Philipines Market Insights 2018.4.23


News Highlights: Rising bond yields rattle Wall Street (DJIA -201pts, Nasdaq -91pts) as more earnings results are expected this week, while regional marts mostly plummet on dampened outlook from tech shares. Meanwhile at home, AC is set to explore more tech & infra ventures; banking heavyweight BDO eyes P31bn in earnings for 2018 (+10%). DD gets clearance for 135mn share offer @ P50/sh. According to the BSP, 1Q18 deficit stood at $1.23bn.





Local bourse regained poise, PSEi @7,726. Buyers gradually returned Friday, pushing the PSEi 44 points higher at 7,726 (+0.58%). Gains were led by property (+1.5%) & industrials (+0.88%). Actively-traded gainers were BDO (+P0.40 at P134); ALI (+P1 at P41.10); JFC (+P6 at P291) & SM (+P1 at P901). Gainers-losers scored 120-83, on P5.4bn turnover.
Digesting headlines. Sessions might start the week sideways, possibly with downward bias, as players check on the mart’s reception to Wall Street’s overnight decline & wider BoP deficit in 1Q18. There may be select stocks that could defy the trend, especially on good 1Q indications. Trade selectively & position on dips. Immediate support is 7,700, secondary at 7,680, resistance 7,750-7,770.


Tech shares weigh on marts. Asian shares lose earlier gains to pull back Friday, with dampened outlook from Taiwan Semiconductor pulling other tech shares across the region.


US equities down. Concerns over rising bond yields & uncertain earnings from iPhone weighed on US equities Friday. DJIA -202 points, 24,462 (-0.82%), Nasdaq Comp. -91pts, 7,146 (-1.3%). Fed officials soothed recession fears. New York incoming Fed chief John Williams & Chicago Fed chief Charles Evans assured the market that growth prospects look pretty strong & that hike in short-term rates should flatten the yield curve. Williams asserted the Fed’s shrinking balance sheet would help steepen the curve by putting upward pressure on long-term rates.


Oil prices close higher, shakes off Trump’s tweet. Oil settled slightly higher Friday, shrugging off U.S. President Donald Trump’s tweet blaming the OPEC for “artificially high” prices. The upward movement came as OPEC ministers were quick to denounce the claims. West Texas Intermediate (WTI) inched up $0.11 to $68.40/barrel.


AC unit explores AI: Ayala Corp.

(AC) unit AC Venture Holdings (ACVH) will invest in new & potentially disruptive technology-related ventures such as artificial intelligence (AI). Around $150mn has been deployed, while $100mn more will be disbursed in the next 5 years. AC’s management team is also set to visit Silicon Valley & China.

AC spots for more infra ventures:

Ayala Corp. (AC) is looking at airport projects outside NAIA. So far, AC is heeding for government’s decision on the P350bn super consortium proposal for NAIA before addressing other opportunities. AC Infrastructure Holdings chief, Rene Almendras, said they’re working on a possible JV with a local gov’t. for a transport-related project but declined to elaborate.

MPI awaits bidding results for Malaysian tollway:

Metro Pacific Investments Corp. (MPI) submitted its bid for a tollway project in Malaysia which may be decided upon within the year. MPI entered Indonesia last Nov. through an increase in its stake in PT Nusantara Infrastructure TBk.

AEV maintains capex for 2018:

Aboitiz Equity Ventures, Inc. (AEV) has set P77bn capex guidance for 2018. Due to delayed rollout of some projects, AEV only spent P35bn-P40bn last year. AEV aims to spend P13bn-P14bn for Apo Agua in Davao City which was delayed in the processing of permits. AP meanwhile, will get P60bn of the amount with the addition of 500MW to its capacity.

MER selected as preferred bidder for Ghana venture:

The Millennium Dev’t. Authority (MiDA) of Ghana selected Manila Electric Company (MER) as the preferred bidder for the 20-30-year concession in the electricity distribution of Electricity Co.of Ghana (ECG). ECG services about 3mn accounts. FLI capex up slightly: Filinvest Land, Inc. (FLI) allotted P23.5bn capex for 2018 from P22bn in 2017. Of the amount, P10bn will be for office segment, residential at P8bn, retail P2.5bn, balance for land purchase. FLI intends to end 2018 with 800k sqm. leasable space, or an additional 140k sqm.

FDC allots P8bn, 2-year plan for Clark Mimosa:

Filinvest Development Corp. (FDC) will spend P6bn-P8bn in the next 2 years for Clark Mimosa, which will be located beside its $200mn casino project. This will cover 6 office buildings, a mall, retail strip & some residential units for the 1st phase.

BDO aims for P31bn:

BDO Unibank, Inc. (BDO) is looking at P31bn net income for 2018 (+10%, EPS P7.09, 19x). Drivers will be on lending growth & fee-based income.

BDO prepares P5bn LTNCD float:

BDO Unibank, Inc. (BDO) is set to offer P5bn Long-Term Negotiable Cert. of Deposits (LTNCDs) to support expansion plans. Term will be 5-1/2 years with indicative pricing at 4.5%. Offer run is on 20-30 April, issue date on 07 May.

PNB prepares initial tranche of MTN:

Philippine National Bank (PNB) will issue US$300mn Fixed Rate Senior Notes based on its medium-term note program (MTN). The 5-year+1-day notes will be issued at 99.532 per 100, with coupon at 4.25% p.a.

DD gets regulatory clearance for P7.5bn float:

DoubleDragon Properties Corp. (DD) secured SEC clearance for its primary offer of up to 135mn common shares (plus 15mn shares over-allotment option), at P50/share. Funds will help roll-out 100,000sqm. leasable industrial warehouse space in various parts of Luzon & Vis- Min, & achieve 5,000 hotel rooms by 2020.

RCI merges units:

Roxas and Company, Inc. (RCI) notified the Exchange of the merger of Roxaco Land & Anya Hotels & Resorts, with Roxaco being the surviving entity. The application for merger will be filed by the subsidiaries with SEC. ABG bought IRC shares at P1.40 apiece: IRC Properties, Inc. (IRC) notified the Exchange that Aggregate Business Group (ABG) agreed to buy from T&M Holdings 222.2mn IRC shares at P1.40 apiece. The transaction will be executed via special block sale in the Exchange. T&M is 100%-owned by Mabuhay Holdings. No further details were given.


Wider BoP deficit in 1Q18:

BSP said 1Q18 balance of payment (BoP) deficit stood at $1.23bn (+23%) due to widening trade deficit in the first 2 months. BSP sees the BoP for 2018 to be very manageable, even as 1Q results already exceeded its full year $1bn estimate.

Land value in Aseana seen to surpass Ortigas:

Colliers see Aseana City in Paranaque surpassing Artigas as CBD. Colliers see land value for Aseana rising 9.2% to P249,800/sqm. Meanwhile, Makati still has the highest land value at P560,500/sqm., BGC P499,500/, Ortigas at P233,700/sqm.

Sofitel denies non-payment of rent to GSIS:

Sofitel Phil. Plaza owner claims it has no reason to vacate its area in Pasay, denying reports that it has unpaid rent to GSIS. GSIS said the hotel has not paid its rent since June 2006, according to earlier reports.









Philipines Market Insights 2018.4.18


Philipines Market Insights 2018.4.27