The core net income (CNI) of PSEi-linked companies grew by 29% year-on-year (y\/y) in 9-month (9M) 2023, led by property, banks, and conglomerates. The power\/energy sector significantly slowed down while the consumer sector showed some recovery quarter-on-quarter (q\/q). <\/p>\n\n\n\n
We forecast the total core net income (CNI) of PSEi-linked stocks to grow by 12% y\/y this 2024. This time, we expect the consumer sector (+21%) to lead the pack. The property sector may still be a top contributor, but the other two winners in 2023, particularly banks and conglomerates, may no longer dominate. <\/p>\n\n\n\n
Our outlook shows a normalizing annual growth to levels near the pre-pandemic historical average (from our robust estimate of 22% for 2023). The PSEi’s Price-Earnings (P\/E) ratio is 11x 2024 prospective earnings, and our PSEi year-end 2024 target of 7,300 implies a P\/E of 13x, still near the low end in history.<\/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 consumer CNI to grow 21% y\/y, the highest among all sectors.<\/p>\n\n\n\n
More infrastructure activities may help fuel the property sector\u2019s growth. Malls may continue to surprise, while residential revenues may generally begin to show double-digit growth as indicated by project launches and reservation sales. The office segment may remain steady. We forecast CNI to grow by 16% in 2024. Our top picks are mall-heavy RLC and SMPH.<\/p>\n\n\n\n
We expect the conglomerates\u2019 CNI to grow by 12% y\/y in 2024. Our focus is set on names whose business units are driven by market forces, not highly regulated, and whose share prices have underperformed or just performed in line with the benchmark PSEi in FY23. Meeting the criteria are AC and SM, which we believe will catch up this year. Hence, the two are our top picks among conglomerates.<\/p>\n\n\n\n
When policy rate cuts happen, as anticipated this year, loan growth may bounce back to at least 10% and outweigh the impact of lower rates on net interest margins (NIMs). We expect the banking sector to rise by another 13% in 2024. BDO remains
our top bank pick, and we add MBT, which is a big bargain that cannot be ignored.<\/p>\n\n\n\n
While the power\/energy sector may continue to deal with tight supply, we believe it can still address the growing demand and benefit accordingly. We forecast the sector\u2019s 2024 CNI to end almost unchanged y\/y as the expected decline of SCC neutralizes the potential growth of ACEN. Our top pick is MER.<\/p>\n\n\n\n
We forecast a muted earnings growth of 6% for 2024, steady y\/y, due to industry maturity and tough competition.<\/p>\n\n\n\n
CNI may grow by 11% y\/y in 2024, driven by dividends-accretive asset infusions, higher occupancy & moderate rental escalations.<\/p>\n\n\n\n