FRI 11 JAN 2019

RCB, MBT, BPI, BDO

Five banks reportedly have $412Mil

exposure to Hanjin

Five banks have $412Mil exposure to Hanjin RIZAL COMMERCIAL BANKING

N/A
N/A
According to news reports, five banks are looking to cover a combined loan exposure of $412Mil
to Hanjin shipyard, after the local shipbuilding unit of Korean conglomerate Hanjin declared
METROPOLITAN BANK & TRUST
bankruptcy earlier this week. The five banks (RCB, Land Bank, MBT, BPI, and BDO) have decided to BUY
move as one to take control of Hanjin Heavy Industries and Construction Philippines’ $1.6-billion PHP93.50
shipyard in Subic Bay, Zambales. According to the news, the creditor banks had agreed that “no
one will jump the gun” to seize collateral ahead of the others, an act that could trigger a free-for- BDO UNIBANK, INC.
all on Hanjin’s Philippine assets and jeopardize the rehabilitation plan that had been filed in the HOLD
local courts. Another possibility is for the banks to call for the forced sale of the Hanjin shipyard PHP127.00
to a strategic investor as a way to recover the amount that they lent. Note that RCB allegedly has
a loan exposure of $140Mil. This was followed by Land Bank with $80Mil, MBT with $72Mil, BPI BANK OF THE PHIL ISLANDS
with $60Mil, and BDO with $60Mil. HOLD
PHP97.00

Situation manageable

We are not too concerned about the news at this point as the loan amounts seem manageable,
particularly for BDO, BPI, and MBT. Note that the alleged amount represents just 1.0%, 1.3%,
and 1.4% of their current book values respectively. In terms on income, these accounts for
10.3%, 13.3%, and 16.5% of their estimated 2018 income. (Though the alleged exposure for RCB
accounts for 8.7% of book value and 166% of 2018 income.) In addition, we believe that the
banks are likely to recover at least a part of the loan through restructuring. While the situation is
definitely worth monitoring, we believe that systemic risks are unlikely at this point.

Maintaining BUY rating on MBT and HOLD rating on BDO and CHARLES WILLIAM ANG, CFA
BPI DEPUTY HEAD OF RESEARCH
charles.ang@colfinancial.com
We currently have a BUY recommendation on MBT with an FV estimate of Php93.5/sh. Meanwhile,
JOHN MARTIN LUCIANO
we have a HOLD recommendation on BDO and BPI with an FV estimates of Php127/sh and
SENIOR RESEARCH ANALYST
Php97/sh, respectively. On the other hand, consensus has a HOLD rating on RCB with an FV john.luciano@colfinancial.com
estimate of Php26/sh.

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 ALERT I RCB, MBT, BPI, BDO: FIVE BANKS REPORTEDLY HAVE $412MIL EXPOSURE TO HANJIN

FRI 11 JAN 2019

IMPORTANT RATING DEFINITIONS

BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the next six to
12 months.

HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might be poor
or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the next six to twelve
months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

IMPORTANT DISCLAIMER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may be
incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are subject to change
without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. COL Financial and/
or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies mentioned in this report and may trade
them in ways different from those discussed in this report.

COL RESEARCH TEAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

ANDY DELA CRUZ JOHN MARTIN LUCIANO FRANCES ROLFA NICOLAS

SENIOR RESEARCH ANALYST SENIOR RESEARCH ANALYST RESEARCH ANALYST
andy.delacruz@colfinancial.com john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com

JUSTIN RICHMOND CHENG ADRIAN ALEXANDER YU

RESEARCH ANALYST RESEARCH ANALYST
justin.cheng@colfinancial.com adrian.yu@colfinancial.com

COL FINANCIAL GROUP, INC.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
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WEBSITE: www.colfinancial.com

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