INDICES

INDEX GAINERS

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TOP 5 MOST ACTIVE STOCKS

THURSDAY, 13 AUGUST 2015

INDICES

INDEX GAINERS

INDEX LOSERS

TOP 5 MOST ACTIVE STOCKS

Close Points % YTD%PSEi 7,495.43 -75.02 -0.99 3.66All Shares 4,298.55 -42.30 -0.97 0.80Financials 1,634.71 -11.34 -0.69 -3.63Holding Firms 6,791.13 -45.08 -0.66 7.80Industrial 11,438.81 -188.15 -1.62 -4.54Mining & Oil 11,928.45 -90.90 -0.76 -24.58Property 3,136.95 -51.88 -1.63 11.63Services 2,056.27 -20.56 -0.99 -3.29

Dow Jones 17,402.51 -0.33 0.00 -2.36S&P 500 2,086.05 1.98 0.10 1.32Nasdaq 5,044.39 7.60 0.15 6.51

Ticker Company Price %DMC DMCI Hldgs Inc 12.78 2.24SCC Semirara Mining 130.00 1.96MBT Metrobank 87.60 0.69JFC Jollibee Foods Corp 192.20 0.52SMC Ssan Miguel Corp 56.00 0.36

Ticker Company Price %PCOR Petron Corporation 8.51 -5.34EMP Emperador Inc 9.50 -4.04BLOOM Bloomberry Resorts 8.95 -3.56MEG Megaworld Corp 4.52 -3.42URC Universal Robina Corp 195.50 -2.20

Ticker Company TurnoverSCC Semirara Mining 545,175,200BDO BDO Unibank Inc 414,666,000MER Manila Electric Co 404,096,300DMC DMCI Hldgs Inc 363,011,500URC Universal Robina Corp 347,298,900

(As of August 12, 2015)

OTHER NEWS:

TOP STORIES:

MWIDE: To build a new company for renewable energy projectsEconomy: 2Q15 GDP to likely miss 7.7% growth targetEconomy: Indicative auction timetable released for Php170.7Bil South Line PPP

DNL: 1H15 profits up 15% to Php1.1Bil, in line with estimatesIMI: 1H15 earnings up 34.7% y/y, above COL estimates

MBT: Profits up 25% to Php4.2Bil in 2Q15, in line with estimates2Q15 earnings end in line with estimates. MBT reported Php4.2Bil in profits during the second quarter, up 24% year-on-year on the back of higher net interest income. This brought its first half total to Php9.3Bil, up 2% from 1H14 and representing 47% and 50% of COL and consensus estimates respectively. Note that the 1H15 growth is artificially low given the significant non-recurring gains (from the sale of Charter Ping An and an investment property) booked in 1Q14. Excluding the non-core items, MBT’s profits would have grown 30% year-on-year. The first half performance translates to an annualized ROE of 11%. We currently have a BUY rating on MBT with an FV estimate of Php102.00/sh based on 1.7X 2015E P/BV.

MEG: 1H15 income outperforms COL estimates2Q15 income jumps 18.2%. MEG reported a net income of Php3 Bil for 2Q15, an improvement of 11.9% y/y. This brings 1H15 net income to Php5.26 Bil which is 11.3% higher compared to last year. Significant growths in sales and gross profit from the residential business and higher rental revenues was offset by lower equity in net earnings of associates and interest and other income. MEG’s net income for the first half outperformed COL expectations as it already account for 55.2% of our full-year forecast of Php9.5 Bil. On the other hand, it is just in line to meet consensus estimate of Php11.0 Bil. We are reiterating our BUY rating following the favorable earnings of MEG, particularly its rental business.

STOCKS IN FOCUS:

MARKET SUMMARY:

The PSEi tumbled down after China’s unexpected announcement to devalue its currency which negatively affected investor sentiment. The main index dropped 75.02 points or 0.99% to close at 7,495.43.

Index decliners led gainers 22 to 6 while two issues closed unchanged. All sectors ended lower as well, led by Industrial (-1.62%). Significant decliners were PCOR (-5.34%), EMP (-4.04%), BLOOM (-3.56%), MEG (-3.42%), andURC (-2.20%). Meanwhile, significant gainers were DMC (+2.24%), SCC (+1.96%), and MBT (+0.69%).

