Market Talk (SECB, MPI, RWM, BLOOM, MCP)

Banks: No surprise in SECB’s 4Q14 results. Security Bank Corp (SECB) reported FY14 earnings of PHP7.2b, in line with our estimate, and translating to 16.3% ROE, the highest in our coverage. Loans expanded 17% with 3.4% NIM, which boosted net interest income. Upside to FY15 earnings may come from trading gains. Maintain BUY and TP of PHP175 based on 2.0x 2015F P/BV. 

Consumer durables: Philippine vehicle sales outpace ASEAN average. Data from the ASEAN Automotive Federation show that total motor vehicle sales in the Philippines jumped 29% YoY to 234,747 units in FY14, compared with total ASEAN sales which fell 10% to 3,190,208 units. Philippine car sales growth outpaced most of the other ASEAN countries. Sales in Thailand plunged 34% to 881,832, Brunei declined 3% to 18,114, Indonesia dropped 2% to 1,208,019, while Malaysia increased 2% to 666,465. In contrast, vehicle sales in Singapore surged 39% to 47,443 while that of Vietnam’s expanded 35% to 133,588. In terms of production, the Philippines is still the smallest at 88,845 units, a 12% YoY increase, while Thailand remains the top producer at 1,880,007 units, but this is 23% lower. In Indonesia, production climbed 7% to 1,298,523 units while Malaysia produced 596,418 vehicles, 1% lower. Vietnam is the fastest growing producer at 29% expansion to 121,084 units. 

Conglomerates: MPI raises USD200m from top up placement. Metro Pacific Investments Corp. (MPI-BUY) has raised USD200m after a top-up placement of 1.8b shares yesterday. The offering was priced at PHP4.90 per share, a 6.5% discount from last week’s closing price. We think this will be used to pay the remaining balance of the acquisition of a direct stake in Manila Electric Co (MER-HOLD) last June 2014 which amounts to PHP10b.

Gaming: China crackdown on foreign casino marketing. There are reports that China’s government is cracking down on foreign casinos that try to set up marketing operations in mainland China. This is not new as the policy as has been in existence since 2011. Nevertheless, stricter implementation has affected local casino operators such as Travellers International Hotel Group (RWM-BUY), Blommberry Resorts Crop (BLOOM-BUY) and Melco Crown Philippines (MCP-Not rated) in anticipation their marketing operations in mainland China will suffer. However, we gather local casino operators don’t have marketing presence in mainland China. Thus we feel this can be an opportunity to accumulate gaming stocks.

-maybank atr