Philipines Market Insights 2018.4.30


News Highlights: Wall Street performed mix (DJIA -11pts, Nasdaq +1pt) amid slower U.S. economic growth in Q1; Asian marts advanced mostly on Nokor-Sokor summit last Friday. S&P hints of rating upgrade for PH. Meanwhile, large-cap SMPH plans to buy-out Harison Plaza contract & plans to launch Chengdu project via SMDC; PGOLD exits convenience store venture Lawsons; SEC exempts FB from conducting a tender offer to SMB & GSMI minority shareholders.





Follow-through buying maintained, PSEi @7,721. Participants took their cue from Wall Street’s overnight climb, following the correction in 10-year US TBond yield below 3%. PSEi jumped 103 points at 7,721 (+1.4%) with day-on-day momentum improving (from P4.9bn to P6.2bn), while market breadth favored optimists, 124-69. Holdings (+2.7%) & industrials (+1.2%) led gainers, as AC (+P30 at P960); MPI (+P0.25 at P4.82); & SM (+P23.50 at P910) rose. URC also advanced (+P0.70 at P138.30), as well as NOW (+P0.04 at P8.06).

Direction is up. Prospective silver lining for a credit rating upgrade for the Philippines & North as well as South Korea’s commitment to work for a nuclear-free peninsula are catalysts that will support buying initiatives Monday. The other variable to watch would be on momentum that will support an ascent, to push back gauges back to the 8,000 mark. Immediate support is 7,720, resistance 7,900-7,950.


Green across boards. Asian shares enjoyed gains Friday following pullback of US treasury yields, as geopolitical tension in the region loosened amidst Nokor-Sokor summit.


US equities mixed. US economic growth slowed in 1Q (+2.3% from 4Q17 +2.9%) due to weak consumer spending, but wages were up at their fastest in 11 years that added to inflation fears. Tech & energy shares were weaker, while consumer shares were up. DJIA -11 points, 24,311 (-0.05%), Nasdaq Comp. +1pt, 7,119 (+0.02%). NoKor & SoKor agreed for a nuclear-free peninsula. North & South Korea pledged to work for complete denuclearisation of the Korean peninsula. Both will work with the US & China this year to declare an official end to the 1950s Korean war & set a permanent peace accord.


Oil settled lower. Oil prices slipped slightly lower as rig count data revealed 5 more rigs for the week, although the decline was capped by market expectations that U.S. will abandon Iran nuclear deal. West Texas Intermediate (WTI) slid by $0.13 to $68.06/barrel.


SMPH plans to buy-out Harrison Plaza contract:

SM Prime Holdings, Inc. (SMPH) is finalising a deal to purchase the Martel family’s contract (set to expire 2020 or 2022) with the City of Manila to develop & manage the 7ha. Harrison Plaza complex. SMPH chair Henry Sy, Jr. said they could build a shopping center with a residential condo above the complex.

SMPH residential unit to launch Chengdu project:

SM Prime Holdings, Inc. (SMPH)’s residential arm, SMDC, is launching a total of 3 residential towers on its 2ha. lot in Chengdu, China. One of the towers will be launched this August, the remaining 2 towers in 2019. SMDC also has some remaining lots in Fujian province but plans are still under review. On the local front, SMDC sees launching its JV with Federal Land within the year, for the 3,400sqm. property along Ayala Ave.

PGOLD exits convenience store:

Puregold Price Club, Inc. (PGOLD) sold its 70% in PG Lawson to Japanese partner, Lawson, Inc., exiting the convenience store business since it ventured into this retail segment for 3 years. The Lawson business covers less than 10% of PGOLD’s portfolio.

BLOOM unit gets lot award from Pagcor:

Bloomberry Resorts Corp. (BLOOM)’s fully-owned unit, Sureste Properties (SP), obtained the Notice of Award from Pagcor for 16ha. lot in Entertainment City where Solaire Resort is located. The purchase price was P37.33bn, or P233k/sqm.

CHP sees 8%-12% volume growth for 2018:

Cemex Holdings Philippines, Inc. (CHP) sees its new Solid plant cement line to start operations 1Q of 2020. Total investment was $225mn. Also, CHP sees cement volume for 2018 rising by 8%- 12%, with capex set at P3.74bn. Of the total capex, 80% will be earmarked for Solid plant expansion.

FB exempted from tender offer rule:

San Miguel Pure Foods Company, Inc. (FB) confirmed that SEC exempted San Miguel Pure Foods Co. Inc. from conducting a tender offer to minority holders of GSMI & San Miguel Brewery with the planned consolidation. No other details were given.

PNB enters share-swap for non-life insurance unit:

Philippine National Bank (PNB)’s board approved the swap of 6mn PNB General Insurers Co. shares for 178.89mn common shares of Allied Bankers Insurance (ABIC). This would raise PNB’s stake in ABIC from 4% to 22.7%. PNB Holdings has 34.25% in PNB Gen.

More projects from SLI:

Sta. Lucia Land, Inc. (SLI) has allotted P5bn in capex for 2018 & is looking at raising its sales by 15%. SLI aims to launch 10 projects for 2018 with sales value of P15bn -P25bn. (closed P1.02, +P0.01)

NOW gets BDO deal for workplace solution:

Now Corp. (NOW)’s affiliate NOW Telecom, was granted a mega-franchise to operate telco services until 2043. In 2016, the firm rolled-out its pre-5G technologies to deliver broadband & wireless cable TV connectivity to hotels, schools, BPOs, hospitals, commercial & residential buildings. It also won a deal with BDO for IBM Watson Workplace for workforce solution.

STI sets up academy in Legazpi:

STI Education Systems Holdings, Inc. (STI) made a groundbreaking for STI Academic Centre Legazpi last 26 April. Around P391mn was allotted for facilities & equipment.


S&P hints of rating upgrade for the Philippines:

S&P Global Rating revised its credit rating outlook for the Philippines to ‘positive’ from ‘stable’ & hinted of stronger chances of a rating upgrade. S&P cited the country’s improved fiscal policies & consistently robust growth. S&P gave ‘BBB’ on the Phils., or above minimum investment grade.

Gov’t. plans setting up own bond exchange:

Finance chief Dominguez said if Landbank cannot buy shareholders of the Phil. Dealing System (PDS), gov’t. plans to develop its own bond exchange. No further details were given.

President wants infra projects fast-tracked:

Finance chief Dominguez said Pres. Duterte wants infra projects completed quickly. While NEDA approved several projects, among which included the P736bn Bulacan airport of SMC, NEDA wants to review the final terms of the concession agreement. Dominguez also said SMC was not prohibited from teaming-up with other groups too.










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