Philipines Market Insights 2018.4.16


News Highlights: Conflicts in Syria cast pall over U.S. equities’ appetite (DJIA -123pts, Nasdaq-33pts), while regional marts slumped as China reported March trade deficit. At the local front, large-cap SM Group plans completion of 600ha. Future City in Parañaque, while also heavyweight Ayala Corporation’s MST looks set to produce solar panels by yearend. MJC plans rights offer & declares cash dividend, ANI’s offering priced @ P13.86/sh. Meanwhile, 3 projects are already approved for New Clark City.





Bourse scored red, PSEi @7,899. Skeptics prevailed Friday, as supply pressure doused buying appetite from fund managers. The PSEi closed 143 points lower at 7,899 (-1.8%), led by holdings (-2.9%) & property (-1.7%). ALI (-P0.90 at P39.90); SM (-P48 at P940); AC (-P22 at P956); & MPI (-P0.22 at P4.93) primed declines among actively-traded stocks. Participation was modest at P5.91bn, with gainers-losers at 76-134.
Volatility seen. Fund managers might remain at bay early this week, with radars alerted on geopolitical headlines that could unfold following the missile attack over the weekend in Syria. Expect volatility to run high across securities markets (forex, bonds, equities) pending the trail of events on this issue. Meanwhile, this ‘excessive pessimism’ window is a good opportunity for contrarians, who are willing to bet for a resolution to the ordeal. Trade cautiously. Immediate support is 7,780-7,800, resistance 7,950-7,970.


Marts mostly slump on China’s trade deficit.Wall Street’s overnight gains failed to stir Asian marts upward Friday as investors zoomed in on China’s surprising trade balance data ($4.89bn deficit in March vs $33.7bn surplus in February).


Syria concerns weighed on US equities. Fears of broader conflict in Syria pulled financial shares lower in Wall Street Friday. The US State bureau said they have evidence Syria carried out a chemical weapons attack in the town of Douma. DJIA -122pts, 24,360 (-0.5%), Nasdaq Comp. -33pts, 7,106 (-0.47%).
Russian UN draft got 2 votes, 8 rejected. Of the 15-member UN Security Council, Russia’s demand for condemnation & immediate halt to aggression & use of force on Syria obtained support from China & Bolivia only. Meanwhile, 8 nations (US, UK, France, Sweden, Netherlands, Kuwait, Poland & Ivory Coast) voted against the draft. The other 4 meanwhile, abstained. US said if the Syrian regime uses poisonous gas again, US is locked & loaded to strike anew.
Missiles fired on Syria. US, Britain & France fired 100 cruise missiles against Bashar al-Assad’s Syrian regime last Saturday following its chemical weapons attack. Meanwhile, Russia said a ‘significant number’ were intercepted by Syrian air defenses. Meanwhile, US Defense chief Jim Mattis said no additional strikes were planned.


Oil posts gains. After week-long anxiety on military conflict in Syria and sentiment, oil prices rose Friday, notching strongest weekly performance in over eight months. West Texas Intermediate (WTI) rose $0.28 to $67.39/barrel.


SM completing 'Future City’:

SM Group is evaluating proposals for the P100bn development of the 600ha. Future City in Pasay-Paranaque. SM hopes to proceed with the project by 2H18. SM already obtained ECC & completing the rest of requirements so it can be issued a notice to proceed.

AC unit prepares lightweight solar panels:

Ayala Corp. (AC)’s majority-owned Merlin Solar Technologies (MST) will produce lightweight solar panels by end 2018 in Laguna. These can be used for specialty rooftop applications in buses, trucks, utility vehicles with cooling needs, where there’s weight restrictions in putting heavy panels. MST will also work with IMI for projects related to mobility, Internet of Things (IoT) & energy in the Philippines.

IMI plans Serbia plant:

Integrated Micro-Electronics, Inc. (IMI) will build a manufacturing facility in Nio, Serbia that will support growth for another 2-3 years. The Serbia plan will be an extension of IMI Bulgaria. The facility is seen to generate $250mn to the firm once completed by Sept/Oct. this year. IMI has 19 manufacturing plants in 8 countries.

