THU 10 DEC 2020

Top Stories:

MPI: MPI invests in petroleum storage facility

(AS OF DEC 07, 2020)
CNPF: CNPF expands and extends OEM contract with Vita Coco
INDICES

Close Points % YTD%

PSEi 7,102.66 -101.01 -1.40 -9.12
Other News: All Shares 4,253.13 -32.92 -0.77 -8.53
Financials 1,477.88 -7.02 -0.47 -20.70
Economy: Congress ratifies Php4.5Tril national budget Holding Firms 7,313.74 -132.64 -1.78 -3.67
Industrial 9,443.78 69.48 0.74 -1.99
Banking Sector: Banks’ bad loans hit record-high in October
Mining & Oil 9,159.00 336.38 3.81 13.19
Economy: Jobless rate likely to remain high until 2022 Property 3,558.60 -65.40 -1.80 -14.34
Services 1,522.02 -25.46 -1.65 -0.59

Dow Jones 104 0.35 5.73

COVID-19 Update:
30,173.88
S&P 500 3,702.25 10.29 0.28 14.59
Nasdaq 12,582.77 62.82 0.50 40.24
Total Cases Total Deaths Total Recoveries

Philippines 444,164 (+1,387) 8,677 (+7) 408,942 (+156) INDEX GAINERS

Ticker Company Price %
USA 15,807,577 (+222,719) 296,511 (+3,158) 9,199,567 (+117,939) SECB Security Bank Corp 138.00 2.30
AEV Aboitizi Equity Ventures 45.75 2.23
Worldwide 69,197,979 (+656,234) 1,574,589 (+12,575) 47,944,500 (+501,206) RLC Robinsons Land Corp 19.94 1.94
URC Universal Robina Corp 148.00 1.09
BPI Bank of the Phil Islands 83.90 1.08

Market Summary: INDEX LOSERS

Ticker Company Price %
The local stock market declined on Wednesday as investors took profit on large cap ICT Int'l Container Term 119.40 -5.24
stocks, particularly property and holding firms. AC Ayala Corporation 820.00 -4.65
JGS JG Summit Hldgs Inc 68.00 -4.43
MPI Metro Pacific Inv Corp 4.39 -3.52
The PSEi dropped 101.02 points or 1.4% to close at 7,102.66. The main drags were ICT ALI Ayala Land Inc 38.70 -2.76
(-5.24%), AC (-4.65%), JGS (-4.43%), MPI (-3.52%), and ALI (-2.76%). On the other hand,
these were partly offset by gainers such as SECB (+2.30%), AEV (+2.23%), RLC (+1.94%),
TOP 5 MOST ACTIVE STOCKS
URC (+1.09%), and BPI (+1.08%),
Ticker Company Turnover
MBT Metrobank 790,664,600
Value turnover rose to Php9.9Bil from Php9.6Bil in the previous session. Meanwhile, ALI Ayala Land Inc 435,956,300
foreigners turned net sellers, disposing Php685.7Mil worth of shares. BDO BDO Unibank Inc 419,243,400
MPI Metro Pacific Inv Corp 376,455,400
BPI Bank of the Phil Islands 376,195,200

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of the
COL Financial website as these may be subject to tampering or unauthorized alterations.
 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

THU 10 DEC 2020

Top Stories:

George Ching MPI: MPI invests in petroleum storage facility

Senior Research Manager

Metro Pacific Inv Corp MPI invests in petroleum storage facility. MPI disclosed that it has partnered with
BUY Keppel Infrastructure Trust (KIT) to acquire Philippine Coastal Storage & Pipeline Corp,
Php7.05
which operates the largest petroleum products import terminal in the country. MPI added
that the 150-hectare facility has a storage capacity of approximately 6Mil barrels after it
completes an expansion in early 2021, and accounts for 36% of the total import terminal
storage requirements of the country. MPIC said it would initially hold a 20% stake in the
company for a purchase consideration of $67Mil (option to increase to 50%), while KIT
will indirectly own 80% of the company.

Other than the cost of the initial investment, details on the new acquisition such as is
potential earnings impact on MPI are still not available. However, MPI mentioned that the
new acquisition generates stable cash flows via take-or-pay contracts with high quality
off-takers, indicating the possibility that the it will immediately be earnings accretive for
MPI once the deal is finalized.

Maintaining BUY rating on MPI. We are maintaining our BUY rating on MPI with a
FV estimate of Php7.05/sh. While near term sentiment on MPI will most likely remain
negative due to the uncertainties on Maynilad, we believe that concerns are overblown
given MPI’s depressed valuation. Based on MPI’s current market price of Php4.55/sh,
the company is trading at a 42% discount to its NAV which implies that Maynilad and
its toll road business are already worthless. MPI is trading nearly at par to its 46% stake
in Meralco, and 20% stake in the hospital business (equivalent to 90% of MPI’s current
market capitalization). Even if we assumed the worst-case scenario where Maynilad
would become worthless, capital appreciation potential based on MPI’s current price is
still 43% to Php6.50/sh.

