Three companies are poised to see a boost from coming tax cuts in the Philippines, writes Isabella Zhong for Barron’s.
Nomura analyst Dante Tinga Jr says conglomerates will be the biggest winners as reforms spur increased economic activity. But consumer, power and energy sectors may take a hit as the country tries to make up for lost revenue from lower income taxes.
Tinga has a buy rating on the country’s largest conglomerate, SM Investments, and expects earnings growth to average 13.8% through 2019.
Shares of GT Capital Holdings are down 10% from January levels, but UBS analyst RJ Aguirre says the share price trades at a discount and is upbeat about medium-term earnings growth prospects for the stock.
Alliance Global Group, is up almost 9% this year and trades at nine times forward earnings, below its five year average of 13 times. Nomura’s Tinga sees the firm as likely to benefit from rising income levels.