3rd Quarter Results Are Out, Numbers Great!

Stock	Buy Below	Date Bought	Current Price	Target Price	Average Cost	Return + Dividends	Remarks
BLUE CHIP STOCKS
BDO	66.65	Sep 6, ‘12	68.00	80.00	60.10	13.15%	HOLD
ALI	22.50		22.85	27.00	-	0	HOLD
PGOLD	29.16		29.40	35.00	-	0	HOLD
EDC	7.08	Sep 6, ‘12	6.88	8.50	5.94	15.86%	BUY
TEL	2,660	Nov 6, ‘12	2,506	3,200	2,627.60	-4.63%	BUY
AGI	13.75		15.08	16.50	-	0	HOLD
MBT	95.80	Sep 14,’12	95.25	115.00	93.73	1.62%	BUY
MID CAP STOCKS
CPG	1.50		1.44	2.25	-	0	BUY
SMALL CAP STOCKS
BHI	0.158		0.150	0.510	-	0	BUY
MAC	2.80	Oct 23,2012	2.75	4.87	2.76	-0.29%	BUY

3rd quarter results are out and most of the companies listed above issued a press release on the results of their operations. I am putting them here and as you can read below, all of the blue chip stocks we have covered produce great numbers. 

BDO –9M12 profits surge to P10.5 billion. 

BDO 9M12 profits surge to P10.5 billion BDO Unibank, Inc. (BDO) posted an unaudited net income of P10.5 billion for the first nine months of 2012, up 38 percent against the P7.6 billion earned during the comparable period in 2011. The Bank sustained the growth in its core lending and deposit-taking businesses and recurring fee-based service income. The Bank also capitalized on the favorable conditions in the bond markets to realize robust trading gains from its treasury activities.

Gross customer loans expanded by 17 percent to P724 billion, while total deposits increased to P860 billion. This resulted in an improvement in net interest income to P26.8 billion.  

Fee-based income increased to P10 billion, driven by the solid growth from the service businesses. Trading and foreign exchange gains jumped 50 percent to P7 billion.  Overall, total non-interest income went up by 23 percent to P18.9 billion.

Operating expenses inched up to P29.7 billion, while P4.2 billion in provisions were set aside during the period. Gross non-performing loan (NPL) ratio is at 3.1 percent, while gross NPL coverage is at 124 percent. 

Following a successful US$1 billion stock rights offer that was concluded in July 2012, the Bank’s capital base expanded to P152 billion, making BDO the largest-capitalized bank in the industry. The Capital Adequacy Ratio (CAR) and Tier 1 Capital ratio remain comfortably above the regulatory minimum at 20.3 percent and 15.2 percent, respectively, as of end-September 2012.

Given this performance, the Bank is very optimistic on achieving its year-end targets.PSE

ALI – Net income increased to P7.59B for 9M12, a 22% increase compared to last year.

ALI’s revenues for 9M12 increase to P39.014B, a 16% increase compared to the same period last year. Expenses increased as well consequently but the spike is less than the percentage increase in revenues. ALI has managed its expenses growth percentage well below the revenue growth percentage. Expenses increased to P28.934B, a 14% compared to last year. PSE

Ayala Land Inc., the country’s biggest property company, has increased its programmed project and capital expenditures for the whole year of 2012 to P70 billion from the original target of P37 billion due to “unbudgeted property acquisitions.”

Ayala Land said it would fund the P70-billion capital spending through a combination of internally-generated funds, borrowings and pre-selling.

It said the property acquisition “will ensure the pipeline of value accretive projects beyond the current five-year plan.”Manila Standard Today

ALI is targets more than 100 Family Mart convenience stores and the rollout of numerous department stores in the next five years. It will spend P80M to put up 30 Family Mart stores next year and about P300M to reach more than 100 convenience stores in the next five years. PSE

PGOLD - clears 45.2% growth in net sales and 67.2% increase in net income as of 3Q 2012. 

Puregold Price Club, Inc. (PGOLD), in an SEC Form 17-Q submission for the quarter ending September 30, 2012, reported that PGOLD posted total net sales of Php39.137 billion, for an increase of 45.2% compared to Php26.945 billion in the same period in 2011. 

