J.P. 摩根-亚太地区-股票策略-菲律宾股市策略：检验牛市的力量-2019.7-61页.pdf

Philippine Equity StrategyTesting the bull market strengthPhilippine Equity StrategyJeanette YutanAC(63-2)878-J.P.Morgan Securities Philippines,Inc.See the end pages of this presentation for analyst certification and important disclosures,including non-US analyst disclosures.J.P.Morgan does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.Asia Pacific Equity ResearchJuly 2019Daniel Andrew Tan(63-2)554 J.P.Morgan Securities Philippines,Inc.ASEAN Equity StrategyRajiv Batra(65)6882-J.P.Morgan India Private Limited2Philippine Equity StrategyAgendaSummaryMacro:Balancing growth and currency stabilityFiscal policy:Outlook for the second half of Dutertes termStock Views:Top Picks&AvoidsSector ViewsEarnings&valuations:Downside risks to Street EPS expectations3Philippine Equity StrategySummaryStock Views:Top Picks&AvoidsSource:J.P.Morgan estimates,Bloomberg.Valuations as of 19 July 2019.PH equities are officially in bull market territory after breaking out from the 7400-8100 range to reach a 15-month high of close to 8400.Two major drivers behind the sharp run-up:(1)Widening growth differential between PHs domestic-centric GDP growth and the rest of the world,(2)positive real interest rates.Along with a light investor positioning,these led to a reversal to net foreign inflows.Key drivers that will test/support the bull market strength:(1)GDP growth could decelerate in 1H19 due to the govt budget impasse and risks to net trade(2)Our market EPS growth of 11%/12%is lower than street(3)Twin stimuli from expansionary fiscal and monetary policies.Quick inflation deceleration provides more room for accommodative monetary policy we are expecting 2 more 25bps cut in 2H19.PH is at its best fiscal health in decades we expect govt spending to reaccelerate its momentum in 2H19.(4)persistent structural CAD(2%of GDP)amid dampened outlook on external trade,slowdown in BPO and OFW flows,and chronically low FDIs is a risk to currency.What actions should investors take?With flow-driven market strength,we think investors should revisit index laggards that have decent earnings clarity,such as MBT,and PGOLD.We expect profit taking on the big real estate names that have performed well amid expectations of further monetary policy easing and nagging concerns of a POGO clampdown and a ban on NCR ecozone(SMPH).We also see this as an exit opportunity from stocks with inherent company-or industry-specific risks,i.e.RRHI and SMPH.MSCI Philippines 12m forward PERSource:Bloomberg.SharePTMkt capPER(x)P/BV(x)DY(%)ROEPrice(Php)(Php)(US$m)FY19EFY20EFY19EFY19EFY19ETop PicksPGOLD 45.951.02,59119.017.22.041.011.6MBT 78.090.06,07611.89.91.021.49.0RLC 27.229.02,76515.916.51.371.38.9MEG 6.46.64,06412.211.01.161.210.0ICT 141.60157.005,58126.220.83.323.412.5Stocks to AvoidGLO 2244.01650.05,85015.219.43.734.125.8RRHI 78.067.02,40727.121.71.690.76.4SMPH 38.735.021,87530.326.83.701.112.84Philippine Equity StrategyOur Base,Bull,Bear Cases for PhilippinesBase Case(PSEi=8,400)EPS Outlook5%downside to consensus FY19E/FY20E EPS growth of 13%/12%for MSCI PHAve EPS growth of 7%in the last 8YStable PERSteady 16.8x PER,in line with 10Y meanGDP support from strong fiscal impulse,moderation of inflation,and light investor positioning limit risk of further de-ratingBull Case(PSEi=9,200)EPS potential upside5%upward EPS revision vs consensus 2020E EPS growth of 12%Established downtrend in inflation and shift to an accommodative monetary policyGDP growth moves back to 7-8%Banks asset quality remains healthy,a sustainable high single-digit credit growth.PER in line at 10Y mean of 17xStable fiscal healthBear Case(PSEi=6,400)EPS potential downside10%downside