Professional Documents
Culture Documents
Head of Research:
April Lynn Tan, CFA
Analysts:
George Ching
Richard Laeda, CFA
Charles William Ang, CFA
Jed Frederick Pilarca
Meredith Hazel Cua
Angelo Lecaros
Michelle Angeline Yu
Banking Sector: Core earnings generally in line but trading losses drag profits
Banks earnings were generally weak during the first nine months of the year. During the period in
review, banks net income increased by only 2% from the same period last year, with the relatively
smaller banks EW (-25%), SECB (-6%) and UBP (-22%) reporting weaker profits. Earnings growth
slowed as trading gains fell. During the first nine months of the year, trading gains dropped 23%
year-on-year. This dragged non-interest income lower by 3% for the period in review. On the positive
side, net interest income from core operations remained strong, growing by 9.2% year-on-year. The
pace of net interest income growth also accelerated to 12% in the third quarter from 9% in the second
quarter and 7% in the first quarter, thanks to the improvement in net interest margin to 3.2% in the
third quarter from 3.1% in the second quarter and 3.0% in the first quarter. Banks also benefited from
the growth in loans and interest earning assets which remained strong at 14% and 10% y/y as of end
September respectively.
Compared to our estimates, only BDO, PNB and SECB performed in line with expectations. The
remaining five banks that we cover reported profits that were below expectations, primarily due to
lower-than-expected trading gains.
page 2
of Meralco shares. Excluding the said items, TELs operating performance was disappointing, with
9M15 EBITDA accounting for only 73.8% of our full year estimates.
Despite the continuous weakness of more traditional services as reflected by the 3.3% drop in nondata revenues to Php136.8 Bil, the telco industrys service revenues still increased 5.0% y/y to
Php205.4Bil during the first nine months of the year. Growth was still largely driven by the substantial
increase in data revenues which grew by 26.4% to Php68.6 Bil. Because of its strong growth, data
revenues already accounted for 33.3% of revenues for the first nine months of 2015, up from 27.7%
during the same period last year.
page 3
page 4
Net Income
9M14
9M15
% Change
16,740
12,802
3,370
1,740
13,077
3,622
3,010
6,428
5,992
17,603
13,840
3,640
1,306
13,253
4,566
3,635
6,064
3,668
5.2%
8.1%
8.0%
-25.0%
1.3%
26.1%
20.8%
-5.7%
-38.8%
24,505
20,147
5,107
2,350
19,608
6,113
7,797
6,561
24,484
20,537
5,553
2,746
17,912
6,475
4,979
7,418
6,903
71.8%
68.7%
71.3%
55.6%
67.6%
74.7%
77.8%
55.9%
71.9%
67.4%
65.6%
47.6%
74.0%
70.5%
73.0%
81.8%
53.1%
27,681
23,225
5,481
2,963
21,619
6,320
8,913
7,397
27,919
22,993
5,961
3,380
20,811
7,179
5,818
7,699
7,517
1,540
566
2,333
496
1,001
136
21
4,549
7,978
1,205
3,909
1,894
(1,318)
6,919
121
1,804
136
22
4,762
2,492
851
6,209
23.0%
-333.1%
196.6%
-75.6%
80.2%
0.3%
4.8%
4.7%
-68.8%
-29.3%
58.8%
2,706
2,866
70.0%
66.1%
3,799
3,917
9,095
970
1,985
178
28
6,004
5,867
1,036
8,296
6,385
937
1,725
180
5,278
3,641
1,242
8,720
76.1%
12.5%
90.9%
76.3%
77.7%
79.3%
42.5%
82.2%
74.8%
108.4%
12.9%
104.6%
75.7%
90.2%
68.4%
68.5%
71.2%
6,908
1,001
2,622
194
33
5,727
5,878
896
11,451
7,462
1,108
