Cement: HLCM’s clinker imports hurt 1Q15 margins. HLCM’s use of
higher costing imported clinker increased due to plant maintenance in Jan.
Margins could recover in succeeding quarters with the next plant
maintenance scheduled 15-18 months hence. Forecasts, BUY rating
unchanged. Robust cement demand expected to be sustainable.
Consumer: PIP posts 41% YoY jump in 1Q15 net income. Pepsi-Cola
Product Philippines Inc (PIP—BUY) reported earnings grew 41% YoY to
PHP192m, accounting for 22.5% of our full-year forecast of PHP867m.
Last year, 1Q accounted for only 16.8% of full-year earnings. Net sales
amounted to PHP6.3b, up 14.1%, while operating income surged 56.1% to
PHP295m. EBIT margin widened to 4.7% from 3.4% due to better scale
and improvements in selling price. We will come out with a more detailed
report within the week.
Consumer: CNPF 1Q15 profits up 37% YoY. Century Pacific Food Inc
(CNPF – Not rated) disclosed 1Q15 earnings of PHP438m, up 37% YoY
and accounting for 23% of full-year 2015 consensus forecast of PHP1.9b.
Revenues went up 16% to PHP5.2b driven by strong demand for its
branded products due to better brand visibility and positioning. Gross profit
margin improved 50 bps to 25.7% with cost of sales up 15% to PHP3.9b.
Operating income grew faster at 31% to PHP469m with operating
expenses increasing only 9% YoY. As a result, EBIT margin expanded
130 bps to 11.7%.
Mining: SCC signs joint venture to build 350MW power plant. Semirara
Mining and Power Corp (SCC—BUY) is reportedly entering a joint venture
with a local partner to build a 350MW power plant in Calaca, Batangas
worth PHP22b. SCC and the local partner will share equity in the project
and will create a new company for this. The contract will be signed in 90
days. We are confirming with the company if this is the St Raphael Power
Generation Corp project or a new one.
Construction: EEI finalizes Skyway Stage 3 project. EEI Corp (EEI –
BUY) disclosed it has signed a contract for the construction of Sections 3
and 4 of the Metro Manila Skyway Stage 3 Project of San Miguel Corp
(SMC – Not rated) and government-owned Philippine National
Construction Corp. EEI will undertake the construction of 7.52km of the
total 14.82km expressway that will effectively link the South and North
Luzon Expressways. The total project is worth PHP26.66b and we expect
EEI will get PHP14-15b. As we had written previously (Clinching Bohol
airport and another, 8 April 2015) the Skyway project and the Bohol airport project together account for about PHP16.5-17b worth of new projects YTD. Our initial
estimate shows these two projects may contribute around PHP132m in 2015F net income
and PHP396m in 2016F. This is based on a minimum 8% profit margin and FY15-16
completion rates of 10% and 30%. Our target price of PHP14 implies 13.5x 2015F PER. We
will provide more details later.
GLO launches unlimited data roaming for prepaid subs. Globe Telecom Inc (GLO—
HOLD) launched a new unlimited data roaming service for its prepaid subscribers, Globe
Prepaid Roam Surf. Under this service, prepaid subscribers can avail of unlimited data
roaming in 50 countries for a flat rate. There are three variants: PHP599 for 24 hours,
PHP1,797 for three full days, and PHP2,995 for five full days. The service offers
convenience to travelling Globe subscribers who will no longer need to buy local SIM cards
and change numbers or look for Wi-Fi areas to access data. Note that In 2014 the company
launched the same unlimited data roaming service of PHP599/day for its postpaid
subscribers.
-Maybank ATR
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