Value turnover decreased to Php7.8Bil from Php8.2Bil the previous session. Foreigners were still net sellers, liquidating Php1.2Bil worth of shares.

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MBT: Profits up 25% to Php4.2Bil in 2Q15, in line with estimates2Q15 earnings end in line with estimates. MBT reported Php4.2Bil in profits during the second quarter, up 24% year-on-year on the back of higher net interest income. This brought its first half total to Php9.3Bil, up 2% from 1H14 and representing 47% and 50% of COL and consensus estimates respectively. Note that the 1H15 growth is artificially low given the significant non-recurring gains (from the sale of Charter Ping An and an investment property) booked in 1Q14. Excluding the non-core items, MBT’s profits would have grown 30% year-on-year. The first half performance translates to an annualized ROE of 11%.

Core operations on track. MBT’s core operations remained on track in 2Q15. Net interest income rose 9% year-on-year to Php12.2Bil while fee revenues expanded 8% to Php2.5Bil. Similar to the previous periods, net interest income continues to be driven by higher volume (and flattish margins). Note that as of end June, MBT’s loan portfolio grew 14% while total interest earning assets also climbed 14% year-on-year. Meanwhile, we estimate that net interest margin fell slightly from 3.1% in 2Q14 to 3.0% in 2Q15. The loan growth and margin level both ended slightly below our full-year estimates of 16% and 3.1% respectively. Nevertheless, we believe that MBT could still meet our targets following its Php32Bil rights offering in 2Q15. For the year-to-date period, net interest income totaled Php23.9Bil, accounting for 47% of our 2015 estimate. Meanwhile, fee-based income for 1H15 reached Php5.0Bil, comprising 51% of our forecast.

Books small trading loss in 2Q15. After posting a huge Pho2.3Bil trading and FX gain in 1Q15, MBT booked a Php367Mil loss in 2Q15. The slight loss came as a result of a rise in bond rates from 4.2% as of end March to 4.4% as of end June. Nevertheless, its year-to-date total of Php1.9Bil remains on track to meet our full-year estimate of Php4.0Bil. We continue to believe that MBT’s trading operations should normalize at around the Php4Bil level (at least) going forward. Note that MBT continues to shift its investment portfolio to held-to-maturity investments, which now comprise 41% of the portfolio. This is up from the 37% as of end 1Q15, 21% as of end 2Q14, and the low of 4% as of end 3Q13. This, together with the shortening duration, should help the bank soften potential marked-to-market losses arising from higher bond rates.

CAR levels already healthy. Following its recently concluded rights offering which raised Php32Bil in CET1 capital, MBT’s capital position is now very healthy. As of end June, the bank’s CET1 and total CAR were at 16.3% and 20.3% respectively. These are already significantly above the minimum requirements of 8.5% (up to an estimated 11.0% once the DSIB is implemented) and 10.0%. Based on our estimates, the existing buffer should be able to fund the growth of MBT for at least the next three years.

Reiterating BUY rating. We currently have a BUY rating on MBT with an FV estimate of Php102.00/sh based on 1.7X 2015E P/BV. The recently concluded stock rights offering should address market concerns that its capital base will not be able to support its aggressive growth. At Php87.00/sh, MBT is trading at 1.45X 2015E P/BV. This is lower compared to that of the two other big banks BDO (1.95X) and BPI (2.3X).

STOCKS IN FOCUS:

Charles William Ang, CFA

Ticker: MBTRating: BUYTarget Price: Php102.00

COL ConsensusNet interest income 11,203 12,218 9.1 22,359 23,879 6.8 47.3 NANon-interest income 4,632 4,354 -6.0 13,610 10,901 -19.9 49.9 NAProvisions 782 1,052 34.5 1,932 1,950 0.9 40.8 NAOperating expenses 9,499 9,563 0.7 19,765 19,350 -2.1 48.3 NANet income 3,389 4,207 24.1 9,075 9,287 2.3 47.4 49.9Source: MBT, COL estimates

% Change % FY15EExhibit 1: Results Summary

In PhpMil 2Q14 2Q15 % Change 1H14 1H15

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MEG: 1H15 income outperforms COL estimates2Q15 income jumps 18.2%. MEG reported a net income of Php3 Bil for 2Q15, an improvement of 11.9% y/y. This brings 1H15 net income to Php5.26 Bil which is 11.3% higher compared to last year. Significant growths in sales and gross profit from the residential business and higher rental revenues was offset by lower equity in net earnings of associates and interest and other income. MEG’s net income for the first half outperformed COL expectations as it already accounted for 55.2% of our full-year forecast of Php9.5 Bil. On the other hand, it is just in line to meet consensus estimate of Php11.0 Bil.

