FREE Market Commentary: CEB Price Drops 38%, Loses PHP 31 Billion Market Cap Due To Trading Error

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Market Issue or Event

CEB’s stock price dropped by 38% yesterday due to a trading error made by a local broker, erasing around PHP 21 Billion of its market cap.


Our Partner Broker’s View and Commentary

At its PHP 58.00 close, the ceiling price today is PHP 87.00, still 7% below the closing price last July 8. Even if it bounces back to its pre-error price by tomorrow, we believe CEB has more room to extend its rally.

The stock will still trade at 7.3x 2019 Price-Earnings Ratio (PER), 0.5 standard deviation below mean and a discount to median PER of regional peers at 13.3x. Reversion to mean will be premised on EPS expansion, with analysts expecting a 2018-2020 earnings CAGR of 53%. The recovery is mostly due to peso appreciation and lower jet fuel prices. CEB is also set to receive 10 new aircrafts within 2H19 which will boost seat capacity by 30%, leading to further margin improvement.

Consensus Target Price for CEB is PHP 110.00/share, in line with its 5-year mean PER of 8.6x.


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AP Securities (formerly Angping & Associates Securities)

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