Carbon sink project signed by FDC unit & DENR:

Filinvest Development Corp. (FDC)’s FDC Utilities, Inc. teamed-up with DENR for a carbon sink program in Misamis Oriental. The man-made forest would also be a potential watershed or natural park that can a source of potable water. The project is in compliance with FDC Misamis Power’s 3x136MW circulating fluidised bed thermal coal plant in Villanueva town.

PNB completes $1bn MTN plan:

Philippine National Bank (PNB) completed its US$1bn medium-term note (MTN) program primed by Citigroup Global as lead arranger. The notes will be issued under the Singapore Stock Exchange (SGX). No other data was provided.

MJC launches rights float, declares cash dividend:

Manila Jockey Club, Inc. (MJC) will conduct a 1:2 rights offer in lieu of the earlier warrants optionapproved during the annual shareholders’ meeting last 29 June Price was set at P1/share, to raise P1.587bn. Proceeds will be for debt servicing. Meanwhile, MJC declared P0.05/share cash dividend, details of which to be announced

ANI share issuance priced at P13.86/share:

AgriNurture, Inc. (ANI) clarified to the Exchange, the issuance of 53mn primary shares to Alcione Family Office Services Co. Ltd. will be valued at P735.94mn, or P13.86/share. Alcione is based in Japan, engaged in trading, consultancy & asset management. Proceeds will be used as extra  working capital & for loan payments.

MGH appoints Cacho as director:

Atty. Enrique Sobrepena, Jr. has resigned as director of Metro Global Holdings (formerly Fil-Estate Corp.) due to health reasons & will be replaced by Mr. Jaime Cacho effective 12 April.

Extra income for TUGS on solar plant equity purchase:

Harbor Star Shipping Services, Inc. (TUGS)’s fully-owned unit, Harbor Star Energy (HSEC), bought 25% more of Astroenergy Dev’t. Gentian (ADGI) for 25MW solar plant in General Santos City. The plant’s capacity is expandable to 75MW & has existing power purchase agreement (PPA) with South Cotabato II Electric Cooperative, Inc. Completion of the initial 25MW will be completed 3Q18. The move would allow TUGS to have 85% of ADGI.

Lower ore reserves:

Philex Mining Corp. (PX) said recoverable gold resources fell 17% to 520k oz. last year, proven ore reserves -12% at 52.3mn MT. PX said deliberation for additional mine life is in progress & studies to raise tailings storage capacity.


Bullish plans on Clark:

DoF chief Dominguez sees New Clark City as the country’s next metropolis. He said 3 infra projects have already been approved for Clark: P211bn PNR North 2 projects, P12.55bn new terminal bldg. for Clark Int’l. Airport, & P4.37bn Chico river pump irrigation.

NAIA might be converted to a real estate zone:

Gov’t. is looking at converting NAIA into a real estate dev’t area as a gateway won’t last forever. Tugade said they’re looking into proposals to build airports outside of the capital, that includes Bulacan & Sangley Point, Cavite.

DoE studies change in power supply mix:

The Energy Bureau (DoE) is looking at 50- 50 mix between baseload & mid-merit plants to give more room for renewable energy (RE) projects coming on stream. The present baseload share is at 70% of total.

New ecozone sites from PEZA:

PEZA identified 137 new sites for ecozone covering 70,475ha. in the Phils. These are owned by PSLAM, Priv. & Mgmt. Office, Phil. Mining Dev’t & DENR, among others. 57% of the total area may be used for manufacturing, the others for IT parks, retirement ecozone.

Petroleum block roadshows planned:

Energy chief Cusi approved the Energy Resource Dev’t. Bureau (ERDB) proposal for roadshows for the petroleum blocks offer. This will advance exploration & dev’t. of upstream oil & gas resources. The roadshows are targeted in Singapore & Australia (target 2Q), Texas & London (in 2H18). The 14 service areas are in 6 petroleum basins, bulk on West Luzon for 4 blocks.

DENR chief wants Boracay to be declared as critical habitat:

The proposed Critical Habitat area would cover 750.96ha., of which 119.85 are forest land, the rest as coastal marine areas. This would cover location of Shangri-La Boracay; Movenpick Resort; Alta Vista of Consunji family & Costa Vista of the Villar Group. The others within this zone covers Filinvest’s Crimson Resort; SMC; Seven Seas Water Park.









Philipines Market Insights 2018.4.13


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