WEDNESDAY, 21 JANUARY 2015 STOCKS IN FOCUS: FGEN: Raises Php7.5Bil from private placement at Php25.25/sh FGEN disclosed that it has raised Php7.5Bil in proceeds from the sale of 297Mil common shares at Php25.25/sh via private placement. The selling price represents a 2.9% discount to FGEN’s closing price of Php26/sh on Tuesday. Broken down, FGEN sold 17.6Mil unissued common shares and 179.1Mil treasury shares to its parent company First Philippine Holdings (FPH). The remaining 100.3Mil shares taken from FGEN’s treasury stock were sold to other investors. The shares sold represent 8.8% of FGEN’s total outstanding shares prior to the transaction. Following the transaction, FPH will maintain its 66.2% stake in FGEN. Proceeds from the placement will be used by FGEN for power projects and general corporate purposes. We currently have a BUY rating on FGEN with a FV estimate of Php36.50/sh. (source: FGEN) (As of January 20, 2015) INDICES INDICES PSEi All Shares Financials Holding Firms Industrial Mining & Oil Property Services Dow Jones S&P 500 Nasdaq Index decliners led gainers 18 to 10 while 2 issues closed unchanged. All sectors closed lower last session, led by Mining & Oil (-2.91%). Significant decliners were LTG (-3.34%), DMC (-2.36%), AGI (-2.29%), SCC (-2.04%), and BPI (-1.86%). Meanwhile, notable gainers were MPI (+3.60%), GTCAP (+1.68%), and BLOOM (+1.32%). Value turnover increased to Php10.1 Bil from Php8.1 Bil the previous session. Foreigners were net sellers, with net selling amounting to Php270 Mil. 3.7 3.1 20.5 0.02 0.15 0.44 5.66 9.42 11.45 INDEX GAINERS Ticker Company MPI Metro Pacific Inv Corp GTCAP GT Capital Hldgs Inc BLOOM Bloomberry Resorts BDO BDO Unibank Inc GLO Globe Telecom Inc Price 5.18 1149.00 12.30 111.50 1740.00 % 3.60 1.68 1.32 1.18 0.87 INDEX LOSERS MARKET SUMMARY: The PSEi continued to decline as investors continued to profit-take given the lack of new leads. The main index lost 32.51 points or 0.43% to close at 7,452.81. 17,515.2 2,022.6 4,654.8 YTD% 26.54 20.80 20.10 21.43 39.86 37.75 32.59 15.06 INDEX GAINERS OTHER NEWS: HOUSE: Forecasts Php1.1Bil in sales from General Santos mass housing project PXP: Pitkin to lose stake in West Linapacan oil field DMPL: Secures SEC and PSE approval for rights offer Economy: BOP a deficit for 2014 but showing improvement Economy: IMF cuts 2014 growth forecast but raises 2015 projection Economy: DoTC to declare failed bidding for MRT-3 maintenance contract Economy: CAAP upgrades air traffic management system Close Points % 7,452.81 -32.51 -0.43 4,366.13 -18.48 -0.42 1,715.02 -5.55 -0.32 6,593.04 -26.00 -0.39 12,154.40 -40.27 -0.33 16,416.56 -492.31 -2.91 2,924.31 -1.37 -0.05 2,147.08 -11.29 -0.52 INDEX LOSERS Ticker LTG DMC AGI SCC BPI Company LT Group Inc DMCI Hldgs Inc Alliance Global Inc Semirara Mining Bank of Phil Islands Price 13.30 14.90 23.45 144.00 92.25 % -3.34 -2.36 -2.29 -2.04 -1.86 TOP 5 MOST ACTIVE STOCKS TOP 5 MOST ACTIVE STOCKS Ticker MBT ALI TEL BDO SMPH Company Metrobank Ayala Land Inc Phil Long Distance Co BDO Unibank Inc SM Prime Hldgs Inc Turnover 788,970,400 710,286,800 634,494,700 484,920,700 406,020,500 PHILIPPINE EQUITY RESEARCH STOCKS IN FOCUS: FGEN: Raises Php7.5Bil from private placement at Php25.25/sh FGEN disclosed that it has raised Php7.5Bil in proceeds from the sale of 297Mil common shares at Php25.25/sh via private placement. The selling price represents a 2.9% discount to FGEN’s closing price of Php26/sh on Tuesday. Broken down, FGEN sold 17.6Mil unissued common shares and 179.1Mil treasury shares to its parent company First Philippine Holdings (FPH). The remaining 100.3Mil shares taken from FGEN’s treasury stock were sold to other investors. The shares sold represent 8.8% of FGEN’s total outstanding shares prior to the transaction. Following the transaction, FPH will maintain its 66.2% stake in FGEN. Proceeds from the placement