FREE Market Commentary: Approved Construction Permits Rise in 1Q 2018

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Market Issue or Event

Approved Construction Permits Rise in First Quarter

The Philippine Statistics Authority (PSA) reported a total of 36,002 approved construction permits in 1Q 2018, up by 2.6% year-on-year. This is slightly slower compared to the 7.1% growth recorded in the same period last year, mainly due to a decline in residential construction projects. Residential constructions, which accounted for 71% of the total approved building permits, declined by 1.2% while non-residential constructions increased by 11.8%.

 

Our Partner Broker’s View and Commentary

We believe that the aggressive expansion of non-residential developments, especially of the commercial buildings (+20.2%), was driven by the current urbanization outside Metro Manila. This is evidenced by the distribution of constructions per region.

Included in the top 3 are CALABARZON, Central Visayas and Central Luzon. This is also supported by the current trend in property development which is building townships. If the increasing number of approved construction permits be sustained, this should bode well for both construction and cement companies. We reiterate our BUY rating on SMPH (Target Price: PHP 43.00), RLC (Target Price: PHP 25.30) and EAGLE (Target Price: PHP 17.50).

 

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AP Securities (formerly Angping & Associates Securities)
AP Securities (formerly Angping & Associates Securities)

AP Securities (formerly Angping & Associates Securities) is one of PinoyInvestor’s partners in delivering superior and reliable stock research reports that help Filipino investors make smart stock investing decisions! Learn more about them here.