Weekly Wrap

7 October 2024

Week in Review
 Global: US employment data in September pointed to a resilient economy as: 1) nonfarm payrolls grew by 254,000 (vs 159,000
in August); 2) unemployment rate slipped to 4.1% (from 4.2% in August); and 3) wage growth continued (+0.4% m-m, +4.0% y-
y). Revised numbers for July and August also added 72,000 more jobs than previously estimated. The latest employment report
eased concerns about a slowing labor market and reinforces the Federal Reserve view of gradual interest rate cuts going forward.
Macro

 Local: PH headline inflation decelerated to a four-year low of 1.9% in September (vs 3.3% in August), bringing the YTD rate to
3.4%. National Statistician Dennis Mapa attributed the deceleration to slower rise in food prices (1.4% in September from 3.9% in
August) and downtrend in transport prices (-2.4% from -0.2% in August). Excluding volatile food and energy items, core inflation
also eased to 2.4% in September (from 2.6% in August), bringing the YTD rate to 3.1%. The broad-based decline in inflation
supports BSP Governor Remolona’s case to loosen monetary policy.
 Global: US Treasury yields (see Fig. 1) rose last week after robust US employment data lowered the odds of aggressive Fed rate
cuts at the last two policy meetings this year.
 Local: Domestic yields were mixed w-w as optimism arising from easing BSP monetary policy was offset by escalating Middle
Bonds

East hostilities. BSP Chief Remolona noted ongoing talks on bringing the reserve requirement ratio (RRR) of commercial banks
down to 5%, as the current level of 7% remains high despite the recent 250bps cut. Remolona also stated the possibility of bringing
the RRR to zero within his term, and reiterated his previous comments on cutting key rates by 25bps at each of the remaining
policy meetings for the year “if there is no risk of a hard landing.”
 Global: US and Chinese stock markets advanced w-w (see Fig. 5) as investors cheered on stronger-than-expected US jobs report
and China’s latest stimulus push, respectively. Oil prices also jumped (Dubai crude up 9.1% w-w to USD77.82/bbl) on supply
Equities

disruption fears amid growing Middle East tensions.

 Local: The PSEi extended its rally for the 5th straight week and closed at 7,467.92 last Friday (+1.1% d-d, +0.5% w-w) as slower-
than-expected September inflation data and anticipation for more BSP rate cuts outweighed heightened geopolitical risks in the
Middle East. Foreigners remained net buyers at PHP2.0bn (from PHP10.7bn the week prior).
 Top index gainer for the week was NIKL (+8.0% w-w) as nickel ore prices rallied on expectations that China’s stimulus measures
would fuel demand for industrial metals. This was followed by GLO (+6.3%) amid speculation that e-wallet subsidiary GCash might
consider listing overseas. Other top index gainers were BPI (+5.7%), MONDE (+4.4%), and AC (+3.3%). We may see more price
Market Insights

gains from consumer, conglomerate, and banking names in the coming weeks, considering the backdrop of slowing inflation,
easing borrowing costs, and improving loan growth (+10.7% y-y in August from +10.4% y-y in July).
 The PSEi gained 5.4% in September and is up 2.7% so far in October, bringing YTD return to 15.8%. Nonetheless, the local index
is still trading at undemanding valuations (11.5x FY25F P/E vs 8.1x-20.3x of Asian peers) which implies there is room for further
upside, especially with improving economic conditions (i.e. slowing inflation, lower borrowing costs) seen to support earnings
growth. However, we caution that geopolitics could also incite some volatility in the market in the interim. For the week ahead, we
expect investors to keep an eye on both local (unemployment rate, trade balance) and global (US inflation, Fed minutes, Middle
East developments) news flows for cues on market direction.
 CEB acquired full ownership of boutique airline AirSWIFT Transport Inc. (AirSWIFT) from ALI for PHP1.75bn. The acquisition will
grow CEB’s turboprop fleet to 20 with AirSWIFT’s 5 turboprops, which will enhance its capability to reach island destinations such
Corporate Updates

