COL: Buy property, banking stocks ‘on dips’

Leading online stock brokerage COL Financial has advised investors to “buy on dips” banking and property stocks—the two counters that defied the generally disappointing corporate earnings results in the second quarter.

April Lee-Tan, chief equity strategist, said in a Sept. 10 research that the median earnings growth of publicly listed corporations covered by COL had slowed further to only 3.1 percent in the second quarter from 6.4 percent in the first quarter.

Moreover, there were more underperformers (34.7 percent) than outperformers (28.6 percent). The remainder performed in line with expectations.

Among the listed companies under their coverage, Tan said East West Bank, Meralco, Puregold Price Club and JG Summit had delivered the best second quarter earnings performance “in terms of sustainability.”

As such, she said the share prices of these firms may perform well this second half of 2025.

In terms of sector, banking remained the best performing with a median earnings growth of 8.2 percent in the second quarter, she said.

“However, the smaller banks performed better than the big three banks in terms of growth,” Tan said.

“There are also concerns that bigger banks will suffer from lower net interest margins (NIM) on growing signs that interest rates are headed lower,” she added.

But whenever big banks are sold off due to weak earnings growth and concern over NIM, Tan said the preferred strategy would still be to buy the dip as profit growth would only slow, not turn negative.

She noted that loan and revenue growth were still “very healthy,” as profits would only be pulled down by a significant increase in loan loss provisions.

Property companies had also performed well, with median earnings growth easing only slightly to 6.3 percent in the second quarter from 6.8 percent in the first quarter, the research noted.

Residential revenues

Although residential revenues were flat, she said these were more than offset by the high single-digit growth of mall and office leasing revenues.

“Residential take-up sales were still down year-on-year for most companies. However, many enjoyed higher take-up sales on a quarter-on-quarter basis due to the popularity of horizontal developments, and lease-to-own, ready for occupancy condominium units,” she said.

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As such, the preferred strategy for properties would be to “buy on dip” and “sell on rally.”

Falling interest rates and cheap valuations are helping, but since the sector is still facing numerous risks, she said it was best to “sell on rallies.”

On the other hand, telcos, power and consumer companies delivered disappointing earnings results. All three listed telecommunication firms posted worse than expected profits, she said.

“Power companies also largely disappointed, with only Meralco beating expectations due to the strong performance of its power generation business,” she said.

Earnings of power companies were negatively affected by the steep drop in spot prices of electricity, she said.

For consumer companies, while most of them saw revenue growth accelerate in the second quarter, she noted that most food manufacturers and restaurants had been hit by higher input costs—such as palm oil, coconut oil, coffee, cocoa and tuna—that pulled down their margins.