Philipines Market Insights 2018.8.22


News Highlights: On Wall Street, encouraging earnings & hopes for resolution to US-China trade dispute pushed Wall Street higher Tuesday. On the local front, Manila Electric Company (MER) sought ERC’s provisional authority (PA) to raise generation cost for its PSA with Therma Luzon to P0.0187/kWh for 2018, P0.0425/k in 2019, P0.0667/kWh in 2020. Meanwhile, BoP deficit stood at $3.7bn in Jan-July 2018 (+168%)., while trade deficit in 1H was $11.7bn (+63%).





Bourse scored lower, PSEi @7,500: After touching an intra-day high of 7,607, profit-taking ensued, pulling gauges 82 points lower at 7,500 (-1%). The decline was led by holdings (-2%) & mining/oil (-1.6%). Decliners among actively-traded shares were: ALI (-P0.30 at P42.20); SM (-P9.50 at P918); URC (-P1.40 at P132.60); VUL (-P0.06 at P1.85). Turnover slowed to P3.86bn, with Manila’s market on holiday Tuesday. Gainers-losers scored 85-115 while net foreign selling reached P670mn.
Push for advance: Sessions might take its cue from Wall Street’s ascent, as resolution on US-China trade tariff will be viewed favourably on the aspect of global trade. Focus might still be stockspecific, especially on listed shares that would benefit from local headlines. Stay alert for supply pressure on rallies, given the flags raised on inflation & interest rates. Immediate support is 7,4807,500, resistance 7,550-7,580.


Mostly ended higher: Asian markets were mixed Tuesday, as Chinese stocks largely rose and Japanese stocks overcame early session weakness.
Mostly gained: Regional bourses mostly gained Monday, mimicking advances on Wall Street last Friday following reports that the U.S. and China agreed to resolve their trade dispute culminating a possible meeting between President Donald Trump and President Xi Jinping in November.


US shares advanced: Encouraging earnings & hopes for resolution to US-China trade dispute pushed Wall Street higher Tuesday. DJIA +63 points, 25,822 (+0.25%), Nasdaq Comp. +38pts, 7,859 (+0.49%).
US equities up: Shares in Wall Street rose Monday, ahead of US-China talks on trade. DJIA +89 points, 25,758 (+0.35%), Nasdaq Comp. +4pts, 7,821 (+0.06%).


Oil rise anew: Oil prices rose on Tuesday ahead of September futures contracts’ expiration at the end of the session and weekly data on U.S. petroleum supplies. West Texas Intermediate (WTI) climbed $0.92 to $67.35/barrel.
Consecutive gain: Oil futures jumped again on Monday as concerns over tighter global oil supplies continued underpinned by U.S. sanctions on Iran and a bullish outlook on US-China resumption of trade talks. West Texas Intermediate (WTI) rose $0.52 to $66.43/barrel.


MER sought PA on higher generation cost:

Manila Electric Company (MER) sought ERC’s provisional authority (PA) to raise generation cost for its PSA with Therma Luzon to P0.0187/kWh for 2018, P0.0425/k in 2019, P0.0667/kWh in 2020. This covers higher excise taxes on coal.

DMC-Japan firm tandem for rail project:

DMCI Holdings, Inc. (DMC) has a tie-up with an undisclosed Japan JV firm for the 1st phase of North-South Commuter Rail project covering Malls, Bulacan & Tutuban. Funding will be partly financed by Japan’s 242bn yen ODA signed in Nov. 2015 & will use seismic designs to make it disaster-resilient.

AC unit enters fulfilment solution services:

Ayala Corp. (AC)’s fully-owned AC Infra Holdings signed an investment agreement to invest in a firm that would provide fulfillment solutions services, subject to certain closing conditions. No other details were given.

SMPH plans expansion:

SM Prime Holdings, Inc. (SMPH) plans to expand 10.8mn sqm. GFA across shopping malls by 2022 vs. 9.3mn sqm. in 2017. Of the total, 86% will come from Phil. malls, the balance from China. SMPH also intends to have 82 residential & 30 leisure projects by 2020.