The 45.2% growth in net sales was largely due to increased sales turnover arising from the full nine-month operations of the 38 new Puregold stores opened in 2011; with these new stores contributing 48.8% of the total increase in net sales as of 3Q 2012. In June 2012, PGOLD acquired 6 S&R warehouse clubs and 19 Parco supermarkets; with these acquisitions contributing 35.3% of the total increase in the PGOLD’s net sales.

As of 3Q 2012, PGOLD chalked up a gross profit margin of 16.0%, from a level of 14.6% as of the same period in 2011.

PGOLD recorded a net income of Php1.802 billion as of September 30, 2012, compared to the P1.078 billion at the end of the same period in previous year, for an increase of 67.2%. In terms of net profit margin, PGOLD logged a 4.6% net profit margin as of 3Q 2012, compared to the 4.0% figure as of the same period in 2011.

On the occasion of the Joint Analysts’ Briefing and Global Investor Call last August 23, 2012, PGOLD provided revised guidance for CY 2012, as follows: net sales targeted to grow by 50% from Php39.0 billion in CY 2011; gross and net profit margins aimed at about 14.5% and 4.5%, respectively; and the opening of 31 new Puregold stores.

During the first nine months of 2012, PGOLD opened 20 new Puregold stores; consisting of 10 hypermarkets, 8 supermarkets and 2 extras. In addition, during the month of October 2012, one each of Puregold hypermarket and supermarket were opened. As of October 31, 2012, PGOLDhas a total of 122 Puregold stores in operation; consisting of 72 hypermarkets, 37 supermarkets and 13 extras. PSE

EDC –the  Company posted a net income of P8,566.1 million during the  first three quarters of 2012,  a 1,856.4% or  P9,053.8 million  improvement from the net loss  of P487.7 million in the nine-month period ending September 30, 2011.

The following factors contributed to the increase:

·         P4,998.6 million impairment loss on property, plant and equipment of  Northern Negros Geothermal Project that was recognized in June 2011;

·         P1,811.8 million  GCGI’s higher revenues from Tongonan I and Palinpinon powerplants as per agreed contracts that became effective in mid-2011 and the additional power supply agreements that were signed in December 2011; and

·         P1,481.5 million FG Hydro’s revenues from sale of electricity as ancillary services.

These were partially offset by the P175.5 million increase in net loss by BGI.

Net income (loss) is equivalent to 39.0% of total revenues in 2012 as compared to the (2.7%) from the same period in 2011.

The recurring net income generated in the first three quarters of 2012 increased by 95.9% or P3,804.4 million to P7,771.6 million from the P3,967.2 million posted during the same period in 2011. This was mainly attributable to the P3,366.2 million increase in sale of electricity by FG Hydro and GCGI, offset by the P315.0 million increase in cost of sales of electricity and steam.

PSE

TEL – Consolidated Reported Net Income for 9M2012 at P28.7billion, from P30.6 billion in 9M2011. 

Philippine Long Distance Telephone Company (“PLDT”) (PSE: TEL) (NYSE: PHI) today announced its unaudited financial and operating results for the first nine months of 2012 with consolidated Core Net Income, before exceptional items, declining to P28.0 billion. While 8% lower than the P30.6 billion recorded in the same period in 2011, the bulk of the decline, or P2.4 billion, was incurred in the first semester. Also note that the 3Q2012 Core Net Income of P9.4 billion is 4% higher than the average quarterly Core Net Income of P9.0 billion in the second half of 2011 when the operating environment was under severe competitive pressure.

Reported Net Income, after reflecting exceptional gains for the period declined 6% to P28.7 billion, from P30.6 billion in 2011. These results reflect the consolidation of the operating performance of Digital Telecommunications Philippines, Inc. (“Digitel”) from its acquisition closed 26th October 2011. 

Despite higher service revenues, Core Net Income declined as a result of higher operating expenses relating mainly to the manpower reduction programs at PLDT and Digitel and selling and promotions initiatives. Reported Net Income was impacted by the decline in Core Net Income and higher net foreign exchange and derivative gains.

