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Stocks reseach from banks

Started by jackxtwist, August 18, 2018, 08:24:06 PM

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Not sure if this new thread is needed since there are already two (to my knowledge) existing threads.  Please merge if necessary.

This thread will contain research from the buy-side and sell-side. Research will mostly stock-specific, industry, and macro.



GT Capital: Three reasons to turn positive; upgrade to Buy [Goldman Sachs]

9 August 2018 | 5:13PM SGT
GT Capital (GTCAP), the Philippines autos proxy with a leading 38% market share, has seen its share price decline 30% from its January 2018 peak amid a number of concerns about GTCAP and the sector. However, we now see three reasons to turn positive on the shares: (1) we believe bad news has been priced in; (2) we forecast auto sales to rebound in 2019E; and (3) we expect the new Toyota Vios to add impetus to sales.

We raise our 12-month SOTP-based target price to P1,270 from P1,147.83 previously, driven by our earnings revisions, a higher multiple for its autos business and our ASEAN Banks team's revised target price for Metrobank. With our new 12-month target price implying 30% upside potential, we upgrade GTCAP to Buy from Neutral.


Philippines Banks: Macro concerns bite; BPI remains Buy, BDO down to Neutral [GS]
9 August 2018 | 5:01PM SGT

Philippines banks under our coverage have declined by 16% YTD on average, underperforming the PSE index which fell 10% (7 Aug close). In our view, this is pressured by large foreign investor outflows given concerns over the economy and potential overheating risks. Year to date, the PHP has depreciated by 6%. We continue to see near-term risks to banks' share prices from FX/macro vulnerabilities. Overall, while long term opportunities for the Philippines banks remain as credit is significantly underpenetrated vs regional peers, near term banks could see slower growth given more challenging environment. For the rest of the year, we expect loan growth to moderate given slower government infrastructure execution and rising rates. We believe there could be further downside risk to non-NII given challenging capital market environment which will hurt market related fee income. Although some of these headwinds can be partially offset by better margins driven by rising rates. We cut 2018E-2020E earnings of Philippines banks under our coverage by up to 7%, as a result our 3-staged DDM based target prices fall by up to 9%. We remain Buy-rated on BPI as we are constructive on its growth into SME and consumer growth engines while sustaining its returns leadership. We downgrade BDO to Neutral from Buy as its lower capital position could impede its growth; and we maintain Neutral on MBT.


Cebu Air Inc. (CEB.PS): Lower estimates post a difficult quarter but maintain Buy on attractive valuations and easing headwinds [GS]

Cebu Air reported 2Q18 results on Aug 9, 2018. Revenue/pre-exceptional earnings missed our estimates by 11%/34% driven mainly by lower than expected passenger yields and ancillary revenue offset partially by strong cargo yields.

We lower our net income estimates by up to 24% for 2018E-20E driven mainly by lower passenger yields and slightly higher ex-fuel costs (driven by the weak PHP), offset partially by higher cargo volumes and lower fuel costs (marking to market lower ytd fuel prices). We lower our passenger yield assumptions by up to 5% for 2018-20E to reflect YTD weakness and mix changes as Cebu adds back long haul flights to the Middle East. Our 2018E net income estimates are 17% above Bloomberg consensus.

We lower our 12-month PT to PHP 88.50 (from PHP 110.20), based on 0.88X the average of 2018E and 2019E EV/GCI (from 2018E EV/GCI). We lower our target EV/GCI multiple to 0.88X (-1.5 S.D.) from 0.94X (-1 S.D.) to reflect the lower returns profile and softer earnings given competitive pressures and weak currency, which is hurting costs.

We maintain Buy as we believe low valuations offer favorable risk-reward. In the near term, we expect positive drivers from: (1) re-opening of Boracay from October after 6 months closure for a clean-up operation; (2) rising yields, as guided by Cebu and AirAsia reflecting higher costs; (3) stabilizing currency given rate hikes by the central bank.

With this note, we transfer the primary coverage of Cebu Air Inc. (CEB.PS) to Ben Hartwright.

12m Price Target: P88.50
Price: P71.40
Upside: 23.9%


Philippines airlines market dynamics
Cebu Air is the leading player in the Philippines domestic market
The Philippines airlines market is dominated by three players - Cebu Pacific, Philippine Airlines (PAL) and AirAsia Philippines (AAP).

Cebu Pacific is the domestic market leader (year 2017 as measured by ASK) with a 51% market share followed by PAL (35% market share) and AAP (13% market share). PAL leads the international market with a market share of 69% followed by Cebu Pacific (25% market share) and AAP (6% market share).
Market Share


Salamat @jackxtwist
Taas ng upside ni GTCAP, sana di ma break yung support nya ngayon.