www.jpmorganmarkets.comAsiaPacificEquityResearch28March2019EquityRatingsandPriceTargetsMktCapPriceRatingPriceTargetCompanyTicker($mn)CCYPriceCurPrevCurEndDatePrevEndDateSemiraraMiningandPowerCorpSCCPM1,773.96PHP21.95OWn/c25.00Jun-20n/cn/cManilaElectricCompanyMERPM8,113.47PHP378.60Nn/c350.00Jun-20325.00Jun-19MetroPacificInvestmentsCorp.MPIPM2,869.83PHP4.79OWn/c6.50Jun-208.00Jun-19AboitizPowerAPPM4,924.95PHP35.20NUW31.00Jun-2030.00Dec-19Source:Companydata,Bloomberg,J.P.Morganestimates.n/c=nochange.Allpricesasof28Mar19.PhilippinePower&UtilitiesSemiraraourTopPickon'20EEPSrecovery,yield;MPIcompellingbutlackscatalysts;u/gAPtoNeutralPhilippinesASEANHeadofResearchAjayMirchandaniAC(65)6882-2419ajay.mirchandani@jpmorgan.comBloombergJPMAMIRCHANDANIJ.P.MorganSecuritiesSingaporePrivateLimitedJellineGaza,CFA(63-2)8781131jelline.gaza@jpmchase.comJ.P.MorganSecuritiesPhilippines,Inc.JeanetteYutan(63-2)878-1188jeanette.g.yutan@jpmorgan.comJ.P.MorganSecuritiesPhilippines,Inc.Seepage36foranalystcertificationandimportantdisclosures,includingnon-USanalystdisclosures.J.P.Morgandoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.ThePHPower&UtilitiesspacehascontinuedtounderperformPSEyeartodate(3-12%)withonlyMPIPM&MERPMgeneratingpositivereturnsin'19Esofar.Whilewesee(a)largepowersupplyadditionin'19E&'20E(~4GW),and(b)continuedregulatorydelays(onMERPSAs&Meralcotariffadjustments)asoverhangs,onapositivenote(i)valuations(forMPI,AP&SCC)havede-ratedto~8-11xwith3-6%dvdyieldversus13-18xP/Emultiplesseenin2016with(ii)limitedpoweradditionbeyond‘20Elimitingprolongedpain&(iii)~15-20%'20EEPSgrowth(forSCC&AP).Semirara(SCCPM):it’stimetobuyon(a)'20Eearningsrecovery&(b)~6%yield;reiterateOW:WerecentlyupgradedSCCPMtoOW(seelink)inspiteofJPMbeing13/22%belowFY19E/20Econsensusaswesee(a)earningsrecovery...
