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