The Philippines: Solid Fundamentals but Still Expensive
Watch the video with Andrew Stotz or read a summary of the country profile on The Philippines.
Four Pillars of GDP: Private consumption and investments are strong
Overall, The Philippines is experiencing fast GDP growth, which is largely driven by private consumption and investments. Net exports, however, have had a big contracting impact on GDP growth.
Solid fundamentals but expensive
The market’s price momentum has picked up recently relative to Asia-ex Japan, but it remains expensive on a price-to-earnings basis, especially considering the relatively slow EPS growth.
A. Stotz Four Elements: Moderately Attractive
Overall, The Philippines is moderately attractive in Asia considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.
Fundamentals: Fundamentally, The Philippines has the third strongest return-on-equity in Asia over the past 12 months.
Valuation: It remains expensive, because PE is high and earnings growth is low.
Momentum: Price momentum has picked up, but earnings momentum has not.
Risk: The market features moderate volatility.
Four sectors returned double digits in the past 3 months
Top 3 largest sectors: Industrials: 26% of the market; Financials: 23%; Real Estate: 18%.
Best sector & stock: Telecom: +13.1% & PLDT Inc.: +15.4%.
Worst sector & stock: Utilities: -4.0% & Aboitiz Power Corp: -8.4%.
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