OFW remittances for the month of November clocked in at P2.64 Billion which was lower month-on-month (MoM) in both USD and PHP terms. Although the current narrative in the market is that the US may have been able to cool economic growth while avoiding a recession, we note that the upside for the peso value of remittances next year would be much more limited given that wage growth abroad will likely slow, at the very least, while the USDPHP rate would also stabilize at lower levels.<\/p>\n\n\n\n
According to the Fed\u2019s wage growth tracker, the pace of growth of the average hourly earnings for December declined by 53% versus Dec 2021 earnings, which could indicate that a slowdown is underway. Because of this, we note that discretionary spending may be impacted and as such we reaffirm our defensive stance on sticking with defensive consumer stocks. <\/p>\n\n\n\n
Aside from our usual names such as URC (Target Price: P168.00), MONDE (Target Price: P15.50), and PGOLD (Target Price: P56.40), we also recommend LTG (Target Price: P16.00). <\/p>\n\n\n\n
LTG derives 47% of its earnings from tobacco which is still a frequently purchased product even amidst downtimes. For 2023, we note that margins could exhibit improvement as the impact of pricing actions owing to higher excise taxes fully kicks in. LTG\u2019s relaunch of its Chesterfield brand could also allow it to shore up its market share in the lower end, which has previously seen increased competition.<\/p>\n\n\n\n