2012 April

TAMPAKAN’S ECC SETBACK RISKS

RP FDI OUTLOOK

EDC- BUY NEXT YEAR ‘S

UPSIDE GT CAPITAL: BEST BET ON

RP’S GROWTH STORY

Public construction spending picks up with Public Private Partnership (PPP) Public construction spending has historically accounted for 45% of total cement demand until 2010, with private construction spending making up the rest. But the sluggish fiscal spending last year pulled down the public share to 40%. This year, it is expected to re-cover to 45% again. That’s the view from the Republic Cement Corp. (RCM) President R. Sunico and Holcim Cement Corp. (HLCM) officials. Stock picks We’re recommending Southeast Asian Cement (CMT) for its liquidity, P5mn average value traded in the past six months, and its positive correlation with the earnings performance of

RCM, being the owner of the latter to the ex-tent of 27%. We think RCM will post better earnings growth of 42% to P4.1bn growth this year vs. key rival Holcim’s 28% to P3.5bn. RCM’s PE is likewise lower, 19.7x 2012 earn-ings vs 22x for Holcim. It’s relative illiquidity remains a constraint, P237k average value traded in the past month compared to CMT’s P5mn and HLCM’s P1.9mn in the last six months. All these make CMT a much more attractive indirect play on RCM’s profit rebound this year. Thanks to government’s PPP, which the industry expects to add 500k tons in new cement demand to bring the industry to an all-time high consumption of 16mn tons this year.

Market Outlook–Fixed Income Range trading is seen in the secondary market, 5 to 10 bps at most. The outlook follows some slight upticks across the yield curve as dealers repositioned ahead of the 7-yr FXTN auction worth Php9bn on April 24. This was a rever-sal of the yield’s downshift (about 5-10 bps) prior to the mid-April T-bill auction which saw the government’s rejection of the 91-day T-bill bids, signaling its re-duced need for cash after last March’s Php180bn RTB issuance. The market was “full” and could hardly digest up-coming debt supply and so the higher bids during that auction.

F IRST METRO INVESTME NT CORPORAT ION

Bellwether Top Gainers Top Losers

Stock Price % w-o-w change

Stock Price % w-o-w change

JGS 33.50 12.04% TEL 2,604 -2.11%

BDO 63.50 5.06% JFC 114.90 -1.79%

URC 64.90 4.51% BEL 4.94 -1.79%

ALI 20.80 3.74% AEV 49.25 -1.40%

AC 425 3.66% SCC 245.40 -1.05%

Market Stats

PSEi Value % w-o-w Change

Closing 5,097.3 1.16%

High 5,097.3 -0.36%

Low 4,990.75 -0.75%

Value T/O (in mn Php) 18,403 57.25%

Foreign Activity (mn USD) 0.49 -412.27%

GSM PM CLOSE April 13, 2012

1.79Y 5s 67 2.825 (-0.175)

3.27y 4s20 no bids

3.79y 7s48 4.235 (-.015)

4.40y 10s42 no bids

9.62y 10s55 5.45 (unch)

9.78y10s54 5.425 (unch) Dealt @ 5.40 for .010B

19.28y 20s17 6.085 (+.045) Dealt @5.985 to 6.08 for .544B

GSM PM CLOSE Apr. 13, 2012

23.69y 25s8 6.300(+.025)

