BPO sector to gain from Clinton victory: analyst

MANILA - Local property companies that lease out to Business Process Outsourcing (BPO) companies could benefit from a victory by Democratic presidential candidate Hillary Clinton, an analyst said Tuesday.

April Lee Tan, head of research at COL Financial, said there are a few reasons why investors favor Clinton over Republican Donald Trump.

“I think one of the reasons why people believe that Asia will not benefit from a possible Trump victory is his talk against trade between other countries and the US, like he would impose tariffs,” she told ANC's "Market Edge with Cathy Yang."

"Aside from that, he also has plans to impose tariffs on the BPO sector," she added.

Philippine shares are in the green in step with a big jump in US shares overnight.

The Philippine Stock Exchange is playing catch up to a region-wide rally that started when the Federal Bureau of Investigation decided to end its probe into an email scandal involving Clinton. -- With Warren de Guzman, ABS-CBN News

source: www.abs-cbnnews.com

Stock picks: Ayala Land, EastWest Bank

MANILA – COL Financial vice president for research April Lee Tan on Monday recommended buying Ayala Land Inc. and EastWest Banking Corp. shares.

Ayala Land, Tan said, would likely benefit from demand for residential space and hotel rooms as President Rodrigo Duterte moves to spread development outside the capital.

EastWest Bank shares are “very cheap” and the lender’s strategy to focus on the retail segment, where margins are higher compared to corporate banking, could pay off, Tan told ANC’s “Market Edge with Cathy Yang.”

source: www.abs-cbnnews.com

Analyst: Look for cheap and good stock buys

The current 7,500-point level of the Philippine Stock Exchange Index makes the Philippines an expensive market, but April Lee-Tan of COL Financial said, the key here is to look for cheap and good buys.

"If you look at almost all the blue chips, almost everything is expensive except maybe for those that have some problems or are not as attractive fundamentally," she noted.

"So we're thinking that maybe there will be some rotation to cheaper stocks like FGEN.. There might be some rotation to smaller cap stocks which were in some ways ignored since 2013, like VLL and Eastwest," she added.

--report by Michelle Ong, ABS-CBN News

source: www.abs-cbnnews.com

PH shares too expensive - Credit Suisse

MANILA - Credit Suisse on Wednesday said Philippine shares are still too expensive.

Right now, with the Philippine Stock Exchange index (PSEi) at 7,000, Philippine shares are trading at an average price to earnings ratio of 18 to 19 times, meaning investors are paying roughly 18 times what the company earns per share.

That is one of the most expensive in the region.

Credit Suisse said many investors are waiting for the price-earnings (PE) ratio to fall to 15 times and below.

"You can achieve that drop two ways, either through a price correction or through improved corporate earnings. The one theme over the next six months for the Philippines, I think, and this is where you are going to get positive surprises, is in corporate earnings, whether it be through consumer companies, because I think domestic consumption will remain strong, or through companies that benefit from these low commodity prices," said Robert Parker, senior advisor for investment strategy and research at Credit Suisse.

A local broker estimates the PSEi would need to fall 1,400 points to get to a 15 price earnings ratio--a 20 percent drop.

Counting on rising earnings may be difficult because earnings growth has been mostly disappointing.

COL Financial says two-fifths of the 56 listed companies it covers reported weaker than expected profit in the first half.

Meanwhile, a Philippine broker said the fall in PE doesn't have to be so big, estimating a PE of 16 to 17 would already be attractive. -- ANC

source: www.abs-cbnnews.com

Metrobank prices $723-M rights offer at discount

MANILA - Metropolitan Bank & Trust Co (Metrobank) priced on Tuesday its rights issue at P73.50 ($2) per share, a discount of about 21 percent to the stock's average price since the start of the year.

The Philippines' second-largest lender in terms of assets could raise as much as P32 billion ($723 million) from the share offer running from March 23 to March 27, the country's largest equity offering in two years.

The bank is offering one rights share for every 6.3045 common shares held as of March 18, it said in a filing to Manila stock exchange.

Shares of Metrobank rose as much as 0.7 percent to hit P94.50 in a largely flat market.

Analysts said the discount was aimed at attracting as many subscribers as possible. "I think it's more of an incentive for the shareholders to exercise their right," said April Lee Tan, research head at COL Financial in Manila.

The bank is seeking to raise Tier 1 capital to comply with Basel III standards, keeping pace with loan growth while bracing for stiffer competition after the Philippines enacted a law allowing foreign banks to take full control of domestic lenders.

JPMorgan and UBS AG are joint global coordinators, joint international lead managers and joint book runners for the issue. The Philippines' First Metro Investment Corp is the sole domestic lead manager and HSBC is the transaction's co-manager.

source: www.abs-cbnnews.com

What were PSE's blockbuster IPOs of 2014?

MANILA – The Philippine stock exchange (PSE) ended 2014 on a positive note, up by around 25 percent year-to-date.

April Lee Tan, vice president and head of research in COL Financial, said the PSE reached several milestones in 2014, including an increased number of initial public offerings (IPO).