Exhibit 1: Results Summary

source: MEG

2Q15 rental revenues surge 28.4%. MEG’s rental revenues in 2Q15 surged 28.4% to Php2.22 Bil. This brings its 1H15 rental revenues to Php4.21 Bil, which is 22% higher than 1H14. The strong performance of MEG’s rental business puts them within reach of their full-year target of Php9 Bil. Note that this is significantly higher than our forecast of Php8 Bil. MEG is also targeting Php10 Bil in rental revenues by 2016 as it aggressively expands in Fort Bonifacio.

Residential sales remain healthy. MEG’s residential revenues grew 9.6% in 2Q15 to Php7.19 Bil. This bring 1H15 residential revenues to Php13.43 Bil, 11.8% higher than 1H14. This is slightly lower than expected as it accounts for just 47.8% of our full year estimate.

Operating expenses drop in 2Q15, normalized for 1H15. After surging in 1Q15, operating expenses dropped 13.6% q/q and 8% y/y to Php1.65 Bil, brining 1H15 operating expense total to Php3.55 Bil. Looking at 1H15 operating expenses, it seems it has normalized by just being up 10.5% y/y and is more aligned with the growth of its operations.

Reiterate BUY with FV estimate of Php5.67. We are reiterating our BUY rating following the favorable earnings of MEG, particularly its rental business. The strong growth in rental revenues in 1H15 puts them in position to reach its full-year target of Php9 Bil. We reiterate our fair value estimate of Php5.67 which implies an upside of 25.44% from yesterday’s close.

in Php Bil COL Consensus

Real estate sales 6,557 7,187 9.61% 12,010 13,427 11.79% 47.75%Realized gross profit 2,178 3,013 38.35% 4,075 5,317 30.47% 51.08%Rental revenues 1,732 2,224 28.44% 3,444 4,210 22.25% 52.38%Core EBIT 2,264 3,651 61.23% 4,498 6,147 36.66% 48.00%Core net income 2,682 3,001 11.88% 16,327 5,260 -67.78% 55.24% 47.82%

2Q14 2Q15 % change 1H15 % of full year estimate1H14 % change

Richard Lañeda, CFA

Ticker: MEGRating: BUYTarget Price: Php5.67

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DNL: 1H15 profits up 15% to Php1.1Bil, in line with estimatesRecurring profits up 15%. DNL reported Php1.03Bil in profits during the first half, up 10% year-on-year. Excluding one-time costs on taxes and filings related to the increase in the authorized capitalization in June 2015, recurring income grew 15% to Php1.07Bil. This ended in line with COL estimates, accounting for 46% of our full-year forecast. The growth in profits resulted from a 10% increase in revenues to Php9.6Bil, as well as a 1 percentage point increase in gross profit margin. We will release a more detailed report on DNL following its earnings briefing today.

Maintaining HOLD rating. We are maintaining our HOLD rating on DNL with a FV estimate of Php17.8/sh. At its current price, DNL is already trading above our FV estimate. Nonetheless, we continue to like DNL for its strong earnings growth outlook and entrenched position in the local consumer space.

IMI: 1H15 earnings up 34.7% y/y, above COL estimates1H15 earnings up 34.7% y/y, above COL estimates. IMI’s earnings for 2Q15 grew to US$8.4Mil in 2Q15, up 34% from US$6.3Mil in the same quarter last year. This brought 1H15 earnings to US$15.2Mil, 34.7% higher than the 1H14 results. This is above COL estimates and is in line with the consensus, comprising 53.6% and 49.6% of full year forecasts, respectively. The results were higher than expected due to lower reported interest expense. Meanwhile, operating income fell below estimates, representing 47.1% and 44.7% of COL and consensus full year forecasts, respectively, on the back of lower revenues for the period and despite a reduction in operating expenses.