EBITDA margin for the first nine months of 2012 dipped to 46%, from 54% in 2011. To align more closely with global accounting standards, service revenues have been restated to reflect the change in the presentation of our outbound revenues from net to gross of interconnect expense, which in turn is included in our expenses. Although EBITDA does not change, EBITDA margins are calculated against the adjusted service revenues.  Consolidated EBITDAfor the first nine months of 2012 was lower by 4% at P58.6 billion compared with the same period in 2011.  Without the P1.8 billion charge relating to the manpower reduction programs, EBITDA would have been P60.4 billion, or 1% lower than the first nine months of 2011.  Digitel EBITDA stood at P5.3 billion; its lower EBITDA margin of 32% contributed to the decline in overall EBITDA margin. 

Overall consolidated service revenues for the first nine months of 2012 increased by 12% to P126.2 billion, including the P16.6 billion revenue contribution from Digitel and reflecting the combined effect (before Digitel) of a 3% decline in wireless revenues, 1% decrease in fixed line revenues, and a 16% rise in BPO revenues.

Consolidated free cash flow reached P29.8 billion, or P6.7 billion lower compared with last year. Consolidated capital expenditures for the first nine months amounted to P19.3 billion. PLDT Group Capex for 2012 is estimated to reach P38 billion, in line with the Group’s P67.0 billion capital expenditure program, which has been completed ahead of schedule. Capital expenditures are expected to return to pre-2011 levels beginning in 2013. 

Having completed its investment program that  has produced a network that is unrivalled in terms of coverage, capacity and resiliency, PLDT is now focusing on delivering superior service quality. Furthermore, the Group announced new initiatives in anticipation of exponential growth in Internet usage:

• Doubling the capacity of PLDT’s internet gateway capacity by the end of 2012 and tripling by the end of 2013;

• Expanding of backhaul coverage with the built-out of the transmission backbone between Iloilo and Palawan; and,

• Rolling out fiber to “pass by” 2 million homes by the end of 2013.   

The Group’s consolidated net debt stood at US$2.1 billion as at 30th September 2012.  Gross debt amounted to US$3.1 billion, with the inclusion of Digitel’s debt amounting to US$0.5 billion. Net debt to EBITDA was at 1.1x. The Company’s debt maturities continue to be well spread out, with about 64% due in and after 2015. The percentage of US dollar-denominated debt to the Group’s total debt portfolio is at 44%. Taking into account our peso borrowings, our hedges and our U. S. Dollar cash holdings, only 31% of total debt remains unhedged.  The Group’s cash and short-term securities are invested primarily in bank placements and Government securities. PLDT is the first Philippine company to be rated “investment grade” by all three major international ratings agencies. PSE

PLDT’s stock price has been battered lately. The uncertainty hovering around the 40% foreign ownership rule and the decrease in net income contributed to the decline in the share price. From a high of 2,940 last Sep 17, 2012, PLDT’s share price declined to 2,506 as of last Friday. That is a 15% decline! It is now about to enter the 2,400s territory. At this price, I am happy to buy PLDT shares and add to my initial shares that I bought recently. The more it goes down, the more I will buy. Fundamentals remains the same and the rewards for the current manpower reduction programme which has contributed P4.6B in expenses for 9M12 will be reaped on the succeeding years.The competition with the market players is intense, thus PLDT’s selling and promotion expenses increased by P2.4B for the 9M12.

Moving forward, I believe PLDT is a buy given that the cellular and broadband subscribers continue to increase while the company adopts manpower reduction programs. The synergy with the recently acquired Digitel will also help in reducing expenses as the company consolidates its operations.

AGI – Earnings in First Nine Months of 2012 Up 48 Percent to P13.46 B. 

The Andrew Tan-led Alliance Global Group Inc. reported strong results for the first nine months of 2012, with its core net income growing to P13.46 billion, up 48 percent from P9.12 billion, and net of a P3.13 billion non-recurring gain due to the acquisition of Global-Estate Resorts Inc. in the same period in 2011.  