24.48y 25s9 6.325 (unch) Dealt @ 6.24 to 6.28 for .332B

RTB Tranche April 13, 2012

15Y 5.45 (unch) Dealt @ 5.37 to 5.375 for .007B

20y 5.98(+.005) Dealt @5.873 to 5.985 for

2.091B

For the week ending Apr. 13, 2012

Continuation on Page 5

Volume 1 No. 1

Fortnightly on Market Action and Outlook

Playing the Cement Upturn

he

Tampakan’s ECC setback

risks RP FDI outlook

Tampakan Mine Development on hold but drillings to continue Sagittarius Mines Inc.’s (SMI) exploration of the 9,000 hectare $5.9bn worth Tampakan copper-gold mining project (in the municipality of Tampa-kan South Cotabato, Southern Mindanao) will proceed even with the denial of its application for an Environment Compliance Certificate by the Dept. of Environment and Natural Resources (DENR). This is the last step to begin the esti-mated three-year Tampakan mine development, leading to commencement of commercial opera-tions in 2016. This was according to top SMI officials. The ECC application was disapproved as it con-flicted with the open pit mining ban of the South Cotabato provincial government. Project propo-nents argued the local ordinance should take a backseat with the 1995 Philippine Mining Act approval of open pit mining method. SMI is the joint venture company owned by Xstrata (62.5%) and Indophil Resources Inc. (37.5% interest) and is the Financial and Technical Assistance Agree-ment (FTAA) contractor for the Tampakan project with the government. The FTAA allows up to 100% foreign ownership of a mining project in the Philippines. Xstrata PLC is a global mining com-pany headquartered in Zug, Switzerland. Indophil Resources NL (Indophil) is a mining company focused on the exploration and development of gold and copper-gold opportunities in South East Asia. Delay in 2016 operation The ECC denial potentially delays the 2016 start of operations set by SMI and also risks the coun-try’s foreign direct investment (FDI) targets. The sheer magnitude of the Tampakan project costs $5.9bn, twice the size of the Philippines’ highest ever $3.0bn total FDI (in 2006). Once operational, the project will add 1% to the country’s yearly GDP and generate maximum employment of 7,000 during the peak construction phase of mine development, which is likely to happen two years

from now. Also, government share of the project surplus (i.e. revenue less cost) or the total tax take in present value terms is estimated to be 71%, based on an economic impact assessment commissioned by SMI and done by Australian economist David Pearce. Higher resource estimate Indophil revealed a higher resource estimate for the copper gold find of 2.9bn tons based on 400 drilled holes with a copper grade of 0.51% per ton and 0.30g per ton Au. This represents an 18% increase from a previous estimate of 2.49bn tons at 0.6% copper & at a 0.30% gold cut-off grade. The upgraded resource is twice the original and much older 1.5bn ton estimate. A third of the resource increment was from the originally classi-fied inferred estimate, the area farthest from the drill holes whose gold and copper grade are the least probable. Based on the new information, estimated contained copper at Tampakan has risen to 15.0mn tons from 13.9mn tons previously while estimated contained gold has risen to 17.9mn ounces from 16.2mn ounces. Operating targets Tampakan’s planned yearly tonnage is 66mn or a daily tonnage of 180k tons, according to SMI’s General Manager Mark Williams. The tonnage is above those of listed mining firms. Philex’s (PX) Padcal mine of gold and copper, its lone operat-ing mine, is doing 9mn a year in tonnage, while Atlas Carmen Copper mine is 13mn-14mn tons a year. PX’s own Silangan is expected to do 5mn tons a year starting 2015 and will ramp up to 10mn tons two years hence.

SMART

INVESTING:

Through

FIRST METRO

SECURITIES, Inc.

In the week ending April 13, 2012, the Philippine bourse went on a positive note boosted by Wall Street gains overnight as well as the double-digit growth in Philippine February exports. The PSE index gained 1.16% for the week to close at 5,097.30. Foreigners were “net buyers” by P20mn. In developed markets, US equities were whip-sawed by disappointing 1Q China GDP of 8.1% and rising Spanish yields. Wall Street closed the week with its steepest drop for this year. The Dow tumbled by 1.6% % for the week, while both and S&P500 and Nasdaq shed 2% w-o-w and 2.3% w-o-w, respectively.

We see the local bourse consoli-

dating on a downward bias as

investors take cue on develop-

ments abroad. News flows abroad

that might influence investor senti-

ment US retail sales, housing starts

and industrial production, jobless

claims and existing home sales, as

well as the meetings of IMF-WB,

G20 Finance ministers, and BSP

monetary board meeting.

PSEi Consolidation Ahead

Page 2

Page 3

On the rise. EDC is up 24% from the YTD low of

PhP4.83 per share to Php6.00 per share year-to-

date end-March 2012, after dipping due to market

disappointment over a delayed geothermal plant

rehabilitation, the 130MW Bacman, originally set

to be recommissioned last year, July, 2011. There

are other upsides though to EDC even without

Bacman’s earnings contribution this year and

earnings are bound to improve also due to the

base effect of the rundown results last year: loss

to common shareholders of Php167m. These are:

(1) Tariff increase at the 305MW Green Core by

almost Php0.60/kwh. See our table below for

the level, and the revenue and earnings

impact. Green Core made Php8.4bn in reve-

nues last year as tariffs rose from a base of

Php3.60/kwh in 2010 to Php4.30/kwh in

1H2011 and Php4.80/kwh in Nov. of 2011.