Revenues decline 3.4% y/y, demand to be soft for the rest of 2015. Revenues for 2Q15 declined 4.5% y/y to US$215.1Mil, bringing 1H15 revenues to US$416.3Mil. This is 3.4% lower than the same period last year, comprising 44.8% and 44.9% of COL and consensus full-year forecasts. The decline was due to the effects of a weaker Euro, the slowdown in demand for mature products in the computing sector, and the normalization of the 4G rollout in China. Excluding the impact of foreign exchange losses, revenues would have been 2.4% higher y/y. Management mentioned that revenues are likely to be soft for the rest of the year, as the Euro continues to be weak and as the demand in other segments declined sooner than anticipated.

Automotive and industrial continue to grow, offsets decline in other segments. 1H15 revenues from the automotive and industrial segments grew 23% and 12% y/y, respectively, offsetting the declines in computing and telecom. IMI expects revenues from the latter segments to further decline moving forward as alternatives for PCs grow and as 4G implementation is completed. On the other hand, IMI continues to win projects in automotive and industrial and it already has prospective bids in the pipeline to sustain growth. Some of the projects it recently won include manufacturing steering parts and embedded control switches and lighting, among others. These projects are expected to be in full ramp up in terms of production by 2018.

Jed Frederick Pilarca

Angelo Lecaros

Ticker: DNLRating: HOLDTarget Price: Php17.80

Ticker: IMIRating: BUYTarget Price: Php9.20

Exhibit 1: Results summary

COL ConsensusSales 225,228 215,122 (4.5) 430,971 416,347 (3.4) 44.8 44.9Gross Profit 26,589 23,311 (12.3) 48,588 45,873 (5.6) 43.3

Gross Margin (%) 11.8 10.8 11.3 11.0Operating Income 9,116 8,922 (2.1) 15,039 17,396 15.7 47.1 44.7

Operating Margin (%) 4.0 4.1 3.5 4.2Net Income 6,268 8,398 34.0 11,282 15,194 34.7 53.6 49.6

Net Margin (%) 2.8 3.9 2.6 3.6Source: IM I, Bloomberg

%Change % of Full year Forecastin US$ '000 2Q14 2Q15 %Change 1H14 1H15

TOP STORIES:

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Operating income up 15.7% y/y, below estimates. Operating income for 1H15 grew 15.7% y/y to US$17.4Mil despite the 2.1% y/y decline in the 2Q15 figure. However, it is still below COL and consensus estimates, accounting for 47.1% and 44.7% of the full-year amount. This is due to the 3.4% y/y decline in revenues, though partially offset by a reduction in operating expenses, which shrank by 13.2% to US$28.5Mil due to improvements in operations and cost-saving measures.

Earnings above COL estimates on lower interest expense and higher margins. IMI reported net income for 1H15 reached US$15.2Mil, 34.7% higher y/y. Earnings were above COL estimates and is in line with the consensus at 53.6% and 49.6%, respectively. The better-than-expected income was due to IMI’s cost-saving efforts which led to better margins for 1H15, with operating and net margin reaching 4.2% and 3.6%, respectively. In addition, lower interest expense was reported for the period. The effective interest rate on IMI’s debt is at 1.3% for the first half of the year, less than half of our 3% full-year assumption.

Estimates under review. We are reviewing our estimates in light of the decline in IMI’s revenues, improving efficiency in operations, and lower-than-expected interest expense. We currently have a BUY rating on IMI with a FV estimate of Php9.2/sh.

OTHER NEWS:

MWIDE: To build a new company for renewable energy projectsMegawide Construction Corp. disclosed that the SEC approved the incorporation of its new company, Silay Solar Power, Inc. (SSPI). The new subsidiary will engage in the development, construction, installation, and other related services of solar power and other clean or renewable energy infrastructure. This is in line with the plans of Citicore Holdings Inc. (Megawide’s parent company) to enter into the power generation business. Its subsidiary, Citicore Power, unveiled its plans last May to enter into the power generation business. It plans to build a power generation portfolio of up to 400MW in the next five years, with the first project involving a 60MW solar farm in Batangas that will be operational in late 2015. (source: BusinessWorld)

