FREE Stock Picks for the week (Apr 11-14, 2023) by First Metro Securities

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Market Recap

Last week, the PSEi had a three-day trading week, closing 0.17% lower week-on-week to 6,488.51 (-11.17 points). The market started in the green, tracking global investors’ optimism on the future Fed policy path following a slower-than-expected print of the monthly Personal Consumption Expenditures (PCE) index. On the local front, despite a similar deceleration in inflation trends, investors positioned ahead of the five-day long weekend in observance of Holy Week and the Day of Valor, with thin volumes observed during the shortened trading week.

PSE Market Outlook this week

This week, we expect a volatile market with an upward bias as all eyes are on the following:

(i) earnings and data releases; (ii) the upcoming US CPI report on Tuesday, 12 Apr 2023 – which is projected to come in lower at 5.2%; and (iii) the cooler US change in nonfarm payrolls (est. 240k; Mar 2023: 236k) data, which is considered one of the key factors in determining the US Fed’s next course of action.

Meanwhile, local fuel prices are also expected to increase by about P1.50 to P1.90 per litre of diesel, P2.40 to P2.80 per litre of gasoline, and P1.75 to P2.05 per litre of kerosene.

Stock Picks this week

1. Security Bank Corp. (SECB)

We believe SECB is on track to deliver 19.2% earnings CAGR in the next two years, allowing the bank to deliver ROE at a multiyear high of 8.8% by next year. We also expect the impact of policy tightening to be more pronounced in the next 12-24 months, which will benefit SECB’s net interest margins, albeit tempered by slowing loan growth and competition.

We recommend to accumulate once price breaks above P95.00 to P96.00 level. After which, set Stop Limit orders at P87.40 and set profit levels at around P109.25. For long-term investors, our target price for SECB is P109.00

2. San Miguel Food and Beverage, Inc. (FB)

Year-to-date, San Miguel Food and Beverage, Inc.’s (FB) share price rose by as much as 41%, outper- forming the PSE industrial sector, which rallied by only 2.4% in the same period. our investment thesis on the counter remains intact: we like FB as a branded food & beverage (F&B) powerhouse – with its dominant market leadership across food, beer (>90% of market volume), and spirits (>40% of market volume) businesses. FB is a major player in the Philippine consumption story.

Accumulating FB once it breaks above P55.00 is advisable. Set cut loss below P52.00. Take profit at around P61.00/P63.00. For long-term investors, our target price for FB is P70.00

3. Philex Mining Corp. (PX)

PX’s positive performance this year tracked the price of Gold, which has rallied by 6.7% YTD. Gold has outperformed this year driven by risk aversion on concerns over the global banking sector. Note that for the past three years (2020-2022), revenues from Gold have accounted for 51.3% of PX’s total topline. PX also tracked the outperformance of Copper, which surged by 6.6% YTD. Copper rallied amid the Chinese eco- nomic reopening and short-term supply issues brought about by the protests in Peru, which accounts for 10% of the world’s Copper supply. Moving forward, Copper prices are expected to be supported by the significant capital being invested in renewable energy.

As for price action, PX broke above the 200-day MA for the first time since Apr-22. Now, PX is looking to break above its resistance level of P3.30, which could propel the stock to retest P3.60/P4.20. Accumulating once PX breaks above P3.30 is advisable. Set cut loss below P3.03. Take profit at around P3.80/P4.20.

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