as El Nido, Palawan, bring in additional passengers and generate more revenues. Based on figures from the Civil Aeronautics
Board, AirSWIFT carried 355,458 passengers in 2023, which exceeded its pre-pandemic peak of 321,523 in 2019. AirSWIFT also
delivered PHP1.7bn in revenues for ALI in 2019. For ALI, the sale allows it to focus resources on core businesses in line with the
broader strategy of the Ayala Group to divest assets.
 AEV has expressed interest in managing and operating Davao International Airport, signaling its continued expansion in the airport
management sector. AEV President and CEO Sabin Aboitiz said the company is waiting for the government to issue the terms of
reference, as it wants the auction for modernizing and operating Davao International Airport to follow a solicited process. “The
government said they decided to do it via solicited (scheme). They are not accepting unsolicited offers now,” Mr. Aboitiz added.
Government Securities PH Corporate Bonds PH Equities
New Issue Monitor

Date Security Tenor Amount Date Security Amount Tenor & Pricing Date Security Amount Pricing
ALCO Preferred Series F: 5Y BVAL +
07 Oct T-Bills 3M PHP6.5bn 13 Nov ALI PHP10bn 10Y BVAL + [30 to 80bps] 11 Nov PHP2bn + PHP1bn
Shares [165 to 225bps]
DITO Common
07 Oct T-Bills 6M PHP6.5bn TBA Up to PHP4.2bn PHP1.00-2.15 per share
Shares

07 Oct T-Bills 12M PHP7.0bn

The Week Ahead

Date Event Period Estimate Prior
8 Oct PH Unemployment Rate Aug - 4.7%
9 Oct MBA Mortgage Applications 04-Oct - -1.30%
10 Oct US Inflation Rate y-y Sep 2.3% 2.5%
10 Oct PH Trade Balance Aug -USD4371mn -USD4869mn
11 Oct U. of Michigan Sentiment Oct 70 70.1
11 Oct PPI Final Demand y-y Sep 1.7% 1.7%

Disclaimer: The information, opinions and analysis contained herein are based on sources and data believed to be reliable but no representation, expressed or
implied, is made as to its accuracy, completeness or correctness. This material is only for the general information of the authorized recipients. In no event shall
BDO or its officers and employees, including the author(s), be liable for any loss/damage resulting from reliance, directly or indirectly, or information found within
this report.

PLEASE CONSIDER THE ENVIRONMENT BEFORE YOU PRINT

 Weekly Wrap | 7 October 2024

Fig. 1: US Treasury (UST) yield curve Fig. 2: PH government securities (GS) yield curve

12/31/2023 9/27/2024 10/4/2024 12/31/2023 9/27/2024 10/4/2024

8.0% 8.0%

5.61% 5.76%
6.0% 6.0% 5.51%

4.0% 4.20% 4.0%

3.98%
3.81%

2.0% 2.0%
3M 6M 1Y 2Y 3Y 5Y 7Y 10Y 20Y 3M 6M 1Y 2Y 3Y 5Y 7Y 10Y 20Y

Source: Bloomberg Source: Bloomberg

Fig. 3: PSEi & net foreign buying (selling) trends Fig. 4: PSEi top gainers and losers w-w

Net foreign buying/selling - PHPmn (RHS) NIKL 8.0%

8,000 2,000 GLO 6.3%

Top 5
7,500 BPI 5.7%
1,000
MONDE 4.4%
7,000
- AC 3.3%
6,500 -2.7%
SMPH
(1,000)
6,000 CNVRG -3.0%

Bottom 5
(2,000) SMC -3.2%
5,500
BLOOM -3.2%
5,000 (3,000)
Oct-23 Dec-23 Feb-24 Apr-24 Jun-24 Aug-24 Oct-24 WLCON -7.9%

