Widen search for winning stocks, Nomura tells investors

BDO Nomura Securities Inc. urged stock market investors to be more selective in their picks and to look for potential winners including those that may not be listed on the benchmark index.

BDO Nomura, a venture between the SM Group’s BDO Unibank Inc. and Nomura Holdings of Japan, said companies in the conglomerates, industrial and property sectors remained favorable in an equities market considered expensive among its regional peers.

“Stock picking and stock selection are extremely important in the Philippine context,” BDO Nomura research head Dante Tinga Jr. said in a briefing yesterday.
“The Philippines is not cheap,” he added. “They (investors) like the growth story, but they worry about the valuations.”

Tinga said investors needed to look beyond large-cap index companies, as he noted slowing earnings for certain firms in the telecom, consumer and power sectors.

“A lot of the more interesting companies are not even part of the index,” he said.

BDO Nomura’s picks included Ayala Land Inc., Aboitiz Power Corp., Century Pacific Food Inc., International Container Terminal Services Inc., Metropolitan Bank and Trust, Megaworld Corp., Metro Pacific Investments Corp., Puregold Price Club Inc., Robinsons Retail Holdings Inc. and SM Investments Corp.

BDO Nomura said the benchmark Philippine Stock Exchange index was estimated to hit 8,500 over the next 12 months. It was considered the most expensive in the region at 18.9 times its 12-month forward earnings.

Tinga said that the target could be revised higher should government follow through on its tax reform program and the “build, build, build” infrastructure initiative; however, investors remained skeptical.

BDO Nomura, which was established last year, is on track for further growth this year. The company more than doubled retail accounts to 15,632 from January to June 2017.

“The growth of BDO Nomura is anchored on the reliability and stability provided [by] the BDO name, the bank’s expansive market presence, and the strong market research capability of Nomura,” BDO Nomura chair Eduardo Francisco said.

Koichi Katakawa, president of BDO Nomura, said the company expects to sustain its growth in the first half through the rest of 2017. BDO Nomura plans to launch a stock trading mobile app by the second half of 2017, and a new online trading platform by early 2018.