INVESTORS remained upbeat on BDO Unibank, Inc. last week after it issued a debt default notice on an Udenna Corp. subsidiary.
Data from the Philippine Stock Exchange showed P1.962-billion worth of 16.819 million BDO shares were traded from July 25 to 29, making it the most actively traded issue last week.
Shares in BDO finished at P119.50 apiece last Friday, 1.4% lower from its P121.20 per share close on July 22.
Year to date, the stock’s share price dipped by 0.4%.
The Sy-led lender’s notice of default on Udenna subsidiary’s obligations to Clark International Airport Corp. (CIAC) fueled the former’s market activity at the beginning of last week, analysts said.
Regina Capital Development Corp. Head of Sales Luis A. Limlingan said investors at first became wary of the news on Udenna debt default, thinking that this would significantly affect BDO.
“However, if we’re going to look closer, the combined debts of Udenna’s listed subsidiaries is just around P71 billion, which is just a fraction of BDO’s P2-trillion loan book,” he said.
“Towards the latter part of the week, the influencing factor became the market’s earnings expectation on BDO,” Mr. Limlingan added.
“It was immediately clarified that the amount was of no concern to the lender’s operation,” Timson Securities, Inc. Head of Online Trading Marc Kebinson L. Lood said in a text message.
“Long-term investors… are looking for a bargain opportunity to buy the stock on the dip when the market reacts, knowing that BDO is a well-capitalized company with enough income and fully collateralized,” he said.
A consortium of lenders led by BDO confirmed on Monday that bank issued a notice of default on Clark Global City Corp. (CGCC), a subsidiary of Udenna, regarding its lease obligations between CIAC and Global Gateway Development Corp. (GGDC), a subsidiary of CGCC.
In a press statement released on July 25, Udenna Corp. said that the $4-million liability due on July 27 refers to the obligation of GGDC to CIAC and not with the bank consortium. It was immediately settled on Monday.
“The relevant obligations of CGCC to BDO are secured and a default will not have a material adverse effect on the financial condition and business of BDO,” the lender said in a disclosure on Monday.
GGDC is the developer of 177-hectare Clark Global City in Clark Freeport Zone in Pampanga.
Udenna is a holding company owned by Davao-based businessman Dennis A. Uy. Among the other companies that Mr. Uy owns are Phoenix Petroleum Philippines, Inc.; DITO CME Holdings Corp.; PH Resorts Group Holdings; and Chelsea Logistics and Infrastructure Holdings Corp.
Mr. Limlingan expects investors and market traders to look out for the bank’s second-quarter earnings and the Bangko Sentral ng Pilipinas’ (BSP) move following the US Federal Reserve’s monetary tightening.
On Wednesday, the US Federal Reserve increased its policy rate by 75 basis points (bps) for a second straight meeting, bringing total interest hikes since March to 225 bps.
“The gradual increase in interest rates by the BSP may benefit banks, but BDO investors should keep an eye on its lending performance and consumer borrowing appetite,” Mr. Lood said.
“For the second quarter, on a conservative note, we think a high-single-digit bottom-line growth is likely to materialize,” Mr. Limlingan said.
For the full-year 2022, he expects BDO to post a double-digit growth annually as loan demand improves continuously.
Meanwhile, Mr. Lood estimated the bank to end the year with P47.476 billion in net income.
BDO’s consolidated net income increased by 13.1% year on year to P11.769 billion in the first quarter. Likewise, its attributable net income grew by 13% to P11.738 billion in the three months to March.
BDO is set to release its second-quarter earnings on Aug. 1.
Mr. Limlingan placed the bank’s support level at P115.20 while its resistance at P121.70.
Mr. Lood expects BDO’s support and resistance levels at P109 and P125, respectively. — Mariedel Irish U. Catilogo