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Daily Edge Summary - June 18, 2015

Core Content

This document provides an overview of the Philippine stock market and highlights key financial results and analyst views for selected companies. It includes the PSEi index, market turnover, and currency exchange rates, followed by insights on the conglomerate and consumer sectors, particularly focusing on DNL (Dongyuan Industries) and EMP (Emperador Inc). It also outlines upcoming events and provides a detailed earnings and valuation table for various stocks.

Key Financial Data

• PSEi: 7,536.31 (+0.41%)
• Turnover (PHPm): 8,492.11 (+14.23%)
• PLDT ADR (USD): 62.89 (-0.02%)
• PLDT ADR (PHP): 2,841.37 (+0.07%)
• Ave interbank rate: 2.50 (-6.25 bps)
• PHP/USD rate: 45.14 (+0.04%)

Analysts

The following analysts are associated with Maybank ATR Kim Eng:

• Luz Lorenzo
• Ramon Adviento
• Michael Bengson
• Rommel Rodrigo
• Lovell Sarreal
• Katherine Tan

Top Idea: DNL (PHP18.68)

• Rating: HOLD (unchanged)
• Performance:
  • 1Q15 net income grew 36% YoY to PHP512m.
  • Revenues increased by 15% to PHP4.8b.
  • Gross profit rose by 9% to PHP818m.
  • Gross profit margin (GPM) declined by 1ppt to 16.9% due to a shift in sales mix.
• Segment Breakdown:
  • Oleo-fats: 53% of revenues, 38% of net earnings, GPM maintained YoY at 13.4%.
  • Oleochemicals: 32% of revenues, 23% of earnings, strong volume growth of 46% YoY.
  • Specialty plastics: 12% of revenues, 32% of earnings, 14% decline in revenues due to port congestion.
  • Aerosols: 3% of revenues, 3% of profits, 42% revenue and 38% earnings growth.

Market Talk

Consumer Sector

• EMP: Declared PHP0.15/sh cash dividend, 1.7% yield based on previous day's closing price. Dividend is slightly below last year's but in line with estimates.

Utilities Sector

• PNOC & AP: Joint venture for a 40-45MW hydro power project in Benguet.
• Subic Coal Plant: Approved to connect to the Luzon grid via a 500kV transmission line.
• Malaya Rehab: Expected to be completed this month, with a budget of PHP94m.

Banks

• BSP: Allows banks to establish trust companies, offering lower supervision fees and no reserve requirements. Minimum capitalization is PHP100m at inception, increasing to PHP300m in five years.

Forecast Changes

• Total Revenues: Increased from PHP22,506m to PHP23,551m (4.6% YoY).
• Gross Profit: Decreased from PHP3,975m to PHP3,825m (-3.8% YoY).
• Net Income: Slightly decreased from PHP2,487m to PHP2,467m (-0.8% YoY).
• Segment Forecasts:
  • Food Ingredients: Revised to PHP12,157m (down 3.5% YoY).
  • Specialty Plastics: Revised to PHP2,815m (down 15.9% YoY).
  • Oleochemicals: Revised to PHP7,829m (up 35.1% YoY).
  • Aerosols: Revised to PHP598m (down 5.8% YoY).
  • Others: Revised to PHP151m (up 10.9% YoY).

Earnings and Valuations Table (as of 17 June 2015)

The Week Ahead

Several companies are scheduled for their Annual Stockholder's Meetings, including:

• Shang Properties, Inc.
• Travellers International Hotel Group, Inc.
• Megaworld Corporation
• Panasonic Manufacturing Philippines Corporation
• Keppel Philippine Holdings, Inc.
• A. Brown Company, Inc.
• Sta. Lucia Land, Inc.
• Century Properties Group, Inc.
• LT Group, Inc.

This summary provides a concise overview of the market performance and analyst insights for the specified period.