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.
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