Source: Bloomberg Source: Bloomberg

Fig. 5: Equity indices movements Fig. 6: Currency and commodity trends

Last price w -w MTD YTD Currencies Last price w -w MTD YTD
Philippines PCOMP Index 7,467.92 0.5% 2.7% 15.8% USD/PHP 56.30 -0.4% -0.5% -1.7%
US (S&P 500) SPX Index 5,751.07 0.2% -0.2% 20.6% EUR/USD 1.10 1.7% 1.4% 0.6%
US (Nasdaq) NDX Index 20,035.02 0.1% -0.1% 19.1% USD/JPY 148.70 -4.6% -3.5% -5.4%
China (CSI 300) SHSZ300 Index 4,017.85 8.5% 0.0% 17.1% Commodities Last price w -w MTD YTD
China (Hang Seng) HSI Index 22,736.87 10.2% 7.6% 33.4% Dubai crude USD/ bbl 77.82 9.1% 7.3% 1.7%
Japan NKY Index 38,635.62 -3.0% 1.9% 15.5% Natural gas USD/ MMBt u 2.85 -1.7% -2.4% 13.5%
Europe SX5E Index 4,954.94 -2.2% -0.9% 9.6% Coal USD/ mt 148.20 6.0% 2.1% 1.2%
UK UKX Index 8,280.63 -0.5% 0.5% 7.1% Gold USD/ t oz 2,653.60 -0.2% 0.7% 28.6%
MSCI World MXWO Index 3,698.41 -0.8% -0.7% 16.7% Copper USD/ mt 9,796.41 -0.5% 1.1% 15.7%
MSCI EM MXEF Index 1,179.34 0.4% 0.7% 15.2% Nickel USD/ mt 17,743.33 5.9% 2.8% 8.4%

Source: Bloomberg Source: Bloomberg

Disclaimer: The information, opinions and analysis contained herein are based on sources and data believed to be reliable but no representation, expressed or
implied, is made as to its accuracy, completeness or correctness. This material is only for the general information of the authorized recipients. In no event shall
BDO or its officers and employees, including the author(s), be liable for any loss/damage resulting from reliance, directly or indirectly, or information found within
this report.

