{"id":327957,"date":"2024-05-17T11:26:43","date_gmt":"2024-05-17T03:26:43","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327957"},"modified":"2024-05-17T11:26:46","modified_gmt":"2024-05-17T03:26:46","slug":"stock-in-focus-aboitiz-equity-ventures-aev-17-may-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-aboitiz-equity-ventures-aev-17-may-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Aboitiz Equity Ventures (AEV) – 17 May 2024 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>AEV<\/td><\/tr>
Company Name<\/strong><\/td>Aboitiz Equity Ventures<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>17 May 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 50.10<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
<\/div>\n\n\n\n

We upgrade our rating on AEV from HOLD to BUY with a target price (TP) of Php50.10 based on sum-of-the-parts net asset value (SOTP NAV) method of valuation. We think that concerns about Union Bank of the Philippines (UBP, 49.94%-owned) and the perceived initial challenges from having a substantial stake in CCBPI are already priced in by the market.<\/p>\n\n\n\n

<\/div>\n\n\n\n

Analysis and Opinion<\/h2>\n\n\n\n

Banking arm may remain under pressure<\/h3>\n\n\n\n

UBP may be facing risks of further earnings pressure. While the elevated interest
rate environment has allowed its net interest margin (NIM) to stay buoyant, its asset
quality remains an issue, resulting in hefty provisions. UBP accounts for 20% of our
gross asset value estimate (GAV) for AEV.<\/p>\n\n\n\n

Infrastructure may be a long shot; real estate may soon gain momentum <\/h3>\n\n\n\n

Capital-intensive infrastructure may require more strategic debt, and the interest
expenses associated with this could temporarily limit the segment\u2019s bottom line.
Nevertheless, it has a chunky book value that accounts for 19% of our AEV GAV
estimate. We also recognize the potential positive impact of the expected interest
rate cuts next year on the demand for AEV\u2019s real estate projects. In the meantime,
the share of real estate in our AEV GAV is only 5%.<\/p>\n\n\n\n

Still optimistic on power<\/h2>\n\n\n\n

We are still excited about the renewables expansion of AP, with 94MWp Cayanga
Solar Power to operate by 2Q24 and 159MWp Laoag Solar Power Project to be fully
energized by around the same time. On the distribution side, energy sales may keep
growing, aided by the high temperatures induced by El Ni\u00f1o. The generation side
may also continue to benefit from higher WESM prices. AP is the top contributor to
our GAV estimate for AEV, providing 45%.<\/p>\n\n\n\n

Entry into CCBPI may be a refreshing change after all<\/h3>\n\n\n\n

After completing the acquisition of 40% of CCBPI for Php41 billion, in our estimate, back in February 2024, an incremental impact on the operating performance of AEV\u2019s F&B segment may follow and eventually result in NAV enhancement. In 1Q 2024, CCBPI grew its revenues by 20.3% y\/y on sales volume organic growth of 16.4%. <\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>