Unicapital Inc., one of the leading local brokers, has revised its year-end forecast for the benchmark Philippine Stock Exchange index (PSEi) to 7,800 points, down from the previous estimate of 8,000 points. The adjustment, however, still indicates a notable growth outlook for the market, with a potential 10 percent rise from the current level of 6,529 points.
Wendy Estacio-Cruz, head of research at Unicapital, based its forecast on projected growth in earnings per share (EPS) among listed companies, alongside favorable market conditions driven by a policy rate adjustment. Its forecast includes a 10 percent increase in EPS and a price-to-earnings (P/E) ratio of 13 times.
“Our EPS growth forecast stems from earnings estimates for index companies, with corporate earnings expected to benefit from lower capital costs and increased consumer spending due to further rate cuts,” Cruz explained.
The brokerage also projected a bear case scenario for the PSEi at 7,200 points by year-end, representing a 10 percent rise over the closing 2024 level. Cruz said the anticipated cut in policy rates by the Bangko Sentral ng Pilipinas (BSP) this year bolstered the outlook. However, Unicapital cautioned that risks could arise from prolonged high interest rates and geopolitical tensions disrupting trade flows.
Currently, the Philippine stock market remains undervalued relative to its regional counterparts. The PSEi is trading at a P/E ratio of just 10.5, a significant 49 percent discount to the historical 10-year average. This positions it as one of the most undervalued indices in Asia, alongside Indonesia’s Jakarta Composite Index (JCI), which also trades at a 49 percent discount to its 10-year average.
Cruz further noted that while the local stock market faces challenges, the power sector continues to show resilience. She said that from 2024 to 2030, electricity consumption in the Philippines is seen growing at an average rate of 6 percent annually, surpassing the projected 4 percent growth in power generation.
Unicapital’s analysis suggests that coal and gas will remain key components of the country’s energy mix, despite government efforts to promote a green energy transition. The firm remains optimistic about the continued performance of the power sector in the face of ongoing demand-supply concerns.
