Market Talk (CIC, MBT, PGOLD, COSCO, PBC)

Consumer: CIC 1H14 net income up 45%. Concepcion Industrial Corp (CIC – BUY) announced during its annual stockholders’ meeting yesterday its 1H14 net sales grew 28% while net income after minority interest went up 45% YoY. This implies 1Q14 net sales of PHP4.8b and net income after minority interest of PHP346m, equivalent to 51% and 54% respectively of our corresponding full year forecasts. 2Q14 top line 

growth slowed to 20% after coming off a 39% in 1Q14. The lower 2Q14 growth is expected as 1Q14 net sales got a boost from trade loading prior to the price increase in 2Q. The 2Q14 numbers should include 

earnings contribution from 51%-owned Otis Elevators and Escalators Phils which was consolidated starting end-March 2014. Stockholders likewise approved the 30% stock dividend to shareholders of record as 

of 22 August with payment date of 8 September. Pending additional details regarding CIC’s 1H14 results, we maintain our BUY rating. 

Banks: MBT plans to raise PHP20b in LTNCDs. Metrobank (MBT –HOLD) today disclosed plans of issuing up to PHP20b in long-term negotiable certificates of deposit (LTNCD). Other details have yet to be 

set when relevant regulatory approvals have been obtained. 

Banks: Lucio Co buys 37.67% of PBCom for PHP5.98b. Businessman Lucio Co, owner of retailer Puregold Price Club Inc (PGOLD – BUY) and holding firm Cosco Capital Inc (COSCO – Not rated) yesterday bought 181m common shares of mid-sized commercial bank Philippine Bank of Communications (PBC – Not rated) for PHP5.98b or PHP33/sh, a 48% discount from PBC’s last closing price of PHP64. This represents 37.67% of PBC post capital stock issuance which will raise outstanding shares 60% to 481m shares. As of 1Q14, PBC ranked 18th out of 36 Philippine commercial banks by asset size with PHP59b in assets, PHP27b loans, and PHP48b deposits. It recorded PHP37m and PHP1.6b net earnings in 1Q14 and FY13, respectively. PBC operates with 71 branches and 160 ATMs located nationwide. This transaction should boost PBC’s capital adequacy ratio of 10.8% in 1Q14, just hovering near the 10% minimum prescribed by the central bank.