will be used by FGEN for power projects and general corporate purposes. We currently have a BUY rating on FGEN with a FV estimate of Php36.50/sh. (source: FGEN) George Ching Ticker: FGEN Rating: BUY Target Price: Php36.50 OTHER NEWS: HOUSE: Forecasts Php1.1Bil in sales from General Santos mass housing project 8990 Holdings, Inc. (HOUSE) said that it is looking at Php1.1Bil in potential sales from its second project in Mindanao. The company is spending Php400Mil to build Deca Homes Gensan Bayview, a 19-hectare mass housing project in General Santos City. The project will have a total of 1,271 house and lot units with sizes of 80 to 150 sqm each. The units are priced at Php450,000 to Php750,000 each. Construction will start within the first quarter and around 500 units are expected to be turned over to buyers within this year. (source: BusinessWorld) Jed Frederick Pilarca Garie Ouano Meredith Hazel Cua PXP: Pitkin to lose stake in West Linapacan oil field Pitkin Petroleum Plc, a 50.3%-owned subsidiary of PXP, is set to lose it s 58.3% stake in the West Linapacan oil field project (Service Contract 14C2) due to its failure to comply with the farm-in agreement with the project’s other stakeholders. In particular, Pitkin failed to complete phase 2 of the program after several extensions already. Pitkin’s stake in the project will be reassigned to the project’s other stakeholders, namely, Philodrill Corp., Cosco Capital, Inc., Forum Energy Philippines Corp., Oriental Petroleum & Minerals Corp., Linapacan Oil & Gas Power Corp., and PetroEnergy Resources Corp. The reassignment of Pitkin’s interest is subject to the approval of the Department of Energy. (source: BusinessWorld) DMPL: Secures SEC and PSE approval for rights offer DMPL disclosed that it has obtained approval from the SEC and PSE for its planned stock rights offering. Based on an earlier disclosure, DMPL plans to raise US$180Mil from the offer of up to US$641.9Mil new shares. The company will use the proceeds from the offer to repay its US$165Mil bridge loan used to finance the acquisition of the US food business. (source: DMPL) Economy: BOP a deficit for 2014 but showing improvement The BSP reported that the country’s balance of payments (BOP) stood at a US$2.88Bil deficit in 2014, turning around from a surplus in 2013 but lower than the US$3.40Bil deficit expected by the BSP. According to the BSP, large outflows in foreign portfolio investments and residents’ investments abroad driven by the impending tightening of US monetary policy resulted in the deficit. For December alone, however, the country posted a US$843Mil surplus, an improvement from the US$314Mil deficit in November. The BSP attributed the December surplus to the country’s strong macrofundamentals. WEDNESDAY, 17 DECEMBER 2014 (source: BSP) WEDNESDAY, 21 JANUARY 2015 page 2 PHILIPPINE EQUITY RESEARCH Economy: IMF cuts 2014 growth forecast but raises 2015 projection The IMF reduced its Philippine economic growth estimate for 2014 due to slow government spending and weak agricultural output. The 2014 growth forecast was reduced to 5.8% from 6.2%. However, the IMF forecasts that the Philippines will continue to outpace regional and global growth. For 2015, the IMF’s Philippine GDP growth forecast was raised to 6.6% from 6.3% with lower global oil prices and an anticipated pick up in government spending expected to boost growth. (source: BusinessWorld) Economy: DoTC to declare failed bidding for MRT-3 maintenance contract According to Transportation Secretary Joseph Abaya, the bids committee will have to declare a failed bidding for the second time after finding no takers for the Php2.4Bil MRT-3 thee-year maintenance contract. The government offered to pay as much as Php800Mil a year with a promise to impose less harsh fines for train glitches. Previously, there should be 20 and 15 trains running during