Stock Review: MEG


The recent weakness in MEG has prompted us to do a quick analysis on the stock. While it is true that the PSEI has been in the red the past 5 days losing around 3.13%, MEG seems to fall much faster. YTD return for MEG is -8.55% compared to 1.42% for PSEI.

The company released its 1H15 results last week and showed a consolidated net income of 5.4B, 67% lower than the 16.4B reported in the same period of 2014. The decrease was mainly due to the non-recurring gains from the sale of Travellers International Hotel Group (TIHGI) to AGI and the remeasurement of the Company’s remaining 1.84% investment in TIHGI totalling 11.63B in 1H14.

Absent these one-time items, the Company’s results improved by 12.51% during the fist half powered by the 11.79% increase in real estate sales, 14.42% increase in interest income on real estate sales, 11.71% increase in realized gross profit from prior year’s sales and 22.25% increase in rental income.


As of June 30, 2015, BVPS is 4.05 while diluted EPS stands at 0.164 – implying a full year DEPS of 0.328 and a PER of 13.05x based on the latest closing price of 4.28.

Key financial ratios are solid as per the Company’s latest disclosure.



MEG has significantly benefited in the rise of real estate prices in prime locations such as in Fort Bonifacio. It’s leasing business continues to strengthen due to the high office demand of BPO companies. Valuations have become attractive due to the continuous decline in share prices. Average target price of brokers is at 5.96, indicating an upside potential of 39.25%.


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