With the third quarter earnings season over, the local stock market is seen to shift focus on prospects of listed firms in 2023 as well as revert its attention to cues on how aggressively the US Federal Reserve and the Bangko Sentral ng Pilipinas will be raising interest rates.
“While the strong corporate earnings may still give a boost to sentiment, with the third quarter corporate reports season already through, investors are now expected to look for catalysts that would help in sustaining the corporate sector’s strong financial performance,” said Philstocks Financial Research Manager Japhet Tantiangco.
He added that, “Aside from this, investors are also expected to look for cues with respect to the monetary policy outlook of the Bangko Sentral ng Pilipinas and the Federal Reserve.” “Cues that would point to a slow down in their monetary tightening may lift sentiment, while cues that would point to a continuation of their aggressive policy path may lead to otherwise,” he explained.
Online brokerage 2TradeAsia.com said “a smaller half-percentage-point increase is expected in December up to early 2023, on account of inflation that has yet to convincingly cool (across very important baskets such as food and gas).”
“Whether the direction is going to change sooner rather than later will be dependent on how GDP figures will print for the last quarter of 2022 to the first quarter of 2023,” it added.
2TradeAsia.com noted that, “Interestingly, the PSEi's technical upward trend remains solidly intact, albeit with stronger bias towards consolidation. As such, some momentum shifts over the coming sessions are expected; monitor volumes especially as funds start screening potential 2023 bets, adding (or dropping) cashflow reliable or vulnerable stories.”
For stock picks, COL Financial has a BUY rating for Ayala Corporation after “raising its fair value estimate from P857.00 to P907.00 as we factor in higher fair value estimate for its subsidiaries as a result of rolling over to 2023 estimates.”
“We also factored in the increase in the net debt balance on the parent level. We maintain our BUY rating on AC as we see the company as a beneficiary of the return of the local economy to a growth trajectory,” it added.
COL also has a BUY rating for First Philippibe Holdings Corporation after raising fair value estimate by 3.4 percent to P154 per share. “FPH is trading at a huge 41 percent discount to its market based NAV of P107.5 per share share,” it noted.
The brokerage also favors SSI and raised its fair value estimate to P3.40 per share. “We expect SSI to continue to benefit from easing mobility restrictions and from the return of foot traffic to malls.
“Despite cost headwinds from higher inflation and the weaker peso, SSI remains well-positioned to capture the rebound in discretionary spending given its core customer base in the upper segment and portfolio of established and upscale brands,” COL said.
Abacus Securities Corporation also noted that, “With how things are looking and revenge spending unlikely to stop before the holidays, SSI is likely to end the year closer to P1.3 billion to P1.4 billion (net income) that would suggest current levels trading close to 3-4 times forward price to earnings ratio. We believe there is still much upside for the stock given its strong fundamentals.”