoms: TEL’s 1Q14 core earnings up 2% YoY. Philippine Long Distance Telephone Co’s (TEL – BUY) 1Q14 results were mixed, in line in terms of profits but fell slightly short on the revenue side. Core income grew 2% YoY to PHP9.76b, representing 24.1% of our full-year estimate. Service revenues of PHP41.22b were higher 3% but slightly lower than our full-year growth target of 5%. Non-SMS data continue to be the main growth driver, with revenues up 22%. Cellular voice revenues grew 6%, partially offsetting declines in SMS, down 10%. Meanwhile, LEC, NLD and fixed international were relatively flat at PHP6.8b. Blended cellular ARPU was slightly lower YoY at PHP124 from PHP125 in 1Q13 but down 5% from the seasonally high 4Q13 ARPU of PHP130. TEL added 450k net subscribers in 1Q14, bringing total cellular subscribers to 70.49m. Broadband had a total of 3.55m subscribers, representing a 136k increase from end-2013. Fixed line subscriber base remained at 2.1m.

Utilities: MWC posts 7% growth in 1Q14 earnings. Manila Water Co Inc’s (MWC - HOLD) 1Q14 results came in better than expected with net profits up 7% to PHP1.43b. We were expecting flat growth this quarter following the suspension of rate adjustments for the East and West zones late last year due to the ongoing arbitration case between the Metropolitan Waterworks and Sewerage System (MWSS) and water

concessionaires MWC and Metro Pacific Investments Corp (MPI) subsidiary Maynilad. EBITDA grew 4% to PHP2.82b, but net earnings rose at a faster pace as depreciation and amortization expenses declined 4% to PHP594m while interest expenses stayed relatively flat at PHP406m. MWC attributed the decline in depreciation expenses to the reversal of certain capital expenditures booked in 2013. As a percentage to earnings, MWC's East zone concession contributed close to 90% of the company's consolidated earnings with net profits of PHP1.28b, up 6%.

Energy: PCOR 1Q14 net income reaches PHP2.23b. Petron Corp (PCOR – BUY) announced 1Q14 consolidated net income (before minorities) of PHP2.23b, 28.6% of our full-year forecast (before minorities and preferred dividends) of PHP7.81b. Although results were flat YoY, this is triple 4Q14’s PHP740m and is already 44% of full-year 2013. Consolidated revenues reached PHP125.2b, up 12%, while consolidated volume sales grew 4% to 20.7m barrels. Considering the company faced several challenges in 1Q14 as it

prepared for the completion of RMP-2, we believe the results are good. There was a scheduled refinery shutdown in February to mid-March. However, volume sales in the Philippines still grew 2% as the company was able to prepare in advance. We expect to get more details in the analysts’ briefing and once the full financials becomes available.

Utilities: AP’s core income down 3% YoY to PHP4.4b. Aboitiz Power Corp (AP – HOLD) announced core net income went down 3% YoY to PHP4.4b in 1Q14, representing 25% of our full-year estimate of PHP17.6b. The company attributed the decline to lower income contribution from the power generation business, which dropped 3% to PHP3.8b due to lower profits from Tiwi-Makban (higher steam cost) and Pagbilao (expiry of tax holiday). The power distribution group also registered lower earnings, down 17% to PHP618m due to higher operating costs. We expect to get more details on the results in the analysts’ briefing

this afternoon.

Conglomerates: AEV’s core income down 20% YoY to PHP4.4b. Aboitiz Equity Ventures Inc (AEV – SELL) reported a 20% YoY drop in 1Q14 core net income to PHP4.4b. This represents 24% of our full-year estimate of PHP18.53b. Aboitiz Power Corp (AP – HOLD) contributed earnings of PHP3.4b, down 3% as both AP’s power generation and distribution businesses registered lower profits in 1Q14. Banking affiliate Union Bank of the Philippines (UBP – HOLD) also contributed lower earnings, down 59% to PHP731m because of lower trading gains. Food subsidiary Pilmico Foods Corp posted a 4% increase in income contribution to PHP339m while property unit Aboitiz Land Inc registered a 181% increase to PHP121m. We expect to get more details in the analysts’ briefing this afternoon.

