Property>Telecom>Banking>Consumer>Power
Property Sector Outlook: Still on solid footing
- Demand for residential properties to remain strong despite higher interest rates
- Weaker peso positive for office and commercial leasing
- Revenue growth secured by strong historical take up sales and expansion of leasing portfolios
- Lanbank for expansion already in place
- Valuations revert back to mean
- Top Pick/s: ALI @ 36.08 and MEG @ 4.54
Telecom Sector Outlook: Slow and Steady Growth
- Pricing competition has subdued
- Postpaid still has room to grow (also broadband revenues)
- Completed modernization programs to reduce cost
- Upcoming third player not yet a concern (ABS Mobile)
- Top Pick/s: TEL (FV @ 3,260)
Banking Sector Outlook: Risks already priced in
- Trading gains to decline (unfavorable trading environment)
- Possible spike in interest rates pose further threat
- Banks may need to raise capital ahead of additional BSP requirements
- Risks mostly priced in at current valuations
- Core businesses to continue growth
- Top Pick/s: BDO and MBT
Consumer Sector Outlook: Continued outperformance not expected
- Decelerating factors: post election, higher inflation (rise of commodity price) and peso depreciation
- Revenue growth to normalize, coming from a high base in 2013
- Expecting limited improvement in margins
- Valuations unattractive (PE at 26.8x)
- Top Pick/s: Only buy URC @ 101, JFC @ 110 and PGOLD @ 36
Power Sector Outlook: Expecting a quiet year
- Power rates to remain stable
- Ancillary service revenue for hydro plants to remain depressed
- No significant increase in capacity to come on line
- Meralco to enjoy added earnings contribution from retail electricity supply under open
- access
- Valuations not yet compelling
- Top Pick/s:
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