PLEASE CONSIDER THE ENVIRONMENT BEFORE YOU PRINT

Stock Coverage
Mkt Cap Last Price Target Upside/ EPS Growth P/E (x) EV/EBITDA P/B (x) ROE Div Yield
Company Ticker Rating (USD mn) 4-Oct-2024 Price Downside FY24F FY25F FY24F FY25F FY24F FY25F FY24F FY24F FY24F
Banking
BDO Unibank BDO Not Rated 14,849 158.00
Bank of the Philippine Islands BPI Buy 13,608 144.80 149.00 2.9% 7.2% 10.2% 12.9 11.7 NA NA 1.9 15.5% 2.7%
Metropolitan Bank & Trust Company MBT Buy 6,446 80.40 88.00 9.5% 14.2% 10.2% 7.5 6.8 NA NA 0.9 13.0% 6.2%
Security Bank Corporation SECB Buy 1,326 98.75 96.00 -2.8% 10.2% 10.0% 7.4 6.7 NA NA 0.5 7.2% 3.0%
Conglomerates
Aboitiz Equity Ventures AEV Buy 3,663 37.00 50.80 37.3% 12.5% 13.4% 8.4 7.4 9.4 8.0 0.5 11.9% 3.8%
Alliance Global Group, Inc. AGI Buy 1,520 9.55 15.00 57.1% -4.5% 15.1% 4.6 4.0 4.4 3.9 0.2 7.2% 1.6%
Ayala Corporation AC Buy 7,948 715.00 870.00 21.7% 23.4% 13.6% 9.9 8.7 14.2 13.1 0.6 8.8% 0.9%
DMCI Holdings, Inc. DMC Neutral 2,731 11.54 11.40 -1.2% -20.8% -4.2% 7.8 8.2 4.3 4.8 1.0 21.5% 9.7%
GT Capital Holdings, Inc. GTCAP Buy 2,771 722.00 870.00 20.5% 15.2% 14.4% 4.8 4.2 9.0 7.8 0.5 16.3% 0.7%
JG Summit Holdings, Inc. JGS Buy 3,687 27.50 37.40 36.0% 8.3% 7.9% 10.8 10.0 6.9 6.3 0.4 8.8% 1.5%
LT Group, Inc. LTG Neutral 1,929 10.00 10.30 3.0% 10.9% 0.9% 4.0 3.9 - - 0.3 11.0% 7.8%
San Miguel Corporation SMC Neutral 3,708 87.25 102.60 17.6% NM 5.8% 13.9 13.1 6.9 7.1 0.3 5.8% 1.6%
SM Investments Corporation SM Buy 21,675 995.00 1,150.00 15.6% 12.3% 10.2% 14.1 12.8 8.5 7.8 1.4 13.8% 0.8%
Consumer
Century Pacific Food CNPF Buy 2,491 39.45 39.50 0.1% 14.9% 24.8% 21.8 17.5 14.4 11.7 3.7 17.1% 1.2%
D&L Industries DNL Buy 849 6.67 7.90 18.4% 18.1% 30.6% 17.6 13.4 10.8 9.2 2.2 12.3% 3.1%
Emperador Inc. EMI Neutral 5,263 18.76 18.20 -3.0% -4.6% 26.5% 35.6 28.1 23.2 19.7 3.0 8.7% 1.6%
Jollibee Foods Corp JFC Buy 5,390 269.40 310.00 15.1% 30.1% 18.9% 33.7 28.3 9.1 8.1 3.2 9.9% 1.1%
Monde Nissin Corporation MONDE Buy 3,459 10.80 12.10 12.0% 28.4% 14.3% 19.8 17.4 12.1 10.5 2.9 14.8% 0.9%
Puregold Price Club PGOLD Buy 1,602 31.20 39.20 25.6% 17.0% 8.9% 8.9 8.2 2.9 2.6 0.9 10.5% 2.9%
Robinsons Retail Holdings, Inc. RRHI Buy 1,033 40.40 64.00 58.4% 5.7% 9.8% 10.0 9.1 3.9 3.3 0.8 7.7% 4.2%
San Miguel Food and Beverage Inc. FB Buy 5,572 52.90 65.00 22.9% 9.9% 9.6% 12.6 11.5 5.0 4.5 2.3 18.6% 3.0%
Shakey's Pizza Asia Ventures PIZZA Buy 279 9.30 12.00 29.0% 17.4% 19.3% 12.4 10.4 8.0 6.6 1.7 14.8% 0.3%
Universal Robina Corporation URC Buy 3,982 103.50 149.00 44.0% 7.1% 14.1% 16.4 14.3 9.0 8.4 1.8 11.2% 3.7%
Wilcon Depot, Inc. WLCON Buy 1,238 16.94 20.90 23.4% 0.7% 12.7% 19.9 17.6 8.4 7.5 2.8 14.9% 2.0%
Property
Ayala Land ALI Buy 9,713 37.00 40.00 8.1% 14.6% 17.2% 19.4 16.6 11.6 10.4 1.8 10.2% 1.4%
Filinvest Land Inc. FLI Neutral 354 0.82 0.70 -14.6% 3.1% 5.7% 5.2 4.9 9.5 9.1 0.2 4.6% 5.4%
Megaworld MEG Buy 1,283 2.21 3.00 35.7% 7.1% 9.7% 3.7 3.4 4.6 4.5 0.2 7.8% 3.6%
Robinsons Land RLC Buy 1,359 15.76 27.00 71.3% 11.3% 11.9% 6.2 5.6 4.7 4.1 0.5 9.6% 3.2%
SM Prime Holdings SMPH Buy 16,705 32.45 42.00 29.4% 11.9% 11.1% 20.8 18.8 15.6 14.2 2.1 10.8% 0.3%
