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The Philippine value investing story
The Philippine value investing story
The Philippine value investing story
The Philippine value investing story
The Philippine value investing story
The Philippine value investing story
The Philippine value investing story
The Philippine value investing story
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The Philippine value investing story

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The Philippines has made headlines recently due to its economic growth, stable government finances and the prospect of upgrade to investment grade. Find out why and whether this recent success is …

The Philippines has made headlines recently due to its economic growth, stable government finances and the prospect of upgrade to investment grade. Find out why and whether this recent success is sustainable in the long run.

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  • 1. The Philippine Value Investing StoryRotary Club of Makati West26 July 2012Marcelo Labre+63 917 825 2828mlabre@london.eduwww.marcelo.labre.tel
  • 2. Everybody’s eyes on the Philippines! BAML Feb 2012
  • 3. Why exactly?  $228 billion official GDP (actual GDP probably higher)  $75 billion in international reserves (33% of GDP)  No IMF debt, in fact currently a IMF creditor  Positive current account surplus at $2 billion (1% of GDP)  Public debt at 40% and deficit at 2% of GDP  Healthiest banking system in SE Asia (16% Tier 1 Capital Ratio)Sources: The Economist 24 February 2012, Global Finance (http://www.gfmag.com), The World Bank
  • 4. However, a hard place for business  Issues with … – Starting a business – Registering property – Investors protection – Getting credit – Enforcing contracts – Resolving insolvencySource: IFC and The World Bank, Doing Business 2012 Rank, http://www.doingbusiness.org/
  • 5. Capital knocking at the door! The Philippines will benefit by letting go of its phobia of foreign capital Proposition to attract value investors rather than opportunistic speculators Efforts both in government policy and corporate culture and behavior
  • 6. Where will capital go to?Businesses that attract value investors Pass mark on the usual ratio analysis – Profitability – Leverage – Operations Is management candid to shareholders? – Are there hints that management tries to hide “bad news”? – Does management do what they say they will? – Are annual financials and internal management reports clear? Is management efficient at allocating capital? – What’s the company’s return on retained earnings? – How is management retaining earnings and distributing dividends? – Is the company using debt efficiently?
  • 7. One final point, on sectors Lending and Banking  Consumer – Lowest household credit as a – Highest consumer expenditure as a proportion of GDP in Asia proportion of GDP in Asia – Great potential for growth, wealth – Already a big consumer country, creation boosts household credit wealth creation and more credit to boost consumer sectorSources: IMF, Euromonitor World Retail Data and Statistics
  • 8. The Philippine Value Investing StoryRotary Club of Makati West26 July 2012Marcelo Labre+63 917 825 2828mlabre@london.eduwww.marcelo.labre.tel

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