Weekly Equities Summary and Outlook : February 29 – March 02, 2018
Market Outlook. We expect the market to continue consolidating as investors remain on the sidelines, given higher inflation reading for February at 4.5%. The good news enabling market to hold was last week’s MPI announcement of a 17% increase in core net income to Php14.1bn (outperform) while SM reported a 9% increase in recurring net income to Php32.9bn, the latter in line with consensus estimates.
Drivers. Higher-than-expected inflation data will likely weaken the market and hold off any near term bounce as the odds of a BSP rate hike grows. The Bangko Sentral ng Pilipinas expects inflation to hover within the 4-4.8% range while the Department of Finance expects a 4.1% reading.
Review. Despite the regional downtrend, the PSEi held its ground, ending the week flat to 8,458.57 from the previous week’s 8,467.56, slightly lower by 0.11%. Most of the international markets ended in the red with the Dow Jones losing 3.05% and S&P down 2.04%. Asian markets were also lower with Tokyo losing the most, down -3.20%. The PSEi was the second best, following Thailand’s 0.20% gain. Main drivers the past week were:
The BSP had a wide February inflation guidance; 4% - 4.8% while full-year 2018 is 4.3% as partly an effect of the tax reform law, but a moderation 2-4% target range is seen in 2019. No changes in expectation despite the rebasing last week which showed a lower reading of 3.9% for the same period Bank lending slightly slowed down in January, 19.1% growth year-on-year (y-o-y) versus 19.4% (revised from 19.0%) in December 2017. On a month-on-month seasonally-adjusted basis, commercial bank loans were up 1.3%. Main drivers of credit growth were:
Metro Pacific Investments’ FY17 core income was up 17.0% y-o-y to Php14.1bn. Drivers were: 30% increase in profit of its power segments which accounted for 52% of its operating income (Note that MPI hiked its ownership in Meralco and Global Business Power Corporation during the first half of 2017); 11% growth in toll road, share of 22% to total operating income; 16% in hospitals, share of 4% of operating income. SM Investments recorded Php33bn in net income, a 6% growth from reported net income of Php31.2bn in 2016. Excluding non-recurring items from 2016, core income was up 9%. SM Retail business reported Php10.4bn in net income which was 2% lower than the previous year. Despite the revenue growth of 7% to Php297bn, huge tax charges at SM Dept which was equal to 4 years of taxes dragged SM Retail’s bottomline. SM Retail same stores sales growth, however, was up 2.4% for 2017, higher than the 2.2% seen in 9M17.
Read full article here.
We use third-party cookies in order to personalize your site experience