By - Jun 2, 2010
“Fantastic” corporate earnings in the Philippines will drive stock valuations back toward levels in December, when multiples touched the highest in almost two years, according to ATR KimEng Asset Management Inc.
The Philippine Stock Exchange Index will probably advance to 15 times estimated earnings this year from the current multiple of 13, said Phillip Hagedorn, who manages the nation’s second-best performing fund at Manila-based ATR KimEng. The valuation rose to 15.3 times on Dec. 2, the highest since Dec. 28, 2007, according to daily data compiled by Bloomberg.
Analysts are set to increase their earnings forecasts after profits jumped more than 20 percent in the first quarter as the economy expanded 7.3 percent, beating expectations, according to Hagedorn. The Philippine economy may expand 5.5 percent this year and support a 14 percent increase in net income, he said.
“Some of the earnings we have seen are fantastic and the economic recovery is pretty strong,” Hagedorn, who helps to oversee $150 million in funds, said in a phone interview today. “The country’s fundamentals will carry this market through.” Aboitiz Power Corp., which owns power plants and retailers, increased earnings more than 19-fold to 7.43 billion pesos in the first quarter. DMCI Holdings Inc., the nation’s biggest construction company, doubled its net income to 1.41 billion pesos, and profit at Ayala Land Inc., the biggest developer, jumped 32 percent to 1.2 billion pesos.
Best Performer The Philippine stock index has risen 7.8 percent this year, the best performer among Asia’s 12 biggest markets. The gauge remains 1.2 percent below its 27-month high of 3,330.42 on May 14 amid concern austerity measures in Europe will derail a global economic recovery.Read more...
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