EPS revision or broadly flat EPS growth in 2020ESharp increase in global oil prices,sustained high inflation,and further tightening of monetary policy which will dampen demand and pressure margins across sectorsThird telco aggressively rolls out its infra leading to lower yields and price competitionBanks asset quality deterioratesPER de-rating of 20%to 13.5x or 2SD below 10Y average driven by:Elevated inflation trajectorySharp PHP depreciation on further widening of CADDeterioration of fiscal metrics due to further strength in government spending,increase in govt debt,shortfall in govt revenue collectionsGDP growth slows down to below 6%5Philippine Equity StrategyAgendaSummaryMacro:Balancing growth and currency stabilityFiscal policy:Outlook for the second half of Dutertes termStock Views:Top Picks&AvoidsSector ViewsEarnings&valuations:Downside risks to Street EPS expectations6Philippine Equity StrategyMacro:Medium-term structural drivers intactStable fiscal dynamics(govt debt to GDP)Source:CEIC,J.P.Morgan.Elevated medium-term private consumption trendSource:PSA,J.P.Morgan.Attractive demographicsSource:PSA.Source:Department of Budget and Management.Improving infrastructure spending trendPrivate ConsumptionGDP1951-19606.5%6.4%1961-19704.7%5.9%1971-19804.7%5.9%1981-19903.0%1.8%1991-20003.5%3.1%2001-20104.5%4.8%2011-20186.2%6.2%7Philippine Equity StrategyMacro:Medium-term risksSource:National Statistics OfficeDeclining labor participation ratesFDI remains low at 3%of GDPSource:CEICSource:National Statistics OfficeShifts in labor:2008(inside)vs.2018(outside)Participation rate(%)200863.6200964.0201064.1201164.6201264.2201363.9201464.4201563.7201663.4201761.2201860.92018 by regionNational Capital Region60.3Cordillera Admin.Region61.9Ilocos 61.7Cagayan Valley63.9Central Luzon59.9Calabarzon62.7Mimaropa62.0Bicol 60.9Western Visayas61.2Central Visayas61.3Eastern Visayas61.2Zamboanga Peninzula 56.3Northern Mindanao66.3Davao Region 60.3Soccsksargen61.7Caraga 64.4ARMM46.68Philippine Equity StrategyGDP:Slower growth in 1H due to private and public capexGDP growth slows to 5.6%oya in 1Q19Trade deficit mirrors domestic demand trendConsumption holds up,but FAI and govt spend slow down9Philippine Equity StrategyGDP:Expecting better govt spending in 2H,offset by trade Fixed investments have moderatedDriven by imported goodsSource:PSA,J.P.Morgan estimates.1.Contribution to growth of GDP.2.Debt with original maturity of less than one year.3.Exports of goods,services,and net transfers.Philippines:economic indicatorsAverage2012-1620172018f2019f2020fReal GDP,%change6.66.76.25.76.0Consumption5.04.75.24.94.8Investment3.62.63.85.26.1Net trade-2.1-0.7-2.8-4.3-4.9Consumer prices,%oya2.22.95.22.53.1%Dec/Dec2.32.95.12.03.7Wholesale prices,%oya-4.2-0.90.71.21.2Government balance,%of GDP-1.8-2.6-3.2-2.8-3.0Merchandise trade balance(US$bn)-21.9-34.6-41.5-44.0-44.3Exports45.550.052.157.763.7Imports67.484.693.7101.8107.9Current account balance7.6-2.4-8.0-7.5-9.2%of GDP2.7-0.8-2.4-2.2-2.4International reserves,(US$bn)73.771.870.873.872.8Total external debt,(US$bn)77.471.569.567.565.5Short term16.416.216.216.216.2Total external debt,%of GDP2823212017Total external debt,%of exports7659544844Interest payments,%of exports2443310Philippine Equity StrategyGDP:Late budget approval could drive better 2H19 growthFull year re-enacted budget impactKey detailsAmount(Php bn)RemarksProposed 2019 budget3,757Cash-basedReenacted 2018 budget3,300Php3.767Tr budget in 2018,but only Php3.3Tr available for spendingDecline in budget 2019 vs.2018467Impact to GDP1.2-1.5%BorrowingsForeign(net)140Domestic(net)903Total1,043Potential decline in borrowings45%DeficitDeficit program624%of