Weekly Equities Summary and Outlook : July 30 – August 3, 2018
Outlook. We expect the PSEi to trade sideways, within the 7,700-7,800 range, ahead of the Bangko Sentral ng Pilipinas’ (BSP) policy meeting and Q2 GDP results on August 9, and more earnings releases from heavily-weighted stocks such as GLO, SM, SMC, TEL, MEG and AGI to be released this week. Yesterday, SMPH and ALI announced their first half 2018 net income: SMPH’s second quarter net income increased by +16% to P9bn, bringing 1H18 to P16.6b up by +16% (in-line) while ALI recorded a 19% growth in 2Q18 resulting in a growth of +18% to P13.6b in the first half (slightly behind). Meanwhile, SECB, which released their earnings this afternoon, was down 18% in 1H18 to P4.3b (-20% for 2Q18, behind) on the back of lower trading gains (-59%,) higher tax expense (+55%) and slow growth in net interest income (+8%).
Market Review. The PSEi bucked regional markets last week, up +1.53% week-on-week (w/w), as foreign flows returned for the second week in a row. July was a positive month for the PSEi, up by +6.6%, after five consecutive months of losses. The market was the second top performer next to Thailand’s +6.7% gain in July. From its peak of 9,058 in January, the market was down by -13.7%.
Bank lending (net of RRP) grew by 19.1% year-on-year (y/y) in June, slightly slower than the 19.3% in May. The top five sectors (64% of total) were the following: real estate activities (+16.1% vs 15.7% in May), wholesale and retail trade, repair of motor vehicles and motorcycles (+24.9% vs 23.4%); manufacturing (+17.8% vs 17.7%); electricity, gas, steam and airconditioning supply (+10.3% vs 11.6%) and financial and insurance activities (+31.1% vs 31.3%). In terms of loans for household consumption, the fastest segment was credit cards at +21.4%, faster than May’s +21.1% growth. Motor loans were slower at +19.9%, slightly slower than +22.0% in May 2018. Meanwhile, domestic liquidity (M3) was up by 11.7% y/y to about P11.1tr in June 2018, slower than the 14.3% expansion in May. This was the slowest growth since May 2017 when it grew 11.5%. Domestic claims and net foreign assets grew slower, up by 16.0% and 2.4% in June versus 16.8% and 5.4%, respectively, in May.Inflation clocked in at 5.7% in July, another 5-year high and faster than the 5.2% recorded in June. Spikes were seen in different categories: Food and non-alcoholic beverages were up by 7.1%, alcoholic beverages and tobacco grew 21.5%, utilities and fuels by 5.6%, transportation by 7.9% and health by 3.7%. Average inflation from January to July was at 4.5%.
ALI’s 1H18 net income grew 18% to P13.6b on the back of higher residential revenue (+31%) from foreigners, especially Chinese nationals. Office rentals were also higher by 20%, pushed by POGOs, while retail grew 12%. On the other hand, SMPH earnings were up by 16% to P16.6b in 1H18 as revenues increased by 15% in 1H18 on the back of robust revenues in residential (+23%) and malls (+12). Reservation sales also grew 25% to P34.45 in 1H18. More details on SMPH this Thursday.Read full article here.
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