Consolidated revenues also grew to P78.09 billion in the first nine months of 2012, a 70 percent increase from P46.02 billion, with the consolidation of Travellers International Hotel Group Inc. this year.  

“We expect our consumer product business and tourism-related real estate business to continue their growth momentum over the next year,” said AGI CFO Dina Inting.  Emperador was named the No. 1 selling brandy in the world in terms of volume by UK-based Drink International Magazine. 

Core net income attributable to owners of AGI reached P9 billion, up 33 percent from P6.75 billion in the same period last year. 

With total assets of around P265 billion, the company is in a strong position to pursue its goals as it continues to enhance its operating efficiency and profitability.  AGI’s total cash and cash resources at the end of the period amounted to P65.1 billion. 

Real estate arm Megaworld Corporation contributed around 39 percent to AGI’s net income and about 30 percent to its total revenue.

Megaworld reported total revenues of P23.85 billion in the first nine months of 2012 from P22.96 billion, up 4 percent year on year.  Core net income, on the other hand, amounted to P5.69 billion from P4.75 billion, up 20 percent year on year, and net of a P1.95 billion non-recurring gain due to the sale of shares of AGI, its parent firm, from the previous year.

Megaworld's performance as the No. 1 residential condominium developer was backed by strong sales from its residential projects in its townships, particularly Newport City, McKinley West, McKinley Hill and Eastwood City, as well as strong leasing income from its BPO and retail portfolio.

Megaworld is also recognized as the leader in office development and is currently the largest BPO office landlord.  By the end of 2012, the company expects to have around 500,000 square meters of office space in its portfolio.

Revenues and profits from the rest of AGI's portfolio of businesses also grew in line with targets.  Apart from real estate, AGI has interests in industries such as food and beverage, quick service restaurants and integrated tourism estates.

Food and beverage arm Emperador Distillers Inc. produces Emperador, Generoso and Emperador Light brandies and a line of flavored alcoholic beverages called The Bar.  

Golden Arches Development Corporation operates the quick service restaurant business under the McDonald's brand.

Travellers International, along with its partner Genting Hong Kong, operates Resorts World Manila, the first integrated tourism estate in the country.   Resorts World Manila is located in Newport City, set across from Terminal 3 of the Ninoy Aquino International Airport in Pasay City. 

Global-Estate Resorts develops integrated tourism estates in strategically located tourism hot spots such as Boracay, Tagaytay, and Batangas.  It is well-positioned to promote the country on a global scale and drive the contribution of tourism to the growth of the economy. PSE

MBT –reported consolidated net income of P10.2 billion for the first nine months of 2012, or 15.2% higher over the P8.9 billion earned in the same period last year.  As a result, Metrobank’s return on average equity was recorded at 12.2%.

Total operating income increased by 8.9% to P41.0 billion, on the back of a 6.7% growth in net interest income to P23.0 billion.  Amid intensified market competition and declining interest rates, the Bank’s net interest margin showed a marked improvement from last year.  This is attributed mainly to the 11.2% year-on-year expansion in net loans and receivables to P481.4 billion, coupled with a healthy mix in deposits.  Total low cost deposits reached P384.5 billion, accounting for 58.1% of the deposit base from 51.7% in the comparative period last year.   
Revenue growth was likewise supported by the 11.7% hike in non-interest income, in turn driven by steady growth in fee-based income, higher contributions from associates, and earnings from treasury and investment activities. 

The Bank continued to improve on efficiency as operating expenses registered a slightly above-inflation growth from the same period last year.  For the first nine months of 2012, operating costs inched up by 5.0% to P23.6 billion. As revenues grew faster than expenses, Metrobank’s pre-provision operating profit rose 14.7% year-on-year to P17.3 billion.

With its continued focus on asset quality, the nonperforming loans (NPL) ratio further improved to 2.2% in the first nine months of 2012, from 2.5% last year. Metrobank set aside provision for credit and impairment losses amounting to P3.4 billion, thus NPL coverage rose to 110.5% from 95.9% previously.

