- PCOMP 2015 negative performance, should markedly improve for 2016
- Reasons to be optimistic: govt spending will improve, corporate earnings slowdown in 2015 temporary – 2016 growth will resure, core earnings improving.
- Index target 7,600 (upside 16%) implies 15% corporate earnings growth and a 2017 Market PE of 15x (historical average). Not expensive.
- Top picks are in property: SMPH MEG and ALI. Also BPI
- Risks: External factors (currency and interest rate movements) and elections.
Gaming Outlook
- Phil gaming sector disappointment with 3 resort casinos not showing the GGR growth expected. But grew fromU$1.6B in 2013 to $2.1B in 2015. 2018 Expectations: $3.2B – 4th largest in Asia.
- Fundamentals in place for gradual growth. Opening of Tiger and RWM key to forming critical mass in Pagcor City.
- COD will be the driver for Phil gaming market in 2016. COD primed from growth in 2016 both in mass and VIP markets. RWM will struggle to hold market share, Solaire’s penetration and GGR high levels and difficult to deliver double digit growth moving forward.
- MCP (operator of COD) will gain market share over RWM and Solaire in 2016. MCP cheapest: 7x 2016E (EV/EBITDA) vs RWM 12x and Solaire 12x
Author: MacQuarie
