November 18, 2014

AGI posts 5% hike in 9M14 net income

In a short press statement yesterday, Alliance Global Group Inc (AGI) said its net profit to equity holders in 9M14 fell 1% YoY to P11.4. Revenues were at P89.5b, implying a 5% YoY decline if we compare it to the figure disclosed last year by the company. The robust growth in its property business (MEG earlier reported a 13% YoY hike in 9M14 net income which is slightly above expectations) and gains by Travellers Int’l Hotel Inc (RWM) were apparently offset by the weak performances of Emperador Inc (EMP) and unlisted McDonald’s franchisee Golden Arches.

Our take: The press statement disclosed very limited details on AGI’s interim results. At any rate, the P11.b in net income to common shareholders represents just 67% of the full-year consensus forecast. While MEG’s results were boosted by additional contributions from Global-Estate Resorts Inc (GERI), we expect challenges for AGI’s other units.

RWM’s 9M14 net income of P4b in 9M14 (+11% YoY) accounted for 73% of our full-year estimate which if revenues can pick up during the holiday season. However, this will be challenged next year as it faces tighter competition with the opening of City of Dreams Manila and the expanded Solaire Resorts. Meanwhile, it remains to be seen if EMP can recover lost market share with the launch of smaller SKUs for its brandy products and the introduction of new whisky products.

We note that EMP’s 9M14 net income came short of expectations (72% of full-year forecast). Golden Arches continued to post disappointing results with its 9M14 net income dropping by 21% YoY despite its expanded branch network. – WealthSec