SM studies Airspeed buy-in:

SM Investments Corp. (SM) plans to get 35% of freight forwarding & e-commerce enterprise, Airspeed Int’l. Corp., but nothing has been finalised yet. SM made its foray in logistics through the purchase of 34.5% in 2Go Group.

SM Retail maps out store growth plan:

SM Investments Corp. (SM)’s SM Retail intends to boost its stores to 3,000 within the next 5 years, after ending 1H with 2,149 stores. This comprises 61 The SM Stores; 1,304 specialty; 55 SM Supermarkets; 49 SM Hypermarket; 190 Savemore; 49 WallMart & 441 Alfamart.

SMDC grows residential portfolio:

SM Investments Corp. (SM)’s SMDC is building a 3,700-unit residential complex within the 10ha. SM Lanang Premier dev’t. SMDC is also looking at other horizontal projects in Pampanga & Bulacan, waiting for the right time.

PNB clarifies internal issues:

In response to an article alleging the retirement of the bank’s chief, Philippine National Bank (PNB)’s board said they have not approved any such retirement of PNB Pres. Reynaldo Maclang. The search however, has started for a new president that will have the ‘intestinal fortitude’ to contend with internal politics & various factions of the Lucio Tan Group of Companies.

Awarding for TPLEx expansion seen:

DPWH might award San Miguel Corp. (SMC) original proponent status for the P23,948bn Tarlac-Pangasinan-La Union (TPLEx) Expressway. This covers extension to Tubao-Naguilian-San Juan.

DFNN unit prepares listing, property dividend declaration:

DFNN, Inc. (DFNN)’s 22.9%-owned gaming services unit, HatchAsia, plans to list by introduction in the PSE covering 275mn shares at P5.28 apiece. This would allow HatchAsia to raise P1.45bn. HatchAsia will also distribute 8mn of common shares as property dividend to DFNN holders at 1:40.5775 DFNN shares held.

APC unit gets EICC clearance:

APC Group, Inc. (APC) said the Energy Investment Coordinating Council (EICC) through DoE, approved Aragorn Power & Energy’s Kalinga Geothermal project to qualify as energy project of national significance. Aragorn is majority-owned by APC.

LOTO finishes treasury share sale:

Pacific Online Systems Corp. (LOTO) sold all its 13,992,386 treasury shares last 20 Aug. at P11.08 apiece. This would raise its outstanding shares from 434mn to 445mn shares.

Ex-date 23 Aug. 2018:

Manila Electric Company (MER) P5.311, payable 24 Sept. Sun Life Financial Inc. (SLF) C$0.475, payable 28 Sept.


Higher 7-month BoP gap:

BoP deficit stood at $3.7bn in Jan-July 2018 (+168%). Trade deficit in 1H was $11.7bn (+63%).

No bids submitted for Manila lot:

PSALM will re-bid the decommissioned Manila Thermal power plant as no bids were submitted last 15 Aug. The lot covers 20,975sqm. in Isla de Provisor along Pasig River, Paco, Manila.

Top CEOs leave their banking post:

HSBC CEO Jose Arnulfo ‘Wick’ Veloso stepped down from his role as chief of the bank. Unnamed sources claimed he might be considering PNB or RCB, as these banks are looking for new CEOs. RCB’s Gil Buenaventura is also stepping down soon.

Property valuation bills supported by DoF:

Finance chief Dominguez supported SB44 of Lacson, HB2207 of Arroyo & HB68 of Salceda, calling for reforms on real property valuation. The bills cover transparent valuation system & set up of electronic database, among others.

Compliance in Boracay for reopening only 30%:

Only a third of 440 hotels, resorts & inns in Boracay are ready to reopen on 26 Oct., according to Interior USec. Sensing. Establishments would only be allowed to reopen if they have connected to the main sewer line of the island, or have their own sewage treatment facilities.

PCC says return of frequency should be mandatory:

Phil. Competition Commission (PCC) said mandatory return of frequencies would apply even if the 3rd telco player already surpassed its commitment period of more than 5 years. This would apply if the new player becomes a related party to either GLO or TEL, or it becomes an affiliate. Under the draft rule, returning the assigned frequency is ‘voluntary’ on the new player, but for PCC, it should be mandatory.









Philipines Market Insights 2018.8.17


Philipines Market Insights 2018.8.24