Mining: NIKL 1Q14 surprises. Nickel Asia Corp (NIKL-BUY) announced unaudited financial and operating results for 1Q14 with attributable net income of PHP593.7m, a 492% YoY increase. A one-time gain of PHP416.6m was booked from the revaluation of equity interest by its 60% owned subsidiary Rio Tuba Nickel Mining Corp in Coral Bay Nickel Corp (CBNC). Ownership increased to 10% from 6% of CBNC. Core income of PHP177.1m is 77% higher stemming from product sales to the new Taganito HPAL (THPAL). Production volume of 2.65m WMT was up 52%, mostly coming from the feed to the THPAL. 1Q results normally comprise 10% of full-year production and at the 1Q14 rate might beat guidance volume of 16m WMT. While 1Q14 production volume is ahead of our forecast, the financial result is off 79% based on 1Q14 core income and full-year average prices. However, we expect the numbers to catch up with the current higher prices than our full-year assumption and higher volume, of which usually 30% is for 2Q, 41% for 3Q, and 19% for 4Q.

Oil&Gas/Utilities: Updates on service contracts 55 and 51. In a disclosure, Otto Energy Ltd (Otto; ASX: OEL) announced the Department of Energy acknowledged the revised timeline of the work program of service contract (SC) 55 for an extension of around 14 months. The extension followed an interruption in SC 55’s work schedule due to the delay in issuance of the Strategic Environmental Plan clearance. Under the revised work program, two deepwater wells will be drilled. The first well should be drilled on or before 23 Dec 2014 while the second well is between 23 Dec 2014 and 23 Dec 2016. Selection of a new joint venture partner which will participate in the drilling of the Hawkeye-1 exploration well is ongoing. Moreover, in a separate disclosure, Otto also announced it elected to withdraw from SC51 due to drilling safety concerns. The detailed analysis of the drilling well results showed a well cannot be drilled safely at the Duhat-2 well location given certain geological issues. Trans-Asia Oil and Energy Development Corp (TA – BUY) has 6.82% and 6.67% participating interests in SC 55 and SC 51, respectively.

Banks: PBB declares dividends. Philippine Business Bank (PBB – BUY) yesterday declared a 25% stock dividend, subject to stockholders and central bank approval. Outstanding common shares will increase by 86m to 429m post stock dividend. Likewise, PBB declared a total PHP62.3m or PHP1/sh cash dividends for preferred stockholders. The latter has not been factored into our forecast and would bring our 2014F net income to common shareholders lower by about 7% to PHP861m.


-ATR

Gaming sector: PAGCOR issues statement on income tax issue

Gaming sector: PAGCOR issues statement on income tax issue

Agreement finally formalized after more than a year

The Philippine Amusement and Gaming Corporation has entered into an agreement with its 

Entertainment City Licensees, namely: Travellers International Hotel Group (RWM), Bloomberry Resorts 

and Hotels (BLOOM), MCE Leisure (Philippines) Corporation, and Tiger Resorts Leisure and 

Entertainment, Inc., on a mutually beneficial solution to address the additional exposure to income tax 

brought about by Bureau of Internal Revenue (BIR) Revenue Memorandum Circular No. 33-2013 (RMC 

33-2013) dated April 17,2013.

PAGCOR and the Licensees have agreed to adjust the license fees commencing April 1, 2014 by 10 

percentage points of Gross Gaming Revenues. This adjustment will address the RMC 33-2013 which 

imposes corporate income tax on Entertainment City Licensees. This adjustment is a temporary measure 

to address the unilateral BIR action and not intended to modify the Provisional Licenses. 

