Weekly Equities Summary and Outlook : April 30 – May 4, 2018
Outlook. We expect the PSEi to move sideways early this week as investors await the results of Q1 2018 GDP and the Monetary Board (MB) policy meeting which will be both released on May 10. In-line or better results from consensus -- Q1 GDP accelerating to 6.7% from 6.5% in Q4 and a 25 bp rate hike from the BSP -- are expected to deliver a relief rally in the local market, which has underperformed global equities due to weak sentiment. So far, Q1 earnings results have failed to lift the market as outcomes were mixed, four were in-line, one outperformed and four underperformed. This week, ALI, ICT, TEL and LTG will release their Q1 earnings results.
Market Review. The PSEi fell by 12.9 points (-0.2% ) today to close at 7,533.3. Last week, it dropped by 174.8 points (-2.3% week-on-week, w-o-w) to end on Friday at 7,546.2 after the PSEi faltered to its one-year low of 7,535.1 (-201 points or -2.6% from previous day) on May 3 as global markets digested the Fed minutes that reaffirmed the outlook for more Fed rate hikes as US inflation had moved nearer its target, coupled by concerns on reignited trade war between the US and China.
Philippine Statistics Authority (PSA) reported that April headline inflation accelerated for the fourth straight month to 4.5% from 4.3% in April and 3.2% in the same period last year, albeit in-line with consensus and within the BSP’s target range for the month of 3.9-4.7%. YTD, inflation averaged 4%. On a month-on-month (m-o-m) basis, consumer prices steadied from previous month’s 0.5% vs 0.9% in Jan and 0.7% in Feb. Faster price upticks from previous month’s inflation were seen in seven of the 11 commodity groups.
Globe Telecom (GLO) disclosed that Q1 2018 core income grew 24% to P4.6bn on the back of strong mobile data (+26% y-oy) and home broadband business (+11% y-o-y). This comprised 31% of the full year 2018 consensus of P14.6bn. Service revenues expanded 8%, while EBITDA grew 18% to P15.8bn. EBITDA margin improved to 47% from 43% in the same period last year. GLO upgraded is 2018 guidance for revenues to mid-single digit growth from low-single digit growth and EBITDA margin from ~40% to mid-40%. GLO share prices closed today at P1,580/share, +7.1% from Friday’s closing but -17% YTD.
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