Market Talk (EMP, HLCM, FGEN, TA, LPZ)

Consumer: EMP sets 2015 capex at PHP3b. Various news dailies quoted a top official from Emperador Inc (EMP – BUY) saying the company has earmarked a total of PHP3b in capital expenditures this year, higher than our PHP2.3b forecast. Of this amount, PHP1.5b will reportedly be spent to upgrade the production facilities of Whyte and Mackay in Europe while the remainder will be deployed to expand domestic production. The company plans to add four more lines to its existing distillery in Laguna, where newly launched Smirnoff Mule is being produced. EMP likewise plans to build a new PHP300m glass plant to be completed by 2017 for the production of nonreturnable bottles dedicated to Smirnoff Mule. Meanwhile the company has already submitted a bid to acquire France-based cognac maker Louis Royer SAS from Japan’s Suntory Holdings. The deal reportedly will not exceed the USD700m price tag for the acquisition of Whyte and Mackay last year.

Cement: HLCM declares PHP0.82/sh cash dividend. Holcim Philippines Inc (HLCM – BUY) disclosed its board of directors approved yesterday the declaration of PHP0.82/sh cash dividend to stockholders on record 15 June with payment date on 9 July. This is equivalent to a dividend yield of 5.7% based on yesterday’s closing price.

Utilities: FGEN 1Q15 profit up 17%. First Gen Corp (FGEN-HOLD) grew net income before preferred dividends 17% YoY to USD50.5m. Growth was due to increased revenue from subsidiary Energy Development Corp (EDC-BUY). Recurring net income increased to USD49.5m (9.3% YoY) mainly due to the higher recurring net income contribution of the geothermal and natural gas businesses.

Utilities: TA 1Q15 net income declined 40%. Trans-Asia Oil and Energy Development Corp (TA-BUY) posted PHP65.455m in 1Q15, down 40% YoY. Although consolidated generation revenues increased 121% to PHP432.95m, net trading revenues declined 64% to PHP94.03m due to higher cost of power per kWh. Also, financing charges increased YoY.

Conglomerates: LPZ 1Q15 earnings up 25%. Lopez Holdings (LPZ-BUY) posted PHP1.1b (+25% YoY) in 1Q15 net income before preferred dividends. It was driven mainly by growth in income contribution from First Philippine Holdings Corp (FPH-BUY). Revenues went up 10% YoY to PHP25.94b due to increases from business units associated with FPH.


- Maybank ATR