Metrobank ended the third quarter with P953.7 billion in consolidated assets and total equity of P114.4 billion. Total capital adequacy ratio (CAR) was at 18.3% with Tier 1 CAR at 14.3%. PSE

CPG - Century Records 957% Growth for 9 Months 2012 Income. 

Century Properties Group, Inc. ("century") reported a 95% net income growth to Php1.4 billion for the first nine months of 2012 on the strong sales performance of its property developments. Century’s net income in the same period of 2011 was Php723 million. Total revenue for the first nine months of 2012 increased by 104% to Php7.2 billion from Php3.5 billion in the same period in 2011. For the third quarter  of 2012 alone, total revenues and total income stood  atPhp2.3 billion and Php467 million respectively,  representing a  60% of growth in revenue and 105% growth in net income  compared to the third quarter  of 2011.

“On our first year anniversary of being a publicly listed company, we have been able to capitalize on the real estate sector's robust and sustained growth. For the first nine months of 2012, Century’s pre-sales stood at P16.3B and we launched P12.5B of inventory. With an average take up of P1.2B in pre-sales per month from the international market, Century is the recognized leader in international sales with 60%, or Php 11.3 billion of its P16.3B pre-sales coming from abroad. For the remaining quarter in 2012, we plan to launch an additional P4.0B of inventory, and will likely exceed our full year 2012 pre-sales target of P20B. Out of a total of P6.6B of credit facilities, Century credit facilities outstanding as of September 30, 2012 was P2.8B, with the balance remaining undrawn to fund our future needs".

For the third quarter of 2012, century generated P5.6B in pre-sales, of which 19%, 24% and 58% came from the luxury, middle income and affordable markets, respectively. The large take up of the affordable segment came from the launch of its latest project in Quezon City, called Residences at Commonwealth as it launched 3 towards with a sales value of P2.8B during the third quarter 2012.

Even with the diversification of its development portfolio to various market price points, Century continues to assert its leadership in the branded and premium residences category with the announcement of new and groundbreaking partnerships. On November 9 it launched the Residences at Acqua Iguazu, the firm's collaboration with the UK-based yoo inspired by Starck, the internationally-acclaimed interior design brand founded by the world-renowned French designer Philippe Starck and the British real estate entrepreneur John Hitchcock. The Php1.7-billion development is the fifth of six buildings to rise within the developer’s 2.4-hectare Mandaluyong city project called Acqua Private Residences.  Last September, Century signed a strategic partnership with telecoms leader PLDT and its business units. The agreement aims to provide advanced digital connectivity and telecommunications services to the property firm’s premium master planned and high-rise developments. Through Century's services consolidation’ initiative, the PLDT Group will provide "ultra connectivity"  to the projects of Century Properties, through the various  services provided  by PLDT's  business units: PLDT Home and PLDT ALPHA Enterprise, mobile phone subsidiaries Smart Communications and Sun Cellular, and affiliate direct-to-home Digital TV provider Cignal.

Further, in a disclosure to the Philippine Stock Exchange 'and the Securities and Exchange Commission on November  8, Century Properties  Group, Inc., purchased  20 %o of the shareholdings of the Century Properties Management  Inc (CPMI) from the existing minority owner. The sale effects a change in ownership  structure of CPMI, which will become a 100% wholly-owned subsidiary  of Century Properties  Group, Inc. CPMI was incorporated in 1989 and is currently engaged  in facilities management,  auction  services,  as well as lease and secondary  sales for Century  developments,  third-party developers  and property owners managing 50 buildings  totaling 2.3million  square meters.

With 26 years in the business of real estate development. Marketing and property management, Century Properties has completed 20 condominium buildings (4,128 units) with a total GFA of 548,262 sqm and is currently managing 50 properties as of September 30, 2012. Delivering differentiated, quality real estate has been Century Properties’ commitment in its almost three decades in the business of full-service real estate development, marketing and property management. The company is listed in the Philippine Stock Exchange under the symbol CPG. PSE

I believe that I shall see the bounty of the Lord in the land of the living. Psalm 27:13