(2) The Php1.2bn ancillary earnings that could

repeat this year from 132MW FG Hydro

amid higher NGCP acceptance rate of re-

serve power on offer, that also benefitted

Aboitiz Power last year. That raised FG

Hydro’s revenues to Php2.4bn (vs. Php2.1bn

in 2010), equal to an effective tariff of

Php8.45/kwh. NGCP is, by law, required to

contract the equivalent of the largest single

unit in the Luzon grid equal to 600MW at the

minimum. That single biggest unit was one

unit of Sual Plant’s 600MW x 2.

Stock Data

Price (Php) 5.85

Market Cap (Php Bn) 109.7

Outstanding shares (Bn) 18.75

Book Value/Share (Php) 1.46

Price to Book (X) 4.01

Fundamental Indicator

In mn Php FY11A FY12E FY13E

Net Profit (167) 10,643 14,077

EPS Php 0.29 0.38 0.53

PER (x) n.a 15.27 11.00

EDC’s other two geothermal plants, though big on

a combined basis, won’t provide much of an upside

and will remain flat. These are the 120MW Minda-

nao and 700MW Unified Leyte (the latter with dis-

patch of just 467MW based on 2011 results, 64%

load factor) due to short steam reserve recovery

and ongoing drilling work over for steam augmen-

tation. These plants’ tariffs are also expected to be

flat, with whatever inflation upside offset by the

peso strength.

2013 Earnings, No Other Way But Up.

The big earnings kick will be next year, when the

full Php3.5bn earnings from Bacman is realized,

bringing total earnings to our estimated Php10.3bn

or a PE of 11x. Bacman’s defective parts are in UK

for repair and set to run, be recommissioned by

4Q12. Buy EDC.

Fig: Year to Date EDC price Chart vs. Phisix

Table 1. Operating data

Table 2. Operating Assumption 2012

Buy Next Year‘s Upside

Energy Development Corp. (EDC)

Source: Bloomberg estimates

GT Capital Holdings Inc. Best bet on RP’s growth story

GT Capital’s IPO opens a buying window to favor-able Philippine demographics and growth story that ripen up conglomerates to their best operating results. Tapping a critical mass of the Philippine affluent class, GT Capital earnings are driven in large part by the Metrobank Group, slightly above half, with its investment banking arm First Metro Investment Corp. and foray in the credit card busi-ness, Metrobank Card Corp in partnership with Australia New Zealand Bank (ANZ). The rest of earnings are shared roughly 15% each by the 627MW Visayas grid-based coal and diesel-fired power generation business Global Business Power Corp. (GBPC); Federal Land and Toyota Motors, respectively. The rest are from a purely life insur-ance arm, AXA Philippines, which is allied with a French partner. Long-standing banking leadership in Metrobank (MBT) Metrobank, the country’s second largest unibank-ing franchise, is best positioned to capture the speeding industry loan growth of 22% in 2011 and average loan to deposit ratio (LDR) of 70%-80%. MBT’s loan growth and LDR have lagged, at 9% and 65%, respectively, suggesting room for future upside. Its strong capital position, Tier 1 ratio of 13.2% and CAR of 16.9%, count among the many factors that made MBT Asia’s 20th strongest bank, based on Asian Banker Magazine ranking. Its OFW remittance franchise, which captures 15% of Philippine OFW remittance flows, is among the highest and closes in to the industry’s lead mar-ket share of 22%. Remittances is an area where potential value creation can happen for Metrobank.

Bloomberg consensus earnings estimate for the bank this year is P12.6bn, up 16% from last year’s comparable estimate of P10.8bn. It has a thrift bank arm, PS Bank, which is also ranked as the strongest bank among the Philippine thrifts with 200 branches nationwide and making up a quarter of the 785 branch network of the group. Half of that network is in Metro Manila (MM), potentially beef-ing up the drive to build the SME loan book which is just 13% of its P433bn net lending's, the indus-try’s 3rd biggest. Bank profitability is anchored on a healthy net interest margin that has not come down as fast the local yield environment, settling at 3.52% and supported by a CASA base that was 52% of total deposits in 2011. Asset quality has improved with a book clean-up that produced an NPL ratio of 2.5% below the industry average of 2.7% and NPL cover ratio of close to 100%. MBT share prices have shot up recently to 1.7x price to book and to 15x PE on net foreign buying. Global Power, 2nd largest in Visayas grid, to seize peaking power Global Business Power Corp. (GBPC) will capital-ize on the peaking power market of the Visayas grid, with 100MW of still uncontracted diesel-fired capacity. This market is seen to be opened up by the privatization of 700MW Unified Leyte (UL) through an Independent Power Producer Adminis-trator contract bidding in four parts and the grid’s historical proneness to a power shortage. UL, run by EDC but whose power goes to NPC, acts more as a peaking plant in the grid instead of ideally delivering base load. GBPC is also going into re-newable energy, eyeing to grow a portfolio of run of river mini-hydros to complement its coal portfolio that’s heavily invested in clean energy with solid particle emission of almost zero. It has an existing 12.5MW contract with NGCP on take or pay, that pays P680k per MW. Another upside is the 82MW expansion of the Toledo power plant for the Atlas Mines’ Carmen Copper electricity requirement in ramping up its capacity to initially 70k tons per day. Synergy with MBT is underscored by the bank’s lendings to electric cooperatives that account for 33% of the total power sales of GBPC. The com-pany last year earned P2.3bn, ahead of its P2.0bn target and this year eyes a 10% improvement over last year’s budgeted earnings to P2.2bn.