GDP3.2%Decline in budget deficit(%of GDP)2.4%Source:DBM,Philippine Star,J.P.Morgan estimatesSource:Rappler,Inquirer,BusinessMirrorPresident Duterte signed the 1Q19 budget on April 15.The President vetoed Php95.3bn worth of infrastructure funds which are not within programmed priorities.DOF Secretary Dominguez estimated that the government was not able to spend Php47bn in 1Q19 due to the delay.Socioeconomic Secretary Pernia said 1Q19 growth would have been 6.6%(instead of 5.6%)if the 2019 budget was approved on time.There is a 45-day spending ban around elections which could affect GDP in 2Q.11Philippine Equity StrategyInflation:Downtrend continuesBenign price pressures across the inflation basketSharp improvement in November and DecemberHeadline CPI declines furtherRice tariffs signed into lawSource:PSA,J.P.MorganRemoval of quotas on rice imports:35%tariff from ASEAN and 50%from non-ASEANExpected to lower rice prices by Php4-7/kilo(current retail price of well milled rice at Php41/kilo)Establishment of Php10bn annual Rice Fund for next 6 years to aid farmers%oya2017 2018 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19CPI2.95.25.14.43.83.33.03.22.7Food 2.63.66.75.64.73.43.03.42.712Philippine Equity StrategyMonetary policy:Easing bias continuesBSP has hiked policy rate by 175bps in 2018Benjamin Diokno appointed BSP GovernorExpecting inflation to breach lower end of targetRRR cuts:200bps this year and countingSource:BloombergSource:BloombergDiokno said that they have a lot of policy space,considering the global trend of monetary easing.He said there is potential for easing especially in the third quarter.Philippine Star,GMA NewsBSP Governor Diokno expects a policy rate cut to precede a cut in the reserve requirement.BusinessWorldJPM expects and 50bps policy rate cuts in 3Q19,bringing the policy rate to 4%by end of 201913Philippine Equity StrategyInterest rates:Downtrend amid tight liquidityModerating inflation outlookDeclining excess liquidity(%of deposits)Targeting more domestic borrowingsGovt programs Php1Tr borrowings in 2019Source:PSA,J.P.Morgan estimatesSource:CEIC,J.P.Morgan estimatesSource:CEIC,Bureau of the Treasury.2018 and 2019 are estimates.Source:CEIC,Bureau of the Treasury.2018 and 2019 are estimates.14Philippine Equity StrategyCurrency:BoP drives PHP strength,but CA deficit could drive reversalPHP trend follows BoPJ.P.Morgan USDPHP forecastsCurrent account vs.PHP long-term trendBoP trend breakdownPeriod endUSDPHPSep-1952.00Dec-1952.50Mar-1953.00Jun-2053.50Source:J.P.MorganSource:CEIC,J.P.Morgan15Philippine Equity StrategyCurrency:Winners and losers from weak PHPOnly 29%of overall debt in USDWinnersLosersSource:J.P.MorganCompany NameOverall Debt in USDPropertyAyala Land1%SM Prime16%Megaworld31%Vista Land36%Fillinvest Land0%Robinsons Land5%ConsumerRobinsons Retail0%Puregold Price Club0%Universal Robina Corp 89%Jollibee Foods34%ConglomeratesLT Group0%Ayala Corp 28%SM Investments45%Metro Pacific Investments0%DMCI 0%San Miguel Corporation33%UtilitiesSemirara 22%Aboitiz Power42%Manila Water60%Meralco0%TelcosPLDT16%Globe14%TransportCebu Air62%ICTSI78%CommoditiesCemex 9%Petron46%Pilipinas Shell0%Total29%Ex-companies with natural hedge26%Ex-companies with hedging/matching23%Partial/full hedgingNatural hedge from operationsSource:Company disclosure,J.P.Morgan estimatesSignificant USD debtCEB,MEG,AP,TEL,GLO,PCOR,CHPSignificant USD input costsCEB(jet fuel)GTCAP(auto)CHP(coal)JFC,URC,PGOLD(raw materials)Property sector stronger residential sales from OFW-dependent householdsMER US$330m investmentsSCC coal exportsDMC SCC exposureMAC revenues in USD16Philippine Equity StrategyOFW:Moderating remittances growth trendOFW stock,deployment,and