“These are the names that people know about, successful IPOs include Century Tuna and SSI. Small investors could have participated through the local small investor program and they would’ve made a lot of money, and I think one of the blockbuster IPOs for the year is DoubleDragon,” Tan told ANC’s “On The Money.”

DoubleDragon is the property company owned by Jollibee founder Tony Tan Caktiong and Mang Inasal founder Edgar "Injap" Sia, while SSI Group is a specialty retailer that resells 103 international brands such as Hermès, Prada and Gucci in the Philippines.

“For the stock market, 2014 was a good year despite the fact that during the start, a lot of people were worried about it, we’re very cautious,” Tan said.

However, she noted that despite the increase in the stock market, not many Filipinos participated.

In 2013, Tan said around 500,000 Filipinos invested in the stock market. She that while the number may have gone up in 2014, it did not increase significantly.

She said value turnover in the PSE is down 20 percent, and sales of mutual fund companies are down 90 percent compared to last year.

According to financial adviser Salve Duplito, the market’s volatility in 2014 may have put off potential investors and made them cautious.

Tan, meanwhile, said investors’ mindset of looking at the stock market like a casino, and banking on the “get rich quick” scheme should be changed.

She said investors should also be taught to only invest a portion of their money.

“Studies have shown that the stock market outperforms other asset classes in the long run. So if you’re going to put your money there, you better make sure it’s long term money so that you can ride the volatility,” she said.

For 2015, Tan expects the market to move sideways despite all the foreseen risks.

“I say this is because liquidity is still so much there. There aren’t a lot of alternative investments,” she said, noting that interest rates did not go up as high as expected.

She said the PSE index may go up by 5 to 10 percent, and close at 7,000-8,000. Investors may earn cash dividends up to 2 to 3 percent per annum.

More investors are also seen to get into the foreign exchange market in 2015, according to Temie Lanaria, executive vice president of Metisetrade.

“More and more people are getting into the foreign exchange market as more people are getting more sophisticated. Most of the people now are into researching those companies that are offering alternative investments before they get into the investment,” he said.

Lanaria said more investors will look into forex as a popular alternative investment “because of its cheapest transaction costs and being the most transparent market in the world.”

source: www.abs-cbnnews.com

PSE seen to hit 7,800-level next year

MANILA - The Philippine Stock Exchange index (PSEi), the barometer of the performance of the local bourse, will likely hit a new record high and close next year at the 7,800 territory, strongly rebounding from the current weakness seen to persist for the rest of 2014.

The uptick in local share prices will be driven by low interest rates, strong momentum of economic growth, and higher earnings growth of listed companies, said officials of leading brokerage firm COL Financial Group Inc.

“The market would most likely remain weak for the remaining part of 2014 due to concerns of rising inflation, political noise and the PSEi’s fair valuation,” the brokerage firm said.

However, the stock market will exit the consolidation phase in 2015, with the second half of this year offering the best opportunity to start positioning, it added.

Since closing 2013 at 5,889.83, the benchmark index has risen 16.55 percent or 974.99 points to 6,864.82 despite volatility in the first half. It peaked at 7,392.20 on May 15, 2013.

“The good news is we have two conviction calls: first, the PSEi will exit consolidation as it approaches 2015. And we also expect PSEi to hit a new high of 7,800 by end-2015,” said April Lee-Tan, vice president and head of research of COL Financial.

The bullish 2015 outlook is backed by slower than expected monetary tightening globally and only a slight increase in interest rates domestically; the growing momentum of the Philippine economic growth due to resilient consumer spending and higher investment and infrastructure spending; and the higher earnings per share (EPS) growth of listed companies, Tan said.

Specifically, COL Financial expects EPS to grow 14.5 percent next year from the five percent forecast this year. Price-to-earnings ratio or P/E, an important gauge in valuing a company, will ease to 16.9 next year from the estimated 19.4 this year.

Tan said the climb in the EPS will be driven by banks (+15.3 percent), conglomerates (+15.2 percent), power (+20.9 percent) and property (+13.7 percent) sectors.

In particular, COL Financial favors banks given the rapid loan growth and normalization of trading gains; conglomerates due to the rebound of banks’ earnings and resilience of other subsidiaries; power sector amid higher generation capacity and normalization of revenues and expenses; and property companies because of strong demand for residential projects and continuous expansion of rental portfolio, Tan said.

On the macroeconomic side, Tan said the Philippines will enter a four-decade demographic “sweet spot” next year, wherein 63 percent of the population will be productive, resulting in a robust economic growth.

However, investors have to contend with the weakness in the stock market in the second half before reaping the benefits of another run-up in share prices.

“The second half will bring on more volatility than we did in the first half. That would again open another trading opportunity for range trading,” said Juanis Barredo, chief technical analyst of COL Financial.

“Weak volume flows and feeble momentum reads would restrain upsides and keep the market bound and open to another corrective lull,” Barredo said, adding that the PSEi might retreat to the 6,500 to 6,700 level.

In the first half, average value turnover dropped 29.3 percent to P8.1 billion from P11.5 billion a year ago while net foreign buying fell 26.9 percent to P44.9 billion from P61.5 billion.

source: www.abs-cbnnews.com