FMSBC Equity Research

MSCI Philippines Investable

Market Index 09 May 2018

MSCI May 2018 SAIR Projections PSEi

• MSCI May 2018 Semi-Annual Index Review (SAIR) results to be
Closing price (09 May 2018) 7555.27
announced on 14 May 2018
F12 P/Earnings (x) 16.83
• We expect Wilcon Depot Inc. (WLCON) and MacroAsia Corp. (MAC) to be
F12 P/Book Value (x) 2.0
included in MSCI Philippines Investable Market Indexes (IMI), and
Premium Leisure Corp (PLC) to be removed
MSCI Philippines May SAIR rebalancing projections
• Robinsons Land Corp. (RLC) expected to remain in MSCI Philippines IMI,
migration to small caps possible
•
Highlights
MSCI May 2018 SAIR results on 14 May. MSCI will announce the results of its May
2018 Semi-Annual Index Review (SAIR) on 14 May 2018. Additions and deletions
usually occur during May and November SAIRs. Announced changes will take
effect on 1 June 2018.

Potential inclusions, migration, and removal. Based on our simulations, we see

potential movements of a number of securities in and out of the MSCI Philippines
Investable Market Indexes (IMI), setting up for an eventful SAIR:1) migration of
Robinsons Land Corporation (RLC) from MSCI Philippines Standard Index to MSCI
Philippines Small Cap Index; 2) inclusion of Wilcon Depot Inc. (WLCON), Pilipinas
Shell Petroleum Corp. (SHLPH), and MacroAsia Corp. (MAC) in the MSCI
Philippines Small Cap Index; 3) deletion of Premium Leisure Corporation (PLC) from
the MSCI Philippines IMI; and 4) one stock currently under MSCI’s watch list - San
Miguel Corporation (SMC), Puregold Price Club, Inc. (PGOLD), Semirara Mining and
Power Corp. (SCC), and Robinsons Retail Holdings, Inc. (RRHI) - may be added in
the MSCI Philippines Standard index.

Outlook
Our call: WLCON and MAC in, PLC out. WLCON and MAC are our high-conviction
picks among the potential entrants to the MSCI Philippines IMI, while PLC is our
pick for deletion. As for RLC, we acknowledge the counter’s market cap falling
below our projected limit for mid-cap securities, making a case for the stock to be Source: Thomson Reuters, MSCI, Bloomberg L.P., EPFR, First Metro
Securities
deleted from the MSCI Philippines Standard Index. While the argument is valid, we
note that RLC still satisfies all the requirements to be included in the Global
Investable Market Indices, albeit with a lower market cap. As RLC’s market cap still Analysts
falls above our estimated small-cap limit, we believe RLC will not be totally Mark Angeles
removed from the MSCI Philippines IMI, but would rather migrate from MSCI Katrina Mercado
Philippines Standard Index to MSCI Philippines Small Cap Index. Given this Philippine Research Team
scenario, we do not expect significant outflows on RLC.
Rating System
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

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