We forecast the total core net income (CNI) of PSEi-linked companies, weighted by market cap, to grow by 12% year-on-year (y\/y) in 2024. This time, we expect the consumer sector (+21%) to lead the pack. The property sector will still be a top contributor. However, the other two winners in 9-month (9M) 2023, particularly banks and conglomerates, may no longer dominate as they come from a high base period.<\/p>\n\n\n\n
In 9M 2023 core earnings up 29% y\/y. To recap, the PSEi CNI (weighted) grew by 29% y\/y, led by property, banks, and conglomerates. The power\/energy sector significantly slowed down while the consumer sector began to show some recovery.<\/p>\n\n\n\n
We expect the conglomerates\u2019 CNI to grow by 13% y\/y in 2024. We favor the names
whose business units are driven by market forces, not highly regulated, and whose share prices have underperformed or are just performing in line with the benchmark PSEi. <\/p>\n\n\n\n
Meeting the criteria are AC and SM, which we believe will catch up with the superb performance of GTCAP. Hence, the two are our top picks among conglomerates.<\/p>\n\n\n\n
When policy rate cuts happen, as anticipated next year, loan growth may boost and outweigh the impact of lower rates on net interest margins (NIMs). We expect the banking sector to grow by another 13% in 2024. BDO remains our top bank pick, and we add MBT. We remove BPI as the implementation of its merger with Robinsons Bank may result in some EPS dilution.<\/p>\n\n\n\n
We turned optimistic about the consumer sector for 2024 in light of a low base, easing inflationary pressures, and potential interest rate cuts, tempered by expansion-related initiatives and possible new tax programs. We forecast 2024 CNI to grow 21% y\/y, the highest among all sectors in our estimates.<\/p>\n\n\n\n
More infrastructure activities are expected to help fuel the property sector\u2019s growth. Malls may continue to surprise, while residential may generally start to show double-digit growth as indicated by project launches and reservation sales. The office segment may remain stable. We forecast the sector\u2019s CNI to grow by 16% in FY24F. Our top picks are mall-heavy RLC and SMPH.<\/p>\n\n\n\n
While the power\/energy sector may continue to deal with tight supply due to the
absence or lack of significant additional power capacity, we believe it can still address the growing demand. We forecast the sector\u2019s 2024 CNI to end almost unchanged y\/y as the expected decline of SCC on normalized earnings neutralizes the potential growth of ACEN. Our top pick is MER.<\/p>\n\n\n\n
We expect muted earnings growth for the telecommunications industry due to (1) inflation-related effects on prepaid and postpaid services, and (2) flattish growth expectations on net additional subscribers. We forecast a relatively steady 4% growth for 2024.<\/p>\n\n\n\n
Growth will be driven by dividends-accretive asset infusions, alongside higher occupancy and moderate rental escalations. We expect the REITs to grow by 11% y\/y in 2024. Our top picks are AREIT and CREIT.<\/p>\n\n\n\n
*Overweight<\/strong> = a recommendation to allot a greater portion of the portfolio to a stock or sector that seems particularly promising. Similar to a Buy recommendation.<\/em><\/p>\n\n\n\n