2,248
208
5,271
5,012
1,542
10,880
14,256
14,053
11,431
2,553
7,267
4,734
6,346
15,700
5,987
18,157
11,899
17,700
10,610
3,010
9,862
3,697
8,408
16,105
7,794
19,430
-16.5%
26.0%
-7.2%
17.9%
35.7%
-21.9%
32.5%
2.6%
30.2%
7.0%
17,000
19,972
14,362
3,953
13,146
5,385
11,947
25,023
10,960
30,857
19,350
20,024
16,137
4,856
13,100
5,410
11,764
23,740
9,760
31,356
70.0%
88.6%
73.9%
76.2%
75.0%
68.7%
70.4%
64.4%
71.1%
63.0%
61.5%
88.4%
65.7%
62.0%
75.3%
68.3%
71.5%
67.8%
79.9%
62.0%
19,228
23,913
15,407
4,363
15,746
6,315
14,148
26,525
9,832
32,818
21,020
24,077
15,936
5,264
14,560
6,540
14,094
26,000
9,820
34,595
495
1,293
4,566
3,640
3,007
619
577
2,346
674
11,559
1,228
482
1,614
4,703
3,858
3,203
706
627
2,972
701
12,678
1,497
-2.6%
24.8%
3.0%
6.0%
6.5%
14.0%
8.7%
26.7%
4.1%
9.7%
21.9%
720
2,314
6,854
5,507
4,925
4,187
66.9%
69.7%
68.6%
70.1%
65.0%
71.0%
97.9%
79.8%
65.8%
67.2%
71.4%
68.4%
64.4%
79.2%
65.9%
67.4%
56.7%
95.9%
79.1%
823
2,679
7,107
6,575
5,463
4,585
12,944
1,876
732
2,403
6,587
5,638
4,971
891
951
4,407
1,237
13,223
1,891
14,866
2,207
855
2,781
7,186
6,727
5,501
996
1,140
5,069
1,489
15,527
2,204
623
3,088
(4,096)
4,131
891
(1,709)
(6,053)
3,354
43.0%
-155.3%
47.8%
-18.8%
1,094
(2,039)
(3,873)
4,863
2,061
(1,117)
(5,894)
4,761
81.4%
83.8%
156.3%
69.0%
43.2%
153.0%
102.7%
70.4%
2,270
1,287
(1,376)
4,569
2,833
2,110
(2,137)
4,603
10,530
27,957
14,151
25,339
34.4%
-9.4%
13,519
34,238
16,893
34,513
104.7%
74.0%
83.8%
73.4%
12,433
33,227
18,493
34,668
13,202
10,443
163
14,308
12,194
5,900
120
16,149
-7.6%
-43.5%
-26.4%
12.9%
15,974
8,515
147
19,122
17,360
9,270
154
18,260
76.3%
69.3%
81.8%
84.5%
70.2%
63.6%
77.8%
88.4%
18,146
9,336
183
20,429
18,840
10,770
197
17,250
10,789
1,592
2,843
18,787
3,880
4,245
13,457
12,825
1,293
3,015
8,094
4,355
5,020
22,867
18.9%
-18.8%
6.0%
-56.9%
12.2%
18.3%
69.9%
16,937
2,465
5,092
9,773
5,751
6,220
20,910
17,520
2,055
5,007
10,589
5,784
6,244
22,663
75.7%
52.5%
59.2%
82.8%
75.7%
80.7%
109.4%
73.2%
62.9%
60.2%
76.4%
75.3%
80.4%
100.9%
19,307
2,473
5,970
11,185
6,185
7,027
23,579
20,794
2,284
5,940
12,006
6,615
7,149
25,186
*In US$ M il
** Fiscal year ending September
*** Fiscal year ending April; in US$M il
Source: Listed companies, COL estimates, Bloomberg
page 5
In PhpMil
Banks and Financials
BDO
BANCO DE ORO
BPI
BANK OF PHILIPPINE ISLANDS
CHIB
CHINA BANKING CORP
EW
EAST WEST BANKING CORP
MBT
METROPOLITAN BANK & TRUST
PNB
PHILIPPINE NATIONAL BANK
RCB
RIZAL COMMERCIAL BANKING CORP
SECB
SECURITY BANK CORP
UBP
UNION BANK OF THE PHILIPPINES
Commercial and Industrial
ABS
ABS-CBN BROADCASTING CORP
AT
ATLAS CONSOLIDATED MINING
CEB
CEBU AIR
In Line
Below
Below
Below
Below
In Line
In Line
In Line
Below
Below
In Line
EEI
EEI CORPORATION
Below
GMA7
ICT*
Above
In Line
IMI*
INTEGRATED MICRO-ELECTRONICS
In Line
MWC
NIKL
In Line
Below
PX
Above
SCC
SEMIRARA MINING
Conglomerates
AEV
ABOITIZ EQUITY VENTURES INC
AC
AYALA CORPORATION
Below
Below
In Line
AGI
In Line
ALLIANCE GLOBAL
Above
Below
Above
In Line
Above
In Line
In Line
Below
In Line
Potential Revisions
Reasons for potential revisions
Revenues Net Income
Unchanged
Unchanged
Trading loss in 3Q15
Down
Down
Down
Down
Weaker-than-expected net interest income (already downgraded)
Down
Down
Trading loss in 3Q15
