Market Talk (CHIB, SMPH, ALI)

Banks: Earnings downgrade on CHIB due to weak trading. We downgraded CHIB’s earnings estimates since 1H14 income was behind our expectations. Our revised net earnings estimate in FY14 is lower 6% to PHP5.2b and 4% to PHP5.7b in FY15. Incorporating our revisions and increasing our risk-free rate 50bps to 4.25% results in a revised TP of PHP55 from PHP60, equivalent to 1.5x 2015F PBV and 15.3x PER. Maintain HOLD with just 6% upside.

Property: SMPH raises PHP20b from bond offering. SM Prime Holdings Inc (SMPH-BUY) has raised PHP20b from its recent retail bond offering. The issue consisted of bonds due 2020 with an interest of 5.1%, another series due 2021 at 5.2% and another series due 2024 at 5.74%. 

Property: ALI plans to develop industrial estates. Ayala Land Inc. (ALI-BUY) plans to launch a new industrial estate with 50 hectares before the year ends. This forms part of its mixed-use project Alviera in Porac, Pampanga. By 2015, ALI will launch another industrial estate in the Cavite-Laguna-Batangas-Rizal (Calabarzon) area. The firm is currently finalizing a deal to acquire 200 hectares of land to accommodate this planned project. 

Media: Supreme Court nullifies Comelec limits on election ad airtime. The Philippine Daily Inquirer reports the Supreme Court has declared unconstitutional part of a Commission on Elections (Comelec) resolution which sets tighter airtime limits on political advertisements. The decision made permanent a temporary restraining order issued by the court a month before the May 2013 midterms elections. The high court nullified Comelec’s earlier resolution which allows all national political candidates an “aggregate total” of 120 minutes of television ads and 180 minutes of radio ads while local candidates are given 60 minutes of TV airtime and 90 minutes of radio airtime covering all stations. Instead, the airtime limit on candidates shall be measured on a “per station” basis as affirmed by the Supreme Court decision. Among the reasons cited by the high court for striking down Comelec’s resolution were the arbitrary manner by which Comelec changed the previous regulation from “per station” to “aggregate total” and the violation of freedom of expression and the people’s right to suffrage as well as the absence of prior hearing before adoption..