ACCORD CAPITAL EQUITIES CORPORATION

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
DAILY REPORT for TD November 4, 2010
PSE Index Pts Change % Change Total Volume Total Value Advancers Decliners Unchanged
4,381.86 40.12 0.92% 1.364B Php5.757B 87 52 38

OUTLOOK for November 4, 2010_Thursday

We are likely to see the index' run extend to a third straight session putting
November on a good start. Optimism has risen a notch following two days of
advance aggregating 113.12 points or 2.65% even as neighboring markets
move tepidly.

At the end of yesterday's trades, the market sustained its break above the
upper regression line drawn year-to-date. The underlying technical indicators
supports the above contention with STO (10,3) widening its break off the trigger
line, MFI (14) topping its previous high point and the MACD (12,26) just two
points below its signal line likewise positing a potential bullish crossover. The
histogram has consistently narrowed over the last 10 sessions, (back to when
the PSEi fell under the 4,200-line) and is poised to move back into positive
territory.

The index itself continues to trade above its 150-pd EMA (3,642.89) and needs
just a little more push to break above both 10-pd (4,286.62) and 50-pd
(4,420.75) EMAs. We thus post initial resistance as between the latter and the
psychological 4,400-line. Alternatively, support is pegged at the previous
resistance level of 4,350-4,370. The underlying premise of the current optimism
has not changed and remains tied up to expectations of more-than-decent q3
results.

CORPORTE DISCLOSURES:

SM DEVELOPMENT CORPORATION [pse: SMDC]

Outstanding Shares: 5,496,276,466 (pre-offer/listing)
7,328,368,621 (post offer/listing)
Last Traded Price: php9.35, +4.8%
52-week range: php3.70 – php11.50
2009 EPS: php0.451
Interim EPS (9-months to Sept 2010): php0.373
PE range (current & prior year EPS): 20.5x – 32.2x
Book Value: php2.27

The underlying shares of its 1:3 SRO were listed today. The offering, priced at
php6.38 per share aggregating php11.7B was fully subscribed, indicating

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE AVAILABLE TO
OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE INFORMATION HEREIN IS
FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE
SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS
REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE
INDUSTRIES MENTIONED.
DAILY Report Page 1 of 2
ACCORD CAPITAL EQUITIES CORPORATION
GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
DAILY REPORT for TD November 4, 2010
PSE Index Pts Change % Change Total Volume Total Value Advancers Decliners Unchanged
4,381.86 40.12 0.92% 1.364B Php5.757B 87 52 38

investors confidence on the Company's prospects. Half of the net proceeds, estimated at php5.8B will be received by SMDC on or before May 2011. The
figure for outstanding shares above will grow to 7.3B at the offer's completion. Part of the proceeds will be used by the Company to tap into the China
market. The Company pursues opportunities in the real estate industry, focusing into the residential market within the immediate vicinity of SM Malls.
It likewise maintains securities investments as a source for a steady stream of interest and/or dividend earnings.

After posting a 51% expansion in its net profit in Q1 2010, the Company revealed it is targeting a 30% to 50% annual rise in its bottom-lines in the next
five years beginning 2010. Based on 2009 results, with the Company raking in php1.8B, this should translate to a target of between php2.34B to
php2.7B for the full year. At the end of September 2010, the Company has booked profits equivalent to 88% of the lower end of the extrapolated target.
With net margins averaging above 30%, and average quarterly revenue (2010) of php872M, q4 should generate a minimum of an additional profits of
php260M, putting the full year estimate right on the money. However, with the outstanding shares expanding to 7.3B after the rights offer, EPS should
amount to php0.403 based on the average number of outstanding shares over the last two years (inclusive of the impact of the offer.) Using absolute
figures, 2010 EPS is estimated to “fall” to php0.316. Last year, the stock traded between a PE of 4.3x to 8.9x based on preceding year EPS, closing the
year near the upper end at 8x earnings. This year, the range has risen to between 10x and 25x, using 2009 earnings. Despite this higher multiple range,
the higher ends are just about 2.0 to 2.5x the lower limit, making it “behaviorally” similar. Given this data, the price should settle between the 20x to 22x
multiple, translating to a share price range of php9.12 to 10.00 (2010 earnings.) These numbers serve as our minimum targets. Applying our projection
to industry level PE's which for the property sector ended October at 22.76, the numbers are practically unchanged.

The stock has moved within a narrow php8.80-

9.30 band after falling off its php10.98 high
(close) near the end of September. Yesterday's
trades, which added as much as 6.37% before
settling at php9.35, up 4.8%. It's close above the
upper limit of a near-term trading band with
volume turnover rising 6.6x the prior day's total
legitimizes the advance and the break.
Theoretically, the listing of the rights shares
purchased at php6.38 apiece should have created
a sell pressure that would have resulted in a price
decline. Subscribers to the rights shares would
have been tempted to book roughly 40% profits.

This activity has carried the STO (middle chart) to

break above the trigger line as it trades at 39.35.
MACD (bottom chart) draws an almost similar
picture with the line just about set to register a
supporting BUY signal with a potential crossover
the signal line. MACD spread has narrowed and is
seen to cross over into positive territory.

Over the immediate term, the stock price may head towards a close of the gap at php10.10, marking such price as the initial target and resistance. This
gives investors an upside potential measuring 8.02% based on the latest closing price. Initial support is at the php9.30 mark, an erstwhile short-term
resistance line while the critical point to look out for as a potential trend reversal is php8.80-8.90.

The only contrary argument, which suggests caution, or at least limits the trades over the short term, is the volume AccDist trend which remains locked
in a downtrend, favoring distribution. SHORT-TERM/TRADING BUY

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE AVAILABLE TO
OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE INFORMATION HEREIN IS
FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE
SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS
REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE
INDUSTRIES MENTIONED.
DAILY Report Page 2 of 2