remittances by continentSource:CEIC,BSP,JP Morgan estimatesVolatile monthly remittance growth trendSource:BSP,CEICSource:BSP,CEICRemittances growth at 3-5%in last 4Y vs.6-8%in 2010-14%of 2013%of 2013%of 2013%of 20132010-2013 CAGR%of 2016 OFW2010-20132012-2016%of 20182010-2014 CAGR2014-2018 CAGRPermanent TemporaryIrregulartotal OFW stockOFW stockdeploymentOFW deploymentOFW deploymentOFW Inflows OFW InflowsOFW InflowsBy ContinentWorld Total48%41%11%100%3%100%8%6%100%6%4%Africa7%83%10%1%-7%1%1%-8%0%-9%42%Asia:East&South17%50%32%16%11%23%19%10%16%15%6%Asia:West0%93%7%24%-4%50%8%8%30%17%7%Europe49%33%18%8%9%1%-7%-11%8%4%-2%Americas&Trust Territories88%6%6%42%4%1%5%-9%23%-6%3%Oceania77%22%1%5%6%1%36%7%3%24%2%Sea-based0%100%0%4%2%21%2%4%21%8%3%17Philippine Equity StrategyBPO:Decelerating growth,minding TRAIN 2 riskIT-BPO sector revenue growthSource:IT-BPAP.In USD bn.Risks to BPO growthSource:PSA.In PHP Mn.Approved ICT investments settled at lower levelsSlower expected growth trajectorySource:IT-BPAPOffshore and outsourcing industry revenues in US$billions Potential rationalization of fiscal incentives from TRAIN 2Rising protectionist stance in numerous countriesProcess automation may lead to job losses over the long runAvailability of talent given shift to K-12 system,ability to develop talent for higher value jobsInfrastructure constraints18Philippine Equity StrategyTrade War:Expecting minimal benefit to the PhilippinesPH approved FDI vs.total FDIEM Asia export impact from 25%tariff on all China exportsEmerging interest in the PhilippinesFDI moved slightly lower in 2018New Kinpo Group announced plans to shift its manufacturing to the Philippines from China hard drive manufacturerAyala Corporation CEO Jaime Augusto Zobel de Ayala noted that a Chinese company in Guangdong is looking to set up one of the largest tile factories in the worldThere have also been electronics companies from Taiwan and China looking to start manufacturing in the PhilippinesDyson announced a US$20m expansion of its manufacturing facility in 2017Source:CEIC,J.P.MorganSource:Bloomberg,BusinessWorld02468101206081012141618US$bn,12qmaSource:J.P.MorganActual gross FDIApproved19Philippine Equity StrategyAgendaSummaryMacro:Balancing growth and currency stabilityFiscal policy:Outlook for the second half of Dutertes termStock Views:Top Picks&AvoidsSector ViewsEarnings&valuations:Downside risks to Street EPS expectations20Philippine Equity StrategyPresident Duterte:High trust and satisfaction ratingsPhilippine Presidents net trust and satisfaction ratingsSource:Malacanang.gov.ph,Pulse AsiaGross trust ratings by social class and geographySource:Pulse Asia ResearchMar-17June-17Sep-17Dec-17Mar-18Jun-18Sep-18Dec-18Mar-19Jun-19ABC84777478888273798080D76818080768771748585E74858585838876829086NCR74817679567963677783Luzon67737274788464698181Visayas84848686829279828789Mindanao9096939490949091969121Philippine Equity StrategyMid-term elections:Limited evidence of GDP growth spikeGDP and private consumption growth trends saw minimal change during previous electionsSource:PSA,J.P.Morgan.Government spending growth saw downtrends in previous mid-term electionsSource:PSA,J.P.Morgan.22Philippine Equity StrategyFiscal spending to rise as capex pares back marginallySource:Department of Budget and Management.In Php bn.Increasing share of capital outlays to total spendSource:Department of Budget and Management.Source:BSP,PSA,J.P.Morgan.Fiscal balance and excess liquidityFiscal:Improving capital outlays and infra spend 23Philippine Equity StrategySource:DBM,J.P.Morgan estimates.Robust infrastructure spending trendBuild,build,build:The golden age of infrastructureKey infra spending reformsEarly pro