Upgrading rating to BUY. We are upgrading our recommendation on BDO from HOLD to BUY following the recent decline in prices. Since announcing its plan to raise as much as Php60Bil in equity capital through a rights offering on Monday, BDO’s share price has dropped 6.8% over the next two trading days. While we have previously mentioned that BDO’s share price could be weighed down in the short term by the additional shares from the offering, we do not think that a further decline is warranted. Fundamentally, the capital raising exercise should benefit the bank as it allows BDO to take advantage of the favorable economic prospects of the country. Based on our estimates, the proceeds from the offering would boost BDO’s CET1 from 11.3% as of end June to ~15.3%, comfortably above the minimum requirement of 11% (already including the DSIB). This should be able to support the strong loan growth of the bank for at least the next three years. We are retaining our FV estimate of Php128.00/sh based on 2.0X 2017E P/BV. We believe that the drop in prices is an opportunity to buy the stock. At its current price of Php105.00/sh, the upside potential to our target price is now significant at 22%. We like BDO given its position to capitalize on the country’s favorable economic prospects. The steady growth in the bank’s core businesses should also continue to support net income despite the expected decline in trading income.