Philipines Market Insights 2018.3.26
News Highlights: RRHI’s board approved the purchase of Mulgrave Corp. BV’s (MCBV) 100% stake in Rustan Supercenters for P18bn. Phoenix Petroleum Philippines, Inc. (PNX) aims to improve FamilyMart’s operations by 2019 by improving supply chain deficiencies, among others. POPI’s board approved the purchase of 75% of Laguna Technopark, Inc. (LTI) from ALI in exchange for additional POPI shares. EDC signed a 15-year financing agreement with IFC for US$90mn. Meanwhile, Gov’t. posted P10.2bn budget surplus in January (+359%) as a result of the first package of the tax reform (TRAIN). Combined tax & non-tax revenues reached P239bn (+19%).
Sessions red, PSEi hits 7,970. Shares succumbed to profit-taking Friday, pulling the key benchmark 153 points lower at 7,970 (-1.9% day-on-day). Since falling to an intra-day low of 7,924, sessions were limited at 7,924-7,971. All sector gauges bled, primed by holdings (-2%) & property (-2%). ALI (-P1.60 at P40.35); BDO (-P3.50 at P140); AC (-P19 at P918); MBT (-P1.20 at P83.75); & SM (-P31 at P949) led actively-traded shares. Turnover was P8.5bn, with gainers-losers at 65-143.
Frail reaction seen. Local players might opt to remain at bay, while checking regional markets’ reaction to Wall Street’s 424-point drop last Friday. Clarity how this trade spat will be resolved between US & China remains hazy, paralleled with the long Easter break. Wait for accumulation to gradually unfold as the mart settles at a bottom. Immediate support is 7,800-7,850, resistance 7,980.
Marts tumble. Trade fears reaching new heights caused mayhem across Asian marts, with market sentiment downbeat after Thursday’s import tariff package sent investors towards selloff.
Escalating trade tensions between US & China weighed on US equities Friday. US plans tariffs of up to $60bn in Chinese good, while China declared plans to impose taxes on up to $3bn of US imports. China may also scale back on its purchases of US Treasuries. DJIA -424pts, 23,533(-1.8%), Nasdaq Comp. -174pts, 6,992 (-2.4%).
Oil scores higher. Oil futures surged Friday, as Trump naming Bolton as new security adviser raised risk of renewed sanctions on Iran, which may hamper Iranian output. Prices also rallied from hints that the OPEC may extend production cut agreement to 2019. West Texas Intermediate (WTI) rose $1.66 to $65.88/barrel.
RRHI buys Rustan Supercenters for P18bn via share-swap:
Robinsons Retail Holdings, Inc.’s (RRHI) board approved the purchase of Mulgrave Corp. BV’s(MCBV) 100% stake in Rustan Supercenters for P18bn. This will be made via a share-swap arrangement. Also, London-based Dairy Farm will be a partner in RRHI’s food retail business. Post-transaction, Dairy Farm through MCBV, will own 18.25% of RRHI, the Gokongweis at 51%.
PNX to improve FamilyMart by 2019:
Phoenix Petroleum Philippines, Inc. (PNX) aims to improve FamilyMart’s operations by 2019 by improving supply chain deficiencies, among others. FamilyMart lost P356mn in 2017 & PNX was allowed by FamilyMart of Japan to open 2 new stores for 2018.
PNX sets P5bn capex:
Phoenix Petroleum Philippines, Inc. (PNX) allotted P5bn in capex for 2018 for its service stations, storage, logistics assets & IT. From its 530 retail network base, PNX aims to open 50 each year.
Mitsubishi retains remaining block in AC:
Mitsubishi will continue to collaborate with Ayala Corp. (AC), even after retaining 8.78% in the latter. After unloading 8.5mn shares at P934 apiece, Mitsubishi said the move was part of their portfolio rebalancing. An official also said there is no plan to further reduce its stake in AC at this time.
ALI-POPI enters share-swap for Laguna Technopark:
Prime Orion Philippines, Inc.’s (POPI) board approved the purchase of 75% of Laguna Technopark, Inc. (LTI) from Ayala Land, Inc. (ALI) in exchange for additional POPI shares. The transaction was valued at P3bn, which will cover the issuance of 1.225bn POPI shares to ALI in return for 30,186 LTI shares. This would bring ALI’s ownership in POPI to 63.9% from 54.91%. LTI has 460ha. Laguna Technopark in Sta. Rosas & Binan, plus 118ha. Cavite Technopark in Naic. Target date of execution is April 2018.
SMPH launches new beachfront condo:
SM Prime Holdings, Inc. (SMPH) plans to break ground before 1H18 for Camilo Coast’s 13-storey ‘Freia at Pico de Loro Cove’, completion before end of 2021. The beachfront condo will have 223 units, 214 of which will be 2-bedroom, 9 penthouse. Size for the 2-bedroom units is at 67-146sqm.