Vista Land & Lifescapes VLL Buy 392 1.73 2.00 15.6% 59.8% 13.8% 2.0 1.8 6.5 6.0 0.2 9.3% 6.3%
REITs
AREIT, Inc. AREIT Buy 2,180 38.10 44.00 15.5% 9.9% 3.0% 14.5 14.1 16.9 14.2 1.1 6.6% 6.9%
Citicore Energy REIT Corp. CREIT Buy 356 3.05 3.90 27.9% 5.3% 2.6% 15.5 15.1 13.4 13.2 4.4 32.0% 6.8%
MREIT, Inc. MREIT Buy 685 13.74 18.00 31.0% 4.9% 3.0% 12.3 11.9 13.0 12.6 0.7 5.7% 8.0%
RL Commercial REIT, Inc. RCR Buy 1,681 6.00 6.70 11.7% 5.1% 4.1% 13.3 12.7 20.0 19.2 1.0 7.0% 7.1%
Power & Industrials
Aboitiz Power Corporation AP Buy 4,881 38.00 42.00 10.5% 5.1% 15.7% 8.3 7.2 9.2 8.8 1.3 16.7% 6.1%
AC Energy Corporation ACEN Buy 3,812 5.39 6.50 20.6% 22.2% 27.2% 31.6 24.8 19.4 20.0 1.4 4.5% 0.9%
First Gen Corporation FGEN Buy 1,155 18.02 22.00 22.1% -6.5% 10.2% 3.9 3.6 2.7 2.2 0.3 10.2% 2.1%
Intl Container Terminal Services ICT Buy 15,227 420.00 421.00 0.2% 37.4% 22.8% 18.1 14.8 9.4 7.7 6.2 43.8% 2.1%
Manila Electric Company MER Buy 9,322 464.00 450.00 -3.0% 16.8% 5.3% 12.1 11.5 7.2 7.0 3.1 23.5% 5.0%
Manila Water Company, Inc. MWC Buy 1,259 27.20 31.00 14.0% 29.7% 9.1% 6.8 6.2 6.1 5.7 1.0 17.3% 4.2%
Megawide Construction Corp. MWIDE Buy 98 2.74 3.70 35.0% NM 79.5% 13.9 7.8 6.6 6.3 0.3 5.2% -
Semirara Mining and Power Corporation SCC Neutral 2,557 33.75 36.20 7.3% -14.7% -19.7% 6.0 7.5 3.9 4.4 2.1 36.2% 11.9%
Mining
Nickel Asia Corporation NIKL Neutral 1,001 4.03 4.10 1.7% -35.4% 20.7% 23.2 19.2 10.4 9.4 0.9 8.4% 3.7%
Telecom
Converge ICT Solutions, Inc. CNVRG Buy 2,109 16.28 15.80 -2.9% 19.9% 10.0% 11.2 10.2 6.0 5.4 2.2 21.5% -
Globe Telecom GLO Neutral 6,177 2,400.00 2,400.00 0.0% 8.8% 3.9% 16.8 16.2 6.6 6.2 2.0 15.2% 4.2%
PLDT Inc. TEL Buy 6,008 1,560.00 1,950.00 25.0% 3.7% 8.6% 9.5 8.7 5.6 5.2 2.7 30.7% 6.1%
Tourism
Bloomberry Resorts Corporation BLOOM Buy 1,643 8.05 11.10 37.9% -19.1% 17.5% 11.5 9.8 8.6 7.6 2.3 17.7% -
Cebu Air CEB Buy 390 35.05 48.30 37.8% -8.1% 72.2% 4.1 2.4 1.8 1.3 2.0 78.0% -
MacroAsia Corporation MAC Buy 205 6.07 6.50 7.1% 72.3% 17.5% 9.0 7.6 9.3 8.2 1.5 20.2% 1.9%

Sources: BDO Securities estimates, Bloomberg

Disclaimer: The information, opinions and analysis contained herein are based on sources and data believed to be reliable but no representation, expressed or
implied, is made as to its accuracy, completeness or correctness. This material is only for the general information of the authorized recipients. In no event shall
BDO or its officers and employees, including the author(s), be liable for any loss/damage resulting from reliance, directly or indirectly, or information found within
this report.

For concerns, you may contact the BDO Securities Hotline at (+632) 8840-7878, Monday to Friday from 8:30AM to 5:00PM, or email us via
[email protected]. BDO Securities is a PSE and PDEx Trading Participant, an SCCP and SIPF Member, and is regulated by the CMIC with
website www.cmic.com.ph, and the SEC with telephone no. 0916-383-8633 and (+632) 8818-0921 and email address at [email protected].

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