A positive signal to investors. The agreement between PAGCOR and the licensees sends a positive 

signal to investors that PAGCOR is willing to uphold its Provisional License with the licensees which 

states that the license fees that are to be paid to PAGCOR are “in lieu of all taxes”. We estimate that the 

reduction in license fees will effectively cancel out most the impact of the corporate tax rate, with impact 

varying based on the cost structure of the gaming companies. In addition, we believe that this agreement 

between PAGCOR and the licensees is expected by the public and will not change the fundamentals of 

the gaming companies under our coverage.



-COLfinancial

Market Talk (EEI, AP, ICT)

Construction: EEI FY13 earnings down 6.4%. EEI Corp (EEI - BUY) posted FY13 net income of PHP915.7m, down 6.4% YoY but higher 2% if we exclude one-off recovery amounting to PHP79.9m in FY12. This is 10% higher than our FY13 estimate and 12% better than consensus forecast. Revenues went down 23% as domestic construction fell 8.8% while services plunged 71.7%. EEI attributes the decline from delays in production due to adverse weather conditions and completion of several projects. Equity in net earnings from its 49% JV with Al Rushaid Construction Co (ARCC) in Saudi Arabia came in higher than expected as it rose 22.7% to PHP529m. EEI ended the year with PHP28.04b order book, up 37% YoY. We shall provide more details later.

Utilities: AP unit wins bid for 153.1-MW Naga complex. A unit of Aboitiz Power Corp (AP - HOLD) has reportedly won the bid for the 153.1-MW Naga power plant complex in Cebu. The auction was the third for the Power Sector Assets and Liabilities Management Corp (PSALM), after two failed attempts last year after only one firm participated in both auctions. As reported by the Businessworld, the notice of award was issued to Therma Power Visayas last 30 April. Therma Power submitted a bid of PHP1.09b compared with the PHP859m tendered by its lone competitor SPC Power Corp (SPC - Not rated). The turnover of the power plant will happen upon PSALM’s receipt of payment for the asset. The Naga power complex consists of three power plants: the 52.5 MW Cebu 1 and 56.8-MW Cebu 2 coalfired thermal power plants and the 43.8-MW Cebu palnt, which consist of six 7.3-MW diesel-fired power plants.

Ports: ICT wins 26-year contract in Australia. International Container Terminal Services, Inc (ICT–HOLD) through its 90%-owned subsidiary Victoria International Container Terminal Ltd (VICTL), won a 26-year expansion and operations contract for the Port of elbourne, the largest container and general cargo port in Australia. This involves design, construction, commissioning, operation, maintaining and financing of the Terminal and Empty Container Park (ECP) at Webb Dock East (WDE) in the Port of Melbourne. Total investment is estimated to reach USD508m. Phase 1 to start in 4Q14 and should be operational by Dec 2016. Phase 2 to become operational in Dec 2017. When fully developed, the Terminal will have 6 Post-Panamax Ship-to-Shore cranes and will be able to handle up to 1.4 million TEUs annually and the ECP will have a capacity of 280,000 TEUs.

-ATR

Market Talk (AGI, RWM, EMP, PX)

Conglomerates: AGI posts strong 2013 earnings, up 23.7% YoY. Alliance Global Inc (AGI – Under Review) announced FY2013 net earnings grew 23.7% YoY to PHP23.10b from PHP13.9b mainly driven by its hard liquor and real estate businesses. Earnings for 4Q13, however, were down 53.5% to PHP2.8b dragged by losses of PHP835m (from profits of PHP3.16b) incurred by Travellers International Hotel Group Inc (RWM – BUY). Listed units Emperator Inc (EMP – Not rated) and Megaworld Corp (MEG – BUY) both posted higher earnings in 2013, up 17.4% to PHP5.8b and 21.95 to PHP9.04b, respectively. Despite higher excise taxes in 2013, EMP posted a 6% growth in volume sales to 33m in 2013 from 31.2m in 2012. MEG’s real estate revenues sales grew 16.9% to PHP91.25b while rental income rose 21% to PHP6b. Meanwhile, RWM turned in lower net profits of PHP3.5b, down 46% due to lower gaming revenues and higher costs (24 March, “RWM: Looking forward to a better FY14”).