Economy: 2Q15 GDP to likely miss 7.7% growth targetAccording to the Socioeconomic Planning Secretary Arsenio M. Balisacan, the economy has most likely missed the 7.7% growth target for 2Q15 GDP. Balisacan said that he was getting worried about the slower exports to date at US$28.8Bil, down 4.7% y/y. Despite the decline in exports, Balisacan said that public-sector investment “quite improved” in the second quarter. A 7.7% target for the remaining three quarters is needed to hit the lower end of the full year goal of 7-8%. The official release of the 2Q15 GDP growth figures is set on August 27. (source: Inquirer)

Economy: Indicative auction timetable released for Php170.7Bil South Line PPPThe DOTC has released the indicative auction timetable for its biggest PPP so far: the Php170.7Bil South Line of the North-South Railway Project (NSRP). The pre-qualification conference is set on August 20 while the submission of qualification documents will be on October 15. Parties qualified to bid will be notified by October 30 and the bid documents and draft concession agreement will be released on November 6. A pre-bid conference will be held on November 20, the bid submission will be on March 28 and the notice of award will be issued on April 27. The winning bidder will design, construct, install, commission, finance, operate, and maintain the 56km commuter rail from Tutuban to Calamba, Laguna, as well as the 478km long-haul rail from Tutuban to Legazpi, Albay. Companies that previously expressed interest in the project include AC and MPI. (source: BusinessWorld)

Garie Ouano

Ticker: PCORRating: N/ATarget Price: N/A

Jed PilarcaGarie OuanoMeredith Hazel CuaAngelo LecarosMichelle Yu

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SUMMARY OF CHANGES IN SHAREHOLDINGS:

Stock Volume Acquired or Disposed

Price per share Person (Designation)

200 D 16.18 Khoo Boo Boon (Independent Director)400,000 A 16.00 Paulwell Han (Director)

BDO 5,830 D 103.10 Edwin R. Tajanlangit (Senior Vice President)145,000 25.85100,000 25.80

Source: PSE

COL

Vincent C. Villegas (Vice President)FGEN D

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Calendar of Key Events

AUGUSTMON TUES WED THURS FRI SAT

27 28 29 30 31 1YEHEY: Annual

Shareholders MeetingV: Annual Shareholders

Meeting3 4 5 6 7 8

RRHI: Ex-date Php0.51Cash Dividend

BPI: Ex-date Php0.90 Cash Dividend

CHIB: Ex-date Php1.00 Cash Dividend

MB: Stock Dividend HOUSE: Ex-date Php0.05 Cash Dividend

CHIB: Stock Dividend

STN: Annual Shareholders Meeting

10 11 12 13 14 15I: Ex-date Php0.0326

Cash DividendGLO: Ex-date Php20.75

Cash DividendCEU: Ex-date Php0.20

Cash DividendHI: Ex-date Php0.065

Cash DividendGMAP: Annual

Shareholders MeetingWEB: Ex-date Php0.15

Cash DividendBEL: Ex-date Php0.095

Cash DividendWEB: Annual

Shareholders MeetingAB: Annual Shareholders

MeetingPXP: Annual

Shareholders Meeting17 18 19 20 21 22

WIN: Annual Shareholders Meeting

MER: Ex-date Php6.76 Cash Dividend

FEU: Annual Shareholders Meeting

24 25 26 27 28 29TEL: Ex-date Php65.00

Cash DividendEEI: Ex-date Php0.10

Cash DividendMAH: Annual

Shareholders MeetingMFIN: Annual

Shareholders MeetingMPI: Ex-date Php0.032

Cash DividendVLL: Annual

Shareholders MeetingEVER: Annual

Shareholders Meeting31 1 2 3 4 5

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Investment Rating Definitions

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 twelve months.

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 inline or underperform the market in the next six to twelve months.

We dislike both the valuations and fundamentals of stocks with a SELL rating.

We expect the share price to underperform in the next six to twelve months.

BUY HOLD SELL

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 it 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 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 ans/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of securities of the companies mentioned in this report, and may trade them in ways different from those discussed in this report.

Important Disclaimers

2401-B East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City 1605 PhilippinesTel: +632 636-5411 Fax: +632 635-4632 Website: http://www.colfinancial.com