Stock Pick: BDO Unibank, Inc. (BDO) Recommendation: Hold

STOCK BROKERAGE Regina Capital Development Corp. has placed a “hold” tag on BDO Unibank, Inc. (BDO) shares as they currently trade above the projected price-to-earnings ratio (P/E) for the financial sector.

“As of [the first quarter of 2015], BDO’s P/E is 17 times, cheaper than the PSEi (Philippine Stock Exchange index) but slightly more expensive than the projected P/E for the financial sector (15.5 times as of early-April),” said Luis A. Limlingan, the brokerage’s managing director.

“For [fiscal year 2015] we still project an EPS (earnings per share) of 7.12, which is also slightly above their profit guidance,” Mr. Limlingan added.

“We believe the company will still be able to exhibit strong loan growth between 16%-18%. This will be led by organic growth and continuous branch expansion.”

Mr. Limlingan also noted that as of Wednesday’s close, the bank is trading at 2.1 times price-to-book (P/B) value, which is in between rivals Metropolitan Bank & Trust Co.’s 1.9 times and Bank of the Philippine Islands’ 2.6 times.

In a disclosure to the Philippine Stock Exchange last April 24, the lender said its net income for the first quarter of 2015 reached P6.1 billion, 12% higher year on year.

Net interest income — which remained to be the main driver of its earnings’ growth — increased to P13.3 billion.

BDO shares closed at P109 apiece last Thursday, down by P1.00 or 0.91% from Wednesday’s closing price of P110 each.

Mr. Limlingan placed the stock’s support and resistance prices at P104 and P112.80, respectively.

— Christine Joyce

S. Castañeda