Down
Down
Trading loss in 3Q15
Unchanged Unchanged
Unchanged Unchanged
Unchanged Unchanged
Down
Down
Trading loss in 3Q15
Down
Down
Unchanged Unchanged
Up
Down
Up
Up
Unchanged Unchanged
Down
Unchanged
Unchanged Unchanged
Down
Down
Lower-than-expected nickel prices
Lower-than-expected metal prices more than offset by lower-thanDown
Up
expected interest expense (none booked in 9M15)
Down
Down
Delay in Calaca expansion project
Lower than expected earnings from banking & power
Down
Down
Unchanged Unchanged Recurring income in line, outperformance on one off gains
RWM and EMP earnings weaker than expected, offset by lower than
Down
Unchanged
expected expenses on parent level
Up
Up
Liquigaz acquisition not yet factored in model
Down
Down
Core earnings below forecast
Up
Up
Core earnings above forecast
Unchanged Unchanged
Core earnings above forecast
Unchanged
Up
Unchanged Unchanged Core earnings in line
Unchanged Unchanged
Down
Down
Down
Margin pressure and slowdown in consumer AC sales growth
Unchanged Commodities drag revenues but GPM is improving
Local sales weaker than expected, interest expense higher than
Down
Down
expected
Unchanged Unchanged
Unchanged Unchanged
EMP
EMPERADOR, INC
Below
JFC
PGOLD
PIP
RFM
In Line
In Line
In Line
Below
RRHI
In Line
Unchanged
SSI
SSI GROUP INC
URC**
UNIVERSAL ROBINA CORPORATION
CNPF
CENTURY PACIFIC FOOD, INC.
Gaming
BEL
BELLE CORP.
BLOOM BLOOMBERRY RESORTS CORP
MCP
MELCO CROWN (PHILS) RESORTS
RWM
TRAVELLERS INTERNATIONAL HOTEL
Telecoms
GLO
GLOBE TELECOM INC
Below
In Line
Above
Unchanged Unchanged
Unchanged
Up
Lower-than-expected opex
Above
In Line
Below
Below
Up
Up
Higher income on finance lease accounting, real estate business
Unchanged Unchanged
Unchanged
Down
Higher than expected OPEX
Down
Down
Lower than expected revenues
TEL
In Line
Below
Above
Above
Above
In Line
Below
In Line
Above
Below
Above
In Line
Power
AP
EDC
FGEN*
MER
Property
ALI
CPG
FLI
MEG
RLC**
VLL
SMPH
Above
Up
Up
Up
Unchanged Unchanged
Down
Up
Up
Up
Down
Up
Up
Up
Unchanged Unchanged
Down
Down
Lower than expected revenues
Unchanged Unchanged
Up
Up
Higher than expected gross margin of GERI
Higher than expected effective incom tax
Unchanged
Down
Higher than expected interest income
Unchanged
Up
Unchanged Unchanged Outperform because of one-off gain of Php7.4 Bil
page 6
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HOLD
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Important Disclaimers
Securities recommended, offered or sold by COL Financial Group, Inc.are subject to investment risks, including the possible loss of the principal amount
invested. Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and it may
be incomplete or condensed. All opinions and estimates constitute the judgment of COLs Equity Research Department as of the date of the report and are
subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a
security. COL Financial ans/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of
securities of the companies mentioned in this report, and may trade them in ways different from those discussed in this report.
2401-B East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City, 1605 Philippines
Tel: +632 636-5411
Website: http://www.colfinancial.com
page 7