Philipines Market Insights 2018.8.8


News Highlights: US equities gained Tuesday (DJIA +126pts, Nasdaq +23pts) on gains in financials, tech, & energy pushed by rosy Q2 earnings expectations. At the local front, July inflation rises to 5.7%, while House Committee on Ways & Means approved package 2 of TRAIN, now ‘TRABAHO’. Blue chips led headlines: PCOR prepares retail bond float, ALI plans local bonds, SCC-DoE signed amendments to coal agreement.





Mart pauses to correct, PSEi @7,725: After briefly touching an intra-day high of 7,815, profit-takers seized on the bourse’s recent advance, pulling gauges lower. The PSEi scored 91 points down at 7,725 (01.2%) led by financials (-2%) & holdings (-1.5%). Property (+0.4%) limited the descent. BDO (-P5.50 at P129.50); JFC (-P10 at P270); & SM (-P20.50 at P958.50) fell among actively-traded shares. Turnover slowed to P4.96bn, with gainers-losers at 99-103. Net foreign selling stood at P112mn.

Weighing the odds: Participants will weigh the market’s response to July’s higher-thanexpected inflation, including chances for rate adjustments in BSP’s Thursday policy meeting. Note also that select large caps are slated to provide 1H guidance, comprising majority of PSEi basket. Chances for the bourse to make a follow-through breather appears likely, as investors heed for margin improvement guidance for 2H18. Consider good inflation hedges. Non-index shares may continue to take notice, as well as other stocks with solid stories to unfold. Immediate support is 7,650, resistance 7,750.


Mostly tracked Wall Street: Asian marts mostly finished higher Tuesday, taking cue from strong Wall Street overnight performance.


US shares up: Gains in financials, tech & energy producers lifted US equities higher on optimism on 2Q earnings. DJIA +126 points, 25,628 (+0.50%), Nasdaq Comp. +23pts, 7,883 (+0.31%).


Crude advanced: Pres. Trump told France’s Macron he would impose tougher sanctions on Iran & abandon the Iran nuclear accord, pushing crude futures higher. WTI gained $0.42 at $68.91/barrel (+0.61%).


PCOR prepares retail bond float, completes $348mn note redemption:

Petron Corp. (PCOR) will offer P20bn, peso-denominated fixed rate retail bonds with BDO Capital & BPI Capital as joint issue managers for the float. Meanwhile, PCOR completed the redemption of their remaining undated subordinated capital securities issued in 2013 with a total amount of US$348mn. PCOR will proceed delisting the securities from HK Stock Exchange.

ALI plans local bonds:

Ayala Land, Inc. (ALI) is looking to issue P5bn bonds before the end of 2018 to partly support its P111bn capex drive. The firm still has P8bn in its shelf registration.

SCC-DoE signed amendments to coal agreement:

Semirara Mining and Power Corp. (SCC) said DoE amended their Coal Operating Contract No. 5 to optimize coal production. SCC relinquished coal blocks 294, 375, 377 & 16, & replaced these with blocks 214, 215, 254 & 257, all located in Semirara Island. SCC also relinquished Caluya & Sibay, Antique that are non-operating.

GERI sees brisk rental income in 2020:

After achieving P177mn in rental revenues in 1H18 (+218%), Global-Estate Resorts, Inc. (GERI) aims to reach P650mn rental income by 2020. GERI pres. Monica Salomon said after the launch of Southwoods Mall, more lifestyle malls & retail concepts will be made in the coming years.

NIKL’s new chair is Brimo:

Nickel Asia Corp. (NIKL)’s board appointed Mr. Gerard Brimo as chair & CEO of the firm with the retirement of Mr. Manuel B. Zamora, Jr., who would still be Chairman Emeritus.


July inflation rises to 5.7%:

July’s inflation rose to 5.7% (vs. June’s 5.2%), bringing the 7-month average to 4.51%, higher than BSP’s 2%-4% target. Market consensus was at 5.5%.

Tax Reform 2 is now ‘TRABAHO’:

Members of the House Committee on Ways & Means approved package 2 of TRAIN called ‘Tax Reform for Attracting Better & HighQuality Opportunities (TRABAHO). The aim is to attract the right set of investments via incentives & aims to lower corp. income taxes 2 percentages from 30% per year starting in 2021 (or a loss of P62bn to govt. revenues).

Senate clears simpler corporation set up bill:

Senate approved a bill that relaxes set up rules for corporations. SB1280 would allow ‘one-person corporation’ (vs. present requirement of 5 stockholders) & grant of perpetual term, among others. Higher August electric bills: MER flagged higher charges for August electric bills due to higher genre rates. Rates would rise by P0.0265/kWh to P10.219/kWh, or P5.30 higher for consumers using 200kWh.

DAU considers agri venture, Agri chief says:

Agri Sec. Pinol said Dennis Uy (DAU) is considering exporting bananas & mangoes & convert MILF areas in Mindanao into farms. Pinol also said Uy is looking to develop Polloc Port, Maguindanao with the signing of the Bangsamoro law. The plan includes a meat goat farm in Davao or Cotabato with 2,000 heads of meat breed from Texas.

HK casino operator undeterred by sacking of Nayong Pilipino officials:

HK-based Landing Int’l. Dev’t. Ltd. (operator too of Korean resort in Jeju) said their $1.5bn ‘NayonLanding’ theme park & casino will proceed, even after Pres. Duterte sacked the entire board of Nayong Pilipino Foundation (NPF). The firm believes there is no effect on the 25-year lease unless nullified on legal grounds. Pagcor granted Landing a provisional license for casino operations in 2022.

Antonio-owned Revolution Precrafted marks its 16th market in Peru:

Revolution Precrafted (RP) cemented another contract with Builders & Realtors (BR-Peru) for the initial supply of 50 luxury curated country villas in Piura, Peru. The accord covers 90 villas priced at $140k-$310k/unit, sizing 700-1k sqm. BR-Peru has 10ha. in Peru that would include a country-inspired hotel resort. This is RP’s 16th market overseas & the 5th in South America next to Brazil, Ecuador, El Salvador & Puerto Rico









Philipines Market Insights 2018.8.3


Philipines Market Insights 2018.8.15