Fundamental Indicators

In mn Php 2009A 2010A 2011A 2012E

Revenues 4,330 6,307 7,965 29,511

Net Profits 2,211 3,112 3,454 5,521

Stock Data

IPO Price (Php)

455

Issue Size (Php bn) 18.75

Listing Location Phil. Stock Exchange

Target PE (x) 13

Proceeds for: Expansion, Debt Service

Float 26%

Page 4

Federal Land addressing housing gap Federal Land is positioned to plug RP’s hous-ing gap of 300k units through its predominant-ly high-end projects (70% of revenues) with the remaining 30% in the mid-income market. Its pre-sales reached P9bn last year and real estate revenues amounted to P4.6bn. In three to four years, its developmental portfolio will shrink to 70% to give way to a retail portion that will produce the recurring rental income in the medium-term. With seven projects of mostly mid-market in Metro Manila prime areas about to start, pre-sales could easily double as it did in the past three years. Esti-mate of pre-sales is P18bn this year with po-tential revenue realization of half (based on historical) or P9bn. Applying a net profit mar-gin of 26% (that having accelerated from 7% in 2009 to 13% in 2010), we estimate 2012 earnings from property development to reach P2.3bn this year.

Source: 2012 based on brokers’ estimates

Continued on page 8

Volume driver Republic Cement Corp. (RCM) eyes additional 130k tons of sales volume this year helped by a growing industry demand led by the government’s PPP program taking off this year. That’s a 2.8% growth in sales volume for RCM over its best year, 2010, in terms of sales volume when it reached 4.5mn. The industry at that time sold 15.5mn tons, a third of which was attributable to RCM. This year, we see RCM sales volume rising dramatically by 440k tons or 9.4% to 4.64mn, above our own 4.2mn ton fore-cast in 2011. RCM has not disclosed its 2011 sales volume but reported a weak 9M2011 net earnings of P1.8bn in 2011 vs. 2010 net profits of P4.1bn. In-dustry earnings consensus for RCM’s earnings this year is just P2.2bn, reflecting the sluggish PPP and its adverse impact on the industry’s sales volume which slumped 7% in 1H2011 but recovered in 2H2011 for a full year flat growth in volume. Second largest market share of 30% The sales volume uptick to 4.64mn means P1.8bn in additional topline to P19.7bn on which the compa-ny’s net profit margin of 20.34% means P4.0bn earnings this year. But we think this is contingent on RCM’s being able to defend its market share of 29% which seemed to have been eroded last year to our estimate of 27% as its 9M2011 P1.8bn net profits suggest. There was strong competition last year due to weak demand in 1H2011, enabling newcomers to grab market shares. New player Eagle Cement, owned by businessman E. Cojuangco, has entered

the market with its Advance brand of portland ce-ment, snatching 4% of total volume. It is part of the group of Ramon Ang’s Northern Cement, which has built up a 9% market share. Together, Eagle and Northern Cement account 13% of total industry sales volume. Room for industry growth and RCM’s strength in Luzon There’s currently industry capacity underutilization, with actual used capacity at only 62% of 24.7mn ton rate capacity per year. RCM has the 2nd largest finish mill capacity of 6.5mn tons and clinker capaci-ty of 4.6mn tons. Clinker is an intermediate input to cement, accounting for 98% of total production cost. RCM’s plant footprint is strong in Luzon with the following locations: two plants in Bulacan, one in Batangas and one in Teresa, Antipolo and another one in Iligan City, Lanao del Norte, Mindanao. It is refurbishing a plant in Danao, Cebu on which it is spending about P400mn, all internally funded as its cash stood at P4.5bn as of 9mo11. Its balance sheet has little debt of P1.3bn against P19bn of equity for interest bearing debt to equity ratio of only 0.06x. Addressing a float issue and consistent dividends RCM’s float is only 4% and is talking to a group of advisers to comply with the 10% requirement for listed companies. Dividend payout has been con-sistent at around 20%-30% of the previous year’s earnings in the last three years. Regular cash divi-dend was P0.12 per share with special cash divi-dend of P0.16 per share last year.

