Experts bet on retail, property stocks
The following entries were cut inadvertently from the Inquirer’s second Stock Market Quarterly report, which came out on Wednesday, July 20, 2016.
Jose Mari Lacson
Deputy head of research
BPI Securities
Stock Picks: Semirara Mining and Power Corp. (BPI Securities research team recommendation), Metro Retail Stores Group Inc. and SM Investments Corp.
SM Investments:
“We’re pushing for a premium on stability of earnings and returns. This is given concerns over the global economy.
“If you wanted a proxy for the Philippines, this is the stock we’re pushing for. For SM Investments, 70 percent of its value and earnings are dedicated to the consumer—the end (Filipino) consumer.”
Target Price: P1,105 per share.
Semirara (SCC):
“Its dividend yield is comparable to Aboitiz Power Corp. but it is 30 percent cheaper if you look at it in terms of P/E (price to earnings ratio). Yield has increased because of concerns surrounding mining.
“The market is too bearish on the news of Gina Lopez’s appointment as Environment and Natural Resources Secretary. It failed to consider that you have to be rational about energy needs.
“Our view here is that if you try to remove coal, you face brownouts. The rational strategy for government is for you to maintain coal at its current level.”
Target price: P143 per share
Metro Retail:
“It’s a Visayas and Mindanao play and President Duterte’s regionalization strategy bodes well for its portfolio.
“It continues to have strong same store sales.”
Target price: P4.90
April Lee-Tan
Research head
COL Financial Group Inc.
Stock Picks: Megaworld Corp., First Gen Corp. and East West Banking Corp.
Megaworld:
“One of the largest property companies in the Philippines with an attractively located landbank all over the country.
“Due to significant expansion, leasing businesses now account for 43 percent of Ebit.
“Very conservative (debt to equity ratio) of 0.07 times.
“Attractive valuation, trading at 13.3 times 2016 estimated price to earnings ratio, 37 percent discount to NAV (net asset value).”
Target price: P5.58 per share
First Gen:
“A defensive play as 90 percent of capacity is covered by LT supply contracts, providing stability.
“Attractive valuation (16E P/E of 13.3 times, dividend yield of 2.6 percent).”
Target price: P32.57 per share.
East West Banking (EW):
“Focus on consumer lending market which is a faster growing, less competitive market, and where margins are more attractive.
“Factors that dragged profits since 2013 are no longer in play. These include substantial increase in operating expenses (brought about by its rapid branch expansion program from 2012 to 2014), rising nonperforming loans (NPL) which resulted to higher provisions, lower trading income, and one-time accounting reclassification of fees.”
“The turnaround in EPS growth was already evident during the first quarter of 2016 as EW reported a 31 percent jump in profits.”
“Attractive valuations, trading at 9.8 times 16 estimated P/E [price to earnings], 0.8 times X 16 estimated P/BV (price to book value).”
Target price: P26 per share.
