Weekly Equities Summary and Outlook : May 14 – 18, 2018
Outlook. We expect the PSEi to consolidate around 7,500-7,800 due to lack of catalysts. Foreign outflows may persist in the near-term as passive funds flow to China with the inclusion of China A shares in the MSCI Emerging Markets (EM) index beginning June 1. First quarter earnings results of 9% growth was behind full year consensus of 13% due to rising input cost and inflation and weaker PHP. Results were mixed -- 3 outperformed, 15 in-line and 12 underperformed.
Market Review. PSEi fell 80.8 points (-1% week-on-week, w/w) to close on Friday at 7,672.3. The local bellwether started the week strong, up 133.9 points on Tuesday. However, concerns over rising US 10-year Treasury yields at 7-year high, coupled by heightened trade and geopolitical tensions resulted in three consecutive trading sessions of decline.
Bangko Sentral ng Pilipinas (BSP) reported a balance of payments (BOP) deficit in April amounting to $270mn, a reversal of the BOP surplus of $917mn in the same period last year. This resulted in a ytd BOP deficit of $1.5bn, significantly higher than the $78mn deficit recorded from Jan-April 2017 and exceeding BSP’s full year target of $1bn for 2018.
Megawide Construction Corporation’s (MWIDE) net income (before minorities and payments of preferreds) grew 16% y/y to P635.8mn, ahead of the consensus income of P1.9bn. Earnings were boosted by the solid performance of its airport business (accounted for 16% of revenues and 62% of earnings). Airport revenues jumped 13% y/y to P646.1mn, EBITDA by 23% y/y to P480.5mn and net income by 37% y/y to P369.7mn. Its construction revenues dropped by 11% y/y. MWIDE share prices closed today at P21.85/share, +21.4% YTD.
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