Mining: PX’s 1Q13 core income more than doubles to PHP278.4m. Philex Mining Corp’s (PX – BUY) core net income (excluding one-time insurance gain) more than doubled to PHP278.4m from PHP132.4m. Consolidated revenues more than tripled to PHP2.9b (higher 1.5% from our FY forecast) from PHP889.3m in 1Q13 on increased metal output. Total tons milled surged nearly fourfold to 2.397 million tons from just 611,801 tons, higher 1% than forecast. Gold production rose almost 2.5x to 26,442oz (lower 8.8% from our FY forecast), boosting revenue 227% to PHP1.61b, on better realized prices of USD1,371/oz (vs USD1,250/oz forecast). Similarly, copper produced almost quadrupled annually to 9,468,009lbs, increasing revenue by 246% to PHP1.178b with realized prices for this metal at USD2.85/lb (vs USD3.34/lb forecast). Combined revenues from silver, coal, and petroleum more than doubled to PHP124.4m from PHP55m, partly due to the higher production at Galoc oil field. PX production is on target to hit 9.5m mt of ore but the grades are not behaving similar to 4Q13 and may miss full year forecast if they do not move up. We will monitor the progress and review the numbers.

-ATR

Market Talk (MER, SECB, UBP, SCC, AT)

Utilities: Soft demand results to flat 1Q14 for MER. Manila Electric Co’s (MER) 1Q14 core net income was up 1.6% YoY to PHP4.09b. Top line results were flattish with distribution revenues and energy sales only increasing by 1.3% and 1.7%, respectively. Maintain HOLD with TP of PHP280 for now. (Refer to page 3 for details.)

Banks: SECB 1Q14 earnings up 17%: Security Bank Corp (SECB – BUY) reported net income increased 17% YoY to PHP1.43b in 1Q14, representing 27% of our full-year estimate of PHP5.23b and 25% of consensus forecast of PHP5.75b. This translates to an ROE of 13.8%. Net interest income surged 42% to PHP2.78b on the back of a 39% expansion in loans. This is faster than our FY14 loan growth assumption of 22%. Deposits improved 49% to PHP211b, bringing loan-to-deposit ratio to 79% in 1Q14 from 84% in 1Q13. No other details were provided. Given better-than-expected core income, we estimate NIMs expanded YoY. We believe the bank is on track in building its core lending business to compensate for the anticipated weakness in treasury income. Pending detailed results, we are keeping our forecast and BUY rating on SECB shares.

Banks: UBP declares stock dividend. Union Bank of the Philippines (UBP–HOLD) has declared a 65% stock dividend, equivalent to 416.9m shares or PHP4.17b. Fractional shares will be paid in cash for PHP120/sh on record date to be set upon approval of regulators. The bank increased its authorized capital stock by PHP16.4b with PHP6.4b of common shares and PHP10b of non-voting preferred shares.

Mining/Utilities: SCC declares PHP12/sh cash dividends. In a disclosure, Semirara Mining Corp (SCC – HOLD) declared yesterday regular cash dividends of PHP12/sh, maintaining last year’s dividend payment. All common stockholders as of record date 15 May will be entitled to the dividend payment on 28 May. Based on yesterday’s

closing price, this translates to a dividend yield of 3.0%. The cash dividends are on top of a 2:1 stock dividends amounting to PHP712.5m declared last 6 March.

Mining: AT declares PHP0.15/sh special cash dividend. Atlas Consolidated Mining and Development Corp’s (AT – BUY) Board of Directors approved yesterday special cash dividend of PHP0.15/sh, translating to a 1% dividend yield based on yesterday’s closing price. Record date is set on 14 May with payment date on 9 June.

-ATR