peak and off-peak hours respectively. Investors initially had apprehensions, prompting the department to relax the rules and penalize them only when trains drop below 12 during peak and off-peak hours. In addition, the penalty before was on an hourly basis but was amended to once every five hours. Despite the sweeter deal, no one procured documents and consequently, no bids were submitted. Currently, the government pays APT Global Php57Mil a month or Php684Mil a year as an interim contractor. They will continue to be in charge of the rail system’s upkeep until the government awards the contract to a new service provider. (source: BusinessWorld) Economy: CAAP upgrades air traffic management system The Civil Aviation Authority of the Philippines (CAAP) has inaugurated upgrades to its Eurocat air traffic management system, which has been in operation since 1996. The project was done in partnership with Thales Australia and Pacific Hemisphere Development for a total cost of Php159.9Mil. The system controls en route, overflight, arriving and departing air traffic over a radius of up to 250 nautical miles. Prior to the upgrade, flights at NAIA especially during the rainy season were affected by continued outages, resulting in flight disruptions. According to CAAP, the improvement is a critical component of the Php13Bil next-generation satellitebased communications, navigation, surveillance/air traffic management (CNS/ATM) project that was signed during the previous administration. The CNS/ATM records the exact position of aircraft by using transponders and satellites which can boost the capacity of air routes and airports. In addition. The technology includes a computer-based flight data processing system that will enable aircraft operators to meet their planned times of departure and arrival without compromising agreed levels of safety. The International Civil Aviation Organization has given the Philippines until next year to adopt the satellite-based CNS/ATM. (source: BusinessWorld) WEDNESDAY, 21 JANUARY 2015 page 3 PHILIPPINE EQUITY RESEARCH Calendar of Key Events JANUARY MON TUES WED THURS FRI SAT 29 30 31 1 2 3 HOLIDAY HOLIDAY 5 6 7 PSB: Ex-date Php0.75 Cash Dividend PGOLD: Ex-date Php0.30 Cash Dividend COSCO: Ex-date Php0.08 Cash Dividend 8 9 GTCAP: Annual Shareholders Meeting 10 12 RCI: Ex-date Php0.02 Cash Dividend 13 14 15 16 17 SPECIAL NONWORKING HOLIDAY SPECIAL NONWORKING HOLIDAY 19 20 21 22 23 NOW: Annual Shareholders Meeting 24 27 28 29 30 31 SPECIAL NONWORKING HOLIDAY 26 WEDNESDAY, 17 DECEMBER 2014 WEDNESDAY, 21 JANUARY 2015 page 4 PHILIPPINE EQUITY RESEARCH Investment Rating Definitions BUY HOLD SELL Stocks that have a BUY rating have attractive fundamentals and valuations, based on our analysis. We expect the share price to outperform the market in the next six to twelve months. Stocks that have a HOLD rating have either 1.) attractive fundamentals but expensive valuations; 2.) attractive valuations but near term earnings outlook might be poor or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely inline or underperform the market in the next six to twelve months. We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to twelve months. Important Disclaimers Securities recommended, offered or sold by COL Financial Group, Inc.are subject to investment risks, including the possible loss of the principal amount invested. Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. COL Financial ans/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of securities of the companies mentioned in this report, and may trade them in ways different from those discussed in this report. 2401-B East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City 1605 Philippines Tel: +632 636-5411 WEDNESDAY, 21 JANUARY 2015 Fax: +632 635-4632 Website: http://www.colfinancial.com page 5
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