Republic Cement Corporation Earnings recovery in 2012

Recommendation The stock is a buy but liquidity is a constraint. Average daily value traded only amounted to P237k on a moving 1 month average basis.

Stock Data

Price (Php) 8.48

Market Cap (Php bn) 49.39

Outstanding Shares (bn) 5.82

Book Value/Share (Php) 3.37

Price to Book (X) 2.52

Fundamental Indicators

In mn Php FY10A FY11E FY12E

Sales 19,171 17,120 18,216

Net Profits 4,172 2,245 2,489

EPS Php 0.72 0.39 0.43

PER (X) 10.19 21.79 19.77

Playing the Cement Upturn (from page 1) Strong ownership backing from global players RCM is owned 40% by La Farge, the French cement maker headquartered in Paris, present in 78 countres and with a strong strategic orientation toward the development of its businesses in fast-growing markets, notably in Asia and Middle-East. CMT, on the other hand, is owned by Union Cement and Holderfin B.V. of Netherlands. Stronger balance sheets We note that the cement companies have strengthened their balance sheets. Interest bearing debt to equity (DE) were below 1:1 ratio. RCM has a 6% DE ratio, P4bn cash, and P19bn worth of equity. Holcim has a higher DE but still less than 1:1 with P18bn equity. Both, however, have to address their compli-ance with the 10% public float requirement, whereas CMT has complied with its 14%.

Excess capacity Total industry production capacity is not yet fully utilized with industry output and cement demand at only 62% of the 24.5mn ton (finish mill) industry capaci-ty, suggesting room for sales expansion. HLCM has the largest capacity, 8mn tons per year, vs. the 2nd largest, RCM’s 6.5mn. The industry has total clinker capacity of 18.5mn, a quarter of which is held by RCM while 36% is accounted for by Holcim. The other smaller players like Cemex, Eagle, Northern and Pacific Cement make up the rest. Capacity utilization is expected to rise to 67% from 62% last year. Industry risk areas Rising energy costs which is slightly more than half of production cost could be a source of margin squeeze. Another is the potential influx of cement from China and Vietnam amid zero tariff on cement and China monetary authorities’ policy to cool down an overheating property market. China’s cement production capacity is 1.2bn tons per year while that of Vietnam, which exports to China, is 50mn tons a year. A third is the US potential ban on American companies’ outsourcing of back-end processes in the Philippines leading to slowing com-mercial property space development.

Page 5

Source: FMIC– IAG estimates

Now the Largest in Capital

BDO is now the largest bank as well

in terms of capital. It is number one

in terms of asset size with Php1.1T.

With the just announced rights offer

worth $1bn, BDO’s total capital will

shoot up to Php139bn.

BDO is preparing for Basel 3 imple-

mentation by 2014 as early as now.

A just announced $1bn rights offer

will do good to its balance sheet but

also tweak EPS levels down to

make valuations prone to a tempo-

rary selldown. See our table of esti-

mates below. Overall, the rights offer

is a positive strategic move that

complies with regulation and at the

same time increases BDO’s scope

for growth and profitability.

1) The rights offer will boost capital

way above the 12.5%, the minimum

level required for capital adequacy

ratio or minimum CAR come 2014,

inclusive of the so-called 2.5% con-

servation buffer.

2) It will also improve BDO’s lending power against the backdrop of ag-gressive industry loan growth rates which for peer banks have gone in excess of 20% early this year. BDO’s lending spree is reflected in a loans to deposit ratio of 77%, the industry’s highest.

Right now BDO’s capital adequacy

ratio (CAR) and Tier 1 ratio stand at

15.6% and 10.2%, respectively.

Basel 3 emphasizes that banks

stock up on common equity as core

capital with as little reliance as pos-

sible on Tier 2 which previously

qualified redeemable and cumulative

preferred and subordinated debt.

