Philipines Market Insights 2018.8.24


News Highlights: New tariffs on $16bn Chinese goods weighed on commodity-related shares, pulling US gauges lower (DJIA -76pts, Nasdaq -10pts). At the local front, deadline for 2019 foreign borrowing plan submission set by BSP, while line up of foreign & telco firms for 3rd telco slot named by DICT. URC acquires RHI unit’s sugar milling & refining assets plus Batangas land, SMC keen on Malaya plant re-bidding.





Hopeful bets aided PSEi’s advance to 7,804: Optimism on the turnout of trade talks between US-China aided local equities’ advance, pushing the PSEi 171 points up at 7,804 (+2.25%). Save for mining/oil (-0.23%), all other sectors gained primed by property (+2.9%) & holdings (+2%). Lead winners among actively-traded shares were: ALI (+P1.20 at P44.30); MBT (+P1.15 at P73.60); JFC (+P7 at P293); SMPH (+P1.40 at P38.5); & SMC (+P12.70 at P160). Turnover zoned to P7.32bn, with gainers-losers, 130-69. Net foreign buying was at P514mn.
Resilience test: Prospective follow-through buying might prevail, having crossed 7,800 on good volume & net foreign buying. Some however, might opt to lock-in gains, especially skeptics on the outcome of US-China trade talks & the Fed’s next movement. Inflation hedges such as property & holdings might lead, while telco plays may also be highlighted, having named participants vying for the 3rd telco seat. Immediate support is 7,770, resistance 7,950-7,980.


Rallied ahead of US-China meeting: Asian marts mostly logged broad gains Thursday as investors continued to cheer trade talks between US & China, seeming to shrug-off $16bn of new tariffs on Chinese goods imposed by the US early morning.


US shares lower, trade talks on spotlight: Declines in commodity-related shares due to new tariffs on $16bn US-China goods weighed on DJIA, while tech shares slightly bucked the trend. DJIA -76 points, 25,656 (-0.3%), Nasdaq Comp. -10pts, 7,878 (-0.13%).


Crude on a win-streak: Crude slightly edged higher Thursday, as investors weigh on Turkey’s financial condition & trade talks between US &China, amid tightening US supplies. West Texas Intermediate (WTI) inched up $0.01 to $67.87/barrel.


URC acquires RHI unit’s sugar milling & refining assets plus Batangas land:

Universal Robina Corp. (URC) will acquire Roxas Holdings’ (RHI) milling & refining assets from fully-owned subsidiary, Central Azucarera Don Pedro & the land owned by RHI in Batangas. The transaction is under PCC’s review & no transaction amount was disclosed. Total raw sugar production for crop year 2017-2018 was 2.6mn 50-kg bags, or 6% of total annual national sugar production. URC meanwhile, operates 6 sugar cane mills yielding raw & refined sugar, & molasses.

SMC keen on Malaya plant re-bidding:

San Miguel Corp. (SMC) chief Ramon S. Ang expressed interest to bid for the 650MW Malaya power plant that would include the land in Pililia, Rizal province. PSALM is looking at revising the terms of reference to conduct a new bidding that would include the 300MW oncethrough type boiler & 350MW fitted with conventional boiler facility. The power plant will be sold ‘as is, where is’, but land will be included to optimize the value of the power plant.

Sales to provincial coops boosted DMC power unit’s 1H sales volume:

DMCI Holdings, Inc. (DMC)’s DMCI Power Corp. (DPC) 1H sales volume grew 19% to 142.91GWh, 43% of which was accounted for by cooperative sales to Palawan, 37% Masbate & 20% Mindoro.

GTCAP prepares new master plan for Cavite, open to tie-ups with other property firms:

GT Capital Holdings, Inc. (GTCAP) intends to come up with a new master plan in 2H for the 1,700ha. Lancaster New City in Cavite due to strong demand in the area. This was set up by Pro-Friends after building low-cost & affordable housing in Kawit, Imus & Gen. Trias. Around 850ha. of the area had been developed & GTCAP is open to partnering with other property firms.