COL Financial Group, Inc. 2

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

THU 10 DEC 2020

Justin Richmond Cheng, CFA

CNPF: CNPF expands and extends OEM contract
Research Analyst
with Vita Coco
Century Pacific Food Inc.
BUY In a disclosure to the PSE, CNPF announced that it has agreed to expand and extend
Php20.40
its long-term contract as an original equipment manufacturer (OEM) for Vita Coco. This
US$165Mil multi-year contract reinforces CNPF’s position as the leading exporter of
coconut water and as one of Vita Coco’s largest supplier. Management said the extension
of this contract is a sign that both parties are fully confident in sustaining the strong
growth trajectory seen in coconut water into the foreseeable future. Note that in 2021,
CNPF is embarking on a major expansion for its coconut water business by investing
Php300Mil to increase its manufacturing capacity. This will help CNPF meet the strong,
growing demand for coconut water globally. Furthermore, the extension of the contract
with Vita Coco is also expected to benefit the local farmers in Mindanao, providing them
with additional income through a guaranteed market for their products.

Other News:

Research Analysts
Economy: Congress ratifies Php4.5Tril national budget
John Martin Luciano, CFA
The bicameral conference committee has approved next year’s Php4.5Tril national budget.
Frances Rolfa Nicolas
The budget bill will now be sent to President Duterte for his signature. The largest share
Justin Richmond Cheng
Adrian Alexander Yu of the 2021 budget goes to the education sector with Php708.2Bil, followed by public
Kerwin Malcolm Chan works and highways with Php694.8Bil as the government ramps up infrastructure projects.
Meanwhile, the health sector was allotted Php287.5Bil, 42% higher than the original
amount proposed by the Budget Department under the National Expenditure Program
(NEP). Under the health sector budget, Php72.5Bil will be set aside for the implementation
of a COVID-19 vaccine program. Of this, Php2.5Bil is under the Department of Health
(DOH), while the remaining Php70Bil will be unprogrammed funds. (source: CNN, Businessworld)

Banking Sector: Banks’ bad loans hit record-high in October

Gross non-performing loans (NPL) rose 69.9% y/y and 5.6% m/m to Php391.4Bil as of end-
October. This brought the sector’s NPL ratio higher to 3.69% (vs 3.47% in September).
This is the highest in comparable record from 2013 as the BSP said earlier data would be
incomparable due to methodology changes in computing soured debts. Note that the
BSP previously mentioned that it expects the banks’ NPL ratio to reach 4.6% by the end
of the year amid the coronavirus pandemic’s impact on both households and businesses.
Meanwhile, with the increase in NPLs, the sector’s NPL coverage declined slightly to
88.8% in October (vs 91.5% in September). (Source: Philstar, BSP)

COL Financial Group, Inc. 3

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

THU 10 DEC 2020

Economy: Jobless rate likely to remain high until 2022

The government now expects the unemployment rate to average 7-9% by 2022, after
the unemployment rate averaged 10.2% so far this year amid the COVID-19 pandemic.
Under the Philippine Development Plan (PDP) adopted in 2016, the unemployment rate
was targeted to hover around 3.8-5.2% in 2020 and 3-5% by 2022. The increase in the
jobless rate meant approximately 2.6 million jobs were lost for the entire year, missing
the government’s initial goal of adding 1.1 million jobs. To take into account the strict
lockdown and economic slowdown, the NEDA has revised its employment targets in
the country’s medium-term plan. According to NEDA, job creation across the country
would depend on the pace of the economic recovery, the timely passage of next year’s
Php4.5Tril budget, and the CREATE and FIST bill. (Source: Bworldonline)

Changes in Shareholdings
Date of Acquired or Price per
Stock Volume Person (Designation)
Disclosure Disposed share
Alexander C. Yu
09-Dec COL 500 A 27.60
(Vice Chairman)
22,700 11.30
25,000 11.32 Jonathan T. Gotianun
10-Dec EW A
252,300 11.34 (Chairman)
200,000 11.40
Source: PSE

COL Financial Group, Inc. 4

 DAILY NOTES I PHILIPPINE EQUITY RESEARCH

THU 10 DEC 2020

I M P O R TA N T R AT ING DEFINITIONS
BUY
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 12 months.

HOLD
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 in line or underperform in the market in the
next six to twelve months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

I M P O R TA N T DISC L AIM ER
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 said information 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 prior 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 and/or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies
mentioned in this report and may trade them in ways different from those discussed in this report.

CO L R E S EAR C H T EAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

JOHN MARTIN LUCIANO, CFA FRANCES ROLFA NICOLAS JUSTIN RICHMOND CHENG, CFA
SENIOR RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN

RESEARCH ANALYST RESEARCH ANALYST
adrian.yu@colfinancial.com kerwin.chan@colfinancial.com

C OL F INANC IAL G R O UP, IN C.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 6