Operating earnings for the Philippine’s largest company in terms of market capitalization ($8.29 billion) this year are projected to hit from a low of $3.29 billion to a high of $4.13 billion (mean of $3.71 billion), growing to a low of $3.92 billion to a high of $4.42 billion next year (mean: $4.17 billion). In 2005, the mean was around $3.4 billion.
PLDT, according to the international research company, remains on its BUY rating, due to a number of factors. Return on assets (ROA), it said, remains a bullish factor. ROA, defined as net income divided by total assets, shows the profitability of PLDT’s underlying assets and gauges how effectively the company can extract profit from its assets.
Total debt to total equity is likewise bullish. This ratio gauges the capital structure of the firm and provides a gauge of balance sheet durability. PLDT’s volume action, as measured by indicators applied to trading volumes, is currently showing strength.
But while the research firm’s ratings are favorable, concerns have been raised moving forward. PLDT’s sales yield (sales/price) is bearish, showing overvaluation based on its sales yield relative to the previous five years. The sales yield shows what investors are willing to pay for top line (sales) growth for each dollar worth of investment. Book yield ( book value/price) has likewise shown overvaluation.
Last five years‚ growth rate for PLDT in terms of earnings is at 121.18 percent compared to a full history growth rate of only 4.76 percent. Over the last 12 months, earnings grew by 32.02 percent. Cash flow meanwhile grew 25.99 percent over the last five years compared to full history growth rate of 7.15 percent. Again, over the last 12 months, it grew 64.13 percent.
Book value growth rate meanwhile over the last five years was at a negative 8.41 percent, but this has grown 64.13 percent over the last 12 months.
A recent scan of the news covering the banking industry seems to have again confirmed our impressions about the bank. But to remind you how impressive the bank has been performing, let’s rattle off just a few of its major achievements in the last six months alone.
In July this year, Fitch Ratings, a leading global rating agency committed to providing the world’s credit markets with accurate, timely and prospective credit opinions, assigned a National Long Term rating of AA- to Security Bank Corp. – if our memory serves us right, no other financial institution in the country currently enjoys the same ranking, one of the leading universal banks in the country today.
This was quickly followed by the bank announcing a net income of P1.01 billion for the first semester of 2006, a sum that’s 50.7 percent more than the P670-million earnings for the same period last year – among the highest increase in percentage terms among all banks‚ earnings for the first half of this year. As of mid-year, Security Bank’s return on equity manifested considerable improvement hitting annualized average of 19.5 percent – a significant growth over the 12.6 percent in the same period last year.
Then Asiamoney Magazine cited the bank as among the top three among local in the categories Best Single Electronic Trading Platform, Best for Innovative FX Products and Structured Ideas and Best for FX Sales. In recognizing the role played by the bank’s leadership, no less than International Association of Business Communicators cited Security Bank president Abet Villarosa with the 2006 CEO Excel Awards held last Nov. 8. Under the banking, finance and insurance category, the association of business communicators recognized the achievements of Security Bank this year as well as how it has broken through targets and perceptions from the previous years.
Two weeks ago, the entire Security Bank management team was in Cebu to inaugurate their new Cebu Business Park Branch. Then, last week, in quick succession, the bank announced two new major milestones. The first was when, Security Bank entered into an unprecedented agreement with Mindanao’s largest rural bank, One Network Bank. Based on the brief we read, both institutions will realize gains in terms of production and cost savings in operations as it will allow each institution to discover new and untapped revenue streams in the areas of consumer banking, remittance, trust operations, foreign currency transactions/trading, and investment products and services for both banks.
The following day, Security Bank publicly forged another major partnership, this time with property giant Megaworld Corp.. The agreement calls for Security Bank to provide a P7-billion funding for HOMELITE, a financing facility exclusive to Megaworld homebuyers which offers fixed interest rates for different payment tenors, HOMELITE is touted to be the first and only program to offer smooth end-to-end financing starting even from the pre-selling stage.
Then, just as last week ended, Security Bank received another major accolade. The Philippine Stock Exchange, recognizing the active trading and continuous appreciation of Security Bank shares of stock over the past several months, upgraded the bank’s stock to blue chip status.
(Disclosure: Hidden Agenda does not own a single share of Security Bank stock)
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