EPS Dilutive. We estimate EPS to drop by 25% to Php3.59/

shr, for a PE of 18.2x., higher than the pre-rights offer PE of

13.7x (and KB average 2012 PE of 15x) based on an EPS of

Php4.79/share and so the selling pressure. On a one BDO

share for every three held, dilution is 25%. The pre-rights offer

outstanding shares of 2.6bn shoots up by 866m for an expand-

ed diluted shares outstanding of 3.5bn. 2012 ROE also falls

with the expansion in the capital base from the current

Php105.9bn (with 2012 expected earnings of Php12.5bn net of

dividends) by Php43bn to Php149bn, undermining 2012 ROE

to 8.3% from pre-rights ROE of 12%.

Book value rises by 5.5% to our estimated Php42.98 per

share, post-rights, for a price to book of slightly lower 1.5x from

pre-rights PB of 1.6x, but lower than the KB PB average of

1.7x. Buy BDO on cheaper-than-industry PB valuation that

suggests sustainable balance sheet growth with favorable P &

L implications and being ahead of the regulatory curve. Our

target price at PB of 1.7x is Php73 per share.

BANK Tier 1 Total CAR Tier 1 Total CAR

BDO 10.04 15.62 9.00 13.68

MBT 13.73 17.36 14.26 14.73

BPI 13.44 14.91 13.55 13.55

Stock Data

Price (Php) 67

Market Cap (Php bn) 174.7

Outstanding Shares (bn) 2.6

Book Value/Share (Php) 35.3

Price to Book (X) 1.89 Source: Published Statement of Condition , end 2011

Fundamental Indicator

In mn Php FY11A FY12E

Sales 49,057 60,741

Net Profit 10,500 12,464

EPS Php 3.910 4.586

PER (x) 15.09 16.47

Source: Bloomberg estimates , pre –rights

Page 6

Table 1. Consolidated SOLO

Marcventures Holding Inc., MARC, Resource Estimate Grows

Target Price Raised

Several positive events that could potentially

increase the value of MARC’s share prices are

as follows:

1) Exploration of 470 hectares outside of the

existing explored 120 hectares that could yield

additional resource inventory for the company.

Existing mine operations are in the 15 hectare

active mine within the 120 hectare explored

area, located in Cantillan, Surigao del Sur.

2) Our estimated almost four-fold hike of net

profits to Php0.9bn this year on near doubling

of shipments to 20 from 13 last year. One ship-

ment is 50k tons. Shipments will rise due to

two factors: increased equipment in the mine

site (120 trucks, bulk of which is owned) and

expansion of the active mine. Nickel selling

prices also remain strong.

Stock Data

Price (Php) 3.45

Market Cap (Php bn) 5.94

Outstanding Shares (bn) 1.72

Book Value/Share (Php) 1.17

Price to Book (X) 2.95

Fundamental Indicator

In mn Php FY11A FY12E FY11E

Sales 0.550 1.849 0.843

Net Profit -14 0.928 0.267

EPS Php -0.01 0.54 0.16

PER (x) n.a 6.40 19.37

Recommendation

Our discounted cash flow (DCF) value estimate

of Marcventures is in the range of Php8-10/

share from Php4.00/share intrinsic value, the

company’s net asset value estimate prior to the

holding company transition. Our valuation is

based on the ff:

1) Higher tonnage and shipment, potentially

reaching 2m tons next year, then 3m and 4m

tons in 2014 and 2015, respectively;

2) Higher selling prices, for the low grade nickel

(<1%/ton ore) with high iron (48%) content, at

$30/ton from previously $23/ton last year.

Strong high-grade nickel selling price of $56/

ton, (grade of 1.8% and above);

3) Our DCF valuation is based on global peer

nickel producers average EV/EBITDA multiple

of 6x. Our 2012 forecast net income is

Php0.9bn on 1m shipment of high and low

grade nickel on a 50:50 sharing. PE is 6.4x.

Buy.

Page 7

Source: FMIC- IAG estimates

Toyota to boost capacity to 50k units by 2018 Toyota Motors Philippines, the top selling brand in RP with a market share of 33%, sees earnings growth of 15% to 20% this year after supply setbacks last year and a one-off related to foreign exchange. Last year, earnings dipped to P2.2bn from 2010’s P3.1bn and a recovery this year is expected with earnings reaching P2.5bn.

AXA Philippines The third largest life insurance company in the country with a market share of 11.8% based on total net premium income aims to make earnings of about P989mn this year, flat vs last year’s P967mn. Earnings estimate Going by the likely individual company earnings contribution, GT Capital 2012 earnings may reach P5.5bn, 57% better than last year’s audited earnings of P3.5bn.

Marcventures Holding Inc., MARC (continuation)

Page 8

GT Capital (continuation):