EDC signs loan with IFC for $90mn:
Energy Development Corp. (EDC) signed a 15-year financing agreement with IFC for US$90mn. Proceeds will finance part of 2018 capex & other requirements. The capex will include geothermal plants in Leyte affected by July 2017 earthquake.
RLC-SHNG formed JV firm:
Robinsons Land Corp. (RLC) & Shang Properties, Inc. (SHNG) signed an agreement to form a JV firm that will be 50-50 owned by each party. No further details were given.
SLI gets Iloilo lot:
Sta. Lucia Land, Inc. (SLI) notified the Exchange that the Armed Forces of the Phils. Retirement & Separation Benefits (AFPRSBS) issued a Notice of Award to SLI for a property in Iloilo City. No other details were given.
IDC gets loan from Landbank:
Italpinas Development Corp. (IDC) secured P420mn loan from Landbank for the first of 2 phases of Miramonti Green Residences in Sto. Tomas, Batangas. The initial tower will cost P780mn &bring P1.4bn in revenues.
New budget hotel in QC:
Araneta Center (ACI) will launch a budget hotel that will have 300 rooms. Price point will be lower than Novotel Manila & will cater to millennial. ACI has prepared P50bn redevelopment for the next 10-15 years for the 35ha. Cubao, QC property.
Mining unit of DMC sees modest growth with caveat:
After earning P105mn in net income in 2017, DMCI Holdings, Inc. (DMC) unit DMCI Mining sees modest growth in 2018, pending resolution of its appeal with the Office of the Pres. on the suspension & closure orders for Berong Nickel (BNC) & Zambales Diversified Metals (ZDMC) last June 2016 & Feb. 2017, respectively. Earnings were obtained after DENR allowed suspended mining firms to ship out their stockpiles to limit accumulation of silt in nearby bodies of water. If nickel prices remain at current levels, DMCI Mining sees double-digit growth in net income.
BSC invests 15% for Thailand solar power firms:
Basic Energy Corp.’s (BSC) board approved its 15% equity investment in Vintage EPC Co. Ltd. (Thailand) & VTE Int’l. Construction Co. Ltd. (Thailand). BSC has remitted US$2.622mn in earnest deposit that will be converted to paid-in capital for the said firms upon signing of a Share Purchase Agreement. Vintage & VTE are the supplier & EPC contractor for 220MW solar plant in Minbu District, Myanmar.
MER-FGEN sought ERC’s nod on PSA:
Manila Electric Company (MER) & First Gen Corp. (FGEN) fully-owned First NatGas Power (FNGPC) filed an application with ERC for the approval of their power supply agreement (PSA). This covers 414MW caseload from San Gabriel, Batangas. The rate was P3.8637/kWh versus WESM’s P4.4405/kWh.
PHN allots funds for education & construction ventures:
Phinma Corp.’s (PHN) board appropriated P1bn retained earnings for investment in the Education& Construction materials business until 2019 plus P300mn for the buyback of shares of the firm until Dec. 2019.
MJC unit ups authorized capital to P500mn:
Manila Jockey Club, Inc.’s (MJC) board approved to raise the authorized capital of fully-owned Manila Cockers Club (MCCI) from P10mn to P500mn. MJC will subscribe to at least 25% of the capital hike at P1/share.
SMB bonds get stable rating:
PhilRatings gave Aaa on San Miguel Brewery’s (SMB) P34.81bn bonds, with stable outlook.Maturities vary from 2019-2024.
ABS sets May opening for Bulacan studios:
ABS-CBN Corp. (ABS) will open its Hollywood-style studios in Bulacan this May. The firm invested P600mn for the 2 sound stages on 15ha. lot in San Jose del Monte. The plan is to build 10 sound stages.
Companies with ex-dividend today:
Companies going ex-div today include: EW 50% stock div., payable 16 Apr.; SHNG P0.1255 cash div., payable 16 Apr.; FNI -1 FNI rights: 17FNI shares, TBA; CAC P0.93 cash div, payable 06 Apr.; PNX P0.15 cash div., payable 26 Apr.
Fiscal surplus surged to P10bn in Jan:
Gov’t. posted P10.2bn budget surplus in January (+359%) as a result of the first package of the tax reform (TRAIN). Combined tax & non-tax revenues reached P239bn (+19%).
Galaxy bought into Wynn:
Wynn Resort’s Steve Wynn sold his entire 11.8% in the firm for $2.1bn to Macau casino operator Galaxy Entertainment (GEG). Wynn focuses on premium & VIPs, GEG targets high-end & broader mass.