The Philippines Offers A Fast Growing Economy With Expensive Stocks To Boot

The Philippines Offers A Fast Growing Economy With Expensive Stocks To Boot

Watch the video with Andrew Stotz or read a summary of the country profile on The Philippines.

Four Pillars of GDP: Private Consumption and Investment

At 6.6%, The Philippines has the second fastest GDP growth in Asia (only India’s is faster). Private consumption and investments are the main drivers of the economy, but net exports created a large drag on GDP growth at -1.6%.

Expensive but moderately attractive

The Philippines totes the highest valuation in Asia on a price-to-earnings basis at 21x in 2017CE*.

EXCLUSIVE: Lee Ainslie’s Maverick Had A Challenging 2Q

Maverick USA was down 3.3% for the second quarter, while Maverick Levered was down 2.1%. Maverick Long Enhanced was up 8%. Year to date, Maverick USA is up 31.8%, while Maverick Levered has gained 49.3%. Maverick Long Enhanced has returned 9.9% for the first six months of the year. Maverick Capital is a long/ short Read More

However, analysts are expecting earnings to grow at a low 3.4% this year.

A. Stotz Four Elements: The Philippines’ rank relative to Asia

Overall, The Philippines is a moderately attractive market in Asia, considering all our four elements: Fundamentals, Valuation, Momentum and Risk.

Fundamentals: The nation sported a moderate ROE in the past 12 months, relative to Asia as a whole.

Valuation: It remains expensive, because PE is the highest in Asia and earnings growth is low.

Momentum: The country offers poor price and earnings momentum.

Risk: The country offers low beta to Asia ex Japan with moderate volatility.

Real Estate did best among top 3 largest sectors in 3Q17

Top 3 largest sectors: Industrials: 26% of the market; Financials: 23%; Real Estate: 18%.

Best sector & stockInformation Technology: +17.9% & Integrated Micro-Electronics Inc.: +38.7%.

Worst sector & stock: Materials: -5.9% & D&L Industries Inc.: -16.4%.

*CE is consensus estimates

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Dr. Andrew Stotz, CFA is the CEO of A. Stotz Investment Research, a company providing institutional investors with ready-to- invest portfolios in Asia that aim to beat the benchmark through superior stock selection. The company also provides buy- and sell-side clients with financial models to value any company in the world and World Class Benchmarking to determine what companies are financially world class. Previously, as Head of Research at CLSA, Andrew was voted No. 1 Analyst in Thailand in the Asiamoney Brokers Polls for 2008 and 2009. He was also voted No. 1 Analyst in Thailand in the 2009 Institutional Investor magazine All-Asia Research Team Report. Andrew earned his PhD in finance at the University of Science and Technology of China in Anhui province, with a focus on answering questions raised by fund managers and analysts during his career about picking stocks and managing portfolios. In addition, Andrew has been a lecturer in finance for 22 years at various universities in Thailand. Since 2013, he has been the president of the CFA Society of Thailand. He is also the author of How to Start Building Your Wealth Investing in the Stock Market.

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