07 June 2013 Asia Pacific/Philippines Equity Research Conglomerates Metro Pacific Investments (MPI.PS / MPI PM) Rating OUTPERFORM* Price (06 Jun 13, P) 5.86 INITIATION Target price (P) 7.90¹ Upside/downside (%) 34.8 Mkt cap (P mn) 152,456 (US$ 3,620) Hospitals biz deserves a second look Enterprise value (P mn) 189,919 ■ Initiate with OUTPERFORM. We initiate coverage on Metro Pacific Number of shares (mn) 26,016.46 Investments with an OUTPERFORM rating and a P7.90 target price, Free float (%) 43.9 52-week price range 6.29 - 3.92 implying 35% potential upside. Our target price is SOTP-based and ADTO - 6M (US$ mn) 6.1 translates to an implied 2014E PER of 20.6x and PBR of 2.0x (sector *Stock ratings are relative to the coverage universe in each average of 18.0x and 2.2x, respectively). The company focuses on water, analyst's or each team's respective sector. ¹Target price is for 12 months. power, toll roads, and hospitals. We forecast that hospitals will contribute 11% to 2014E net profit but we estimate that its NAV contribution is more Research Analysts substantial at 20%. Alvin Arogo ■ Multi-year growth potential for hospitals. Metro Pacific manages and 63 2 858 7716
[email protected] operates various privately held hospitals and we forecast its total beds to witness an 18% CAGR to 3,000 by 2015. This would be the main driver for Gab Roque 63 2 858 7756 the 47% CAGR in its net income contribution, in our view.