Weekly Equities Summary and Outlook : March 05 – 09, 2018
Market Outlook. We expect the market to trade between 8,300-8,600. Healthy fourth quarter/full year (FY) 2017 earnings to support the domestic market. Out of 18 companies that have released their FY 2017 earnings -- seven were in-line, two outperformed, while nine underperformed. Key data to watch out for this week are US CPI and retails sales for Feb. on March 13 and 14 (US time), respectively, and OFW remittances for Jan. on March 15.
Drivers. Slower month-on-month (m-o-m) Feb. US inflation (as market expects), following sluggish US wage growth (+0.1% from 0.3% in Jan.) in Feb. despite strong hiring (+313K) could further ease inflationary fears, but optimism may wane as investors further digest trade war rhetorics from Pres. Trump.
Market Review. PSEi lost 33.9 points (-0.4% from previous closing) today to close at 8,419.57. Yesterday, it gained 81 points (+1% from previous closing) to end at 8,453.5, tracking the Wall Street and Asian markets rally after Feb. US jobs report showed moderated wage gains amid sustained US growth. Last week, PSEi dropped 86 points (-1% week-on-week, w-o-w) to close on Friday at 8,372.5 due to lack of catalysts. It was the 3rd straight week of decline for the PSEi, driven by net foreign outflows totaling P2.6bn last week. YTD, PSEi was down 1.6%.
Philippines’ net FDI hit a record high of $10bn in FY 2017 (+21.4% y-o-y) from $8.3bn (revised) in 2016, exceeding BSP’s forecast of $8bn for the year.
PH exports started 2018 at a slower pace, gaining 0.5% y-o-y to $5.2bn from 10.2% growth in Dec. 2017 due to slowdown in exports from the US (-12.2% y-o-y) and Japan (0.7%). Receipts were pulled down by lower manufactured goods (except Electronics) and agro-based (-11.2%) exports. Meanwhile, imports for Jan. accelerated to 11.4% y-o-y to $8.5bn from 10.4% growth in the previous month. It was boosted by robust capital goods (+16.9%) and raw materials & intermediate goods (+14.9%) imports, which could reflect robust economic activity for first quarter. Collectively, these accounted for 70% of total imports receipts.
Aboitiz Equity Ventures (AEV) reported FY 2017 core income of P23.9bn (+5% y-o-y), ahead of consensus of P22bn. Income was boosted by strong performance of AP (+13%) and AboitizLand (+286%). Consolidated EBITDA rose 18% y-o-y to P57bn. AEV share prices closed on Tuesday at P76/share, +2.7% YTD. Philippine Long Distance Telephone Co. (TEL) reported FY 2017 recurring core income of P22.3bn (+11% y-o-y), in line with the company’s guidance of P22bn. TEL’s income was boosted by double-digit growth of its Home (+13% y-o-y) and Enterprise (+11% y-o-y) business amidst weak Individual business (-11% y-o-y). EBITDA rose 11% y-o-y to P67.8bn (excluding manpower reduction expenses), with EBITDA margin improving to 45% from 39% in 2016. TEL’s share prices closed today at P1,567/share, +5.9% YTD.
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