BPI prepares roadshow for $ float:

Bank of the Philippine Islands (BPI) appointed BPI Capital as sole global coordinator & joint book runner, along with Deutsche, HSBC & JP Morgan as book runners for the US $-denominated senior unsecured debt issuance. Investor meetings will start 24 Aug. 2018.

CEB adds local routes in Clark:

Cebu Air, Inc. (CEB) will mount daily flights from Clark-Davao & to Tagbilaran, Bohol starting 09 Nov. Meanwhile, CEB will launch direct flights from Clark-Caticlan by 28 Oct., once Boracay reopens. Passenger volume in Clark is seen to hit 2mn for 2018.

MWIDE set to complete PITx:

Megawide Construction Corp. (MWIDE) & fullyowned WM Property Management (WMPMI) may complete Paranaque Integrated Terminal Exchange (PITx) early Sept. this year. The project covers passenger terminal buildings, arrival & departure bays, ticketing & baggage handling facilities, among others. DoTr said all profit from PITx will accrue in favor of MWIDE.

Completion eyed for FLI’s 2nd Clark office tower:

Filinvest Land, Inc. (FLI) is set to complete the 2nd office tower within the 201ha. tourism & leisure estate in Pampanga this year. Called 2 Workplus, GLA is 13,035sqm. across 5 office floors. The initial building was completed in 2017 with GLA at 8,410sqm., leased by BPOs & Chinese gaming firms. FLI sees adding 4 more office towers to the estate until 2021.

POPI to expand industrial sites:

Prime Orion Philippines, Inc. (POPI) will add 11ha. warehouse & logistics facilities in its 460ha. Laguna Technopark, that would add 50k sqm. gross leasable area (GLA). It would also redevelop the 14ha. Lepanto warehouse in Calamba, Laguna that would add 110k sqm. GLA.

Swiss challenge for urban rail system in Makati to end 24 September:

Makati City Mayor Abigail Binary said groundbreaking for the $3.7bn subway is slated end of 2018. The Swiss challenge for the urban rail system proposed by IRC Properties, Inc. (IRC) is set to end 24 Sept. IRC will partner with Greenland Holdings Group, Jiangsu Provincial Construction, Kwan On Holdings & China Harbour Engineering for the project.


BSP sets deadline for 2019 foreign borrowing plan submission:

BSP wants all public & private entities to submit their foreign borrowing plans by 30 Sept. 2018. This covers loans from global banks, capital infusions by parent firms, affiliates & shareholders overseas. This would help BSP monitor capital flows & assess their economic implications.

Line up of foreign & telco firms for 3rd telco slot named:

DICT Sec. Rio said AT&T, China Telecom, LG Uplus, Korea Telecom, Vietnam Telecom, Telenor of Norway & a Japanese telco firm are interested to join the bidding for the 3rd telco slot. Meanwhile, local firms interested in the selection process are PTT, Converge ICT, TBGI, ECP & TierOne. Bid documents will be available 26 Sept. 2018.

DTI gets authority to padlock stores:

DTI warned to padlock stalls selling items at excessive prices based on its agreement with the Agri bureau. This covers stores & stalls in public wet markets.

SBMA prepares project bidding:

Subic Bay Metropolitan Authority (SBMA) will bid out 6 projects under the gov’t.-funded P10.2bn, 6-year infra plan. The projects covering seaport, airport, road widening, among others, are slated for completion in 2023. Spending plan will be as follows: P525mn in 2019; P573mn 2020; P1.32bn 2021; P2.35bn 2022; P1.4bn in 2023.

GIG of Macquarie buys into solar firm:

Macquarie Capital’s Green Investment Group (GIG) acquired Conergy Asia & ME Pte Ltd’s energy portfolio in AsiaPacific, including commercial, technical, & energy storage capabilities & asset monitoring center in the Phils. Conergy has 2,000MW solar energy projects globally, including 500MW in Asia-Pacific.









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