Philippines Market Insights 2017.1.18


News Highlights: A consortium led by Filinvest Land (FLI), with Japan Airport Terminal Corp. (Jatco) and Sojitz Corp. as the other members, is still keen on five regional airports under the PPP scheme. An Ayala and Austrian group firm begins motorcycle production in the Philippines this month after it gained approval from the Board of Investments (BoI). Meanwhile, according to Deputy Governor Nestor A. Espenilla, Jr., there are more foreign banks interested in investing in local banks as partners. The idea is to look into buy-in opportunities. The Board of Investments (BOI) aims to breach the P500bn target for project approvals this 2017.





Mart relatively flat, PSEi@7,123: Local mart continued its decline on Brexit jitters. PSEi fell 115 points to close at 7,123 (-1.59% day-on-day), with all sectors ending in red, primed by property (-2.42%). Among actively-traded shares were: MEG (-P0.23 at P3.55); ALI (-P0.50 at P33.80); and MBT (-P2.90 at P75.00), on P5.5bn turnover. Losers outnumbered gainers at 130-67, with net foreign selling at P312mn.

Global news might dampen sentiment: Mart might be swayed by news globally, especially on US President-elect Donald Trump’s negative comments on the stronger dollar, implying that he is not open for further rate increases. Also, with UK Prime Minister Theresa May’s latest speech on hard Brexit, sentiment might be dampened further. Immediate support, 7,070, resistance at 7,200.


Marts mixed on Brexit jitters: Marts ended mixed as investors turned cautious ahead of UK Prime Minister Theresa May’s speech.


Equities fell on Trump’s comments, Brexit jitters: Equities fell on US President-elect Donald Trump's comment on the stronger dollar, saying that 'too strong' dollar could kill the competition between China and US companies. Also, UK Prime Minister Theresa May comments regarding Britain’s firm exit from the European Union sent equities lower.


Oil up amid weaker dollar and output-cut adherence comments: Oil prices were slightly up amid the decline in US dollar and comments from the Saudi Arabia, saying that it would adhere to OPEC’s commitment to cut output. West Texas Intermediate rose $0.11 to settle at $52.48/barrel.


FLI-led consortium remain keen on airport projects: A consortium led by Filinvest Land (FLI), with Japan Airport Terminal Corp. (Jatco) and Sojitz Corp. as the other members, is still keen on five regional airports under the PPP scheme. Filinvest-Jatco-Sojitz is among the five prequalified bidders. Three others are: Philippine Airports Consortium (which includes Metro Pacific Investments or MPI, Aeroports de Paris and ADP Ingeniere), San Miguel Holdings Corp.-Incheon Int’l Airport Corp. and GMR-Megawide

ALCO has spent 10.5% of proceeds from preferred shares offer: As of end-2016, Arthaland Corporation (ALCO) has used up P207.6mn or 10.5% of the P1,972.9mn proceeds generated from its preferred shares offering. Nearly P54mn of the P207.6mn was for the Company’s Cebu Exchange
Project while P154mn was used for the partial repayment of loans. There is still P176mn loans which will be repaid. The entire proceeds should be exhausted by the end of 1Q17 and the largest or P822mn of which will be for ‘South of Metro Manila Project’. Makati CBD Residential and Binan
Laguna projects require P372mn and P332mn funding, respectively.

AP's Hedcor inked deal with Zaneco: Aboitiz Power Corp.'s (AP) Hedcor Inc. inked a deal with Zamboanga cooperative to supply 5MW more, bringing the contracted power from its Bukidnon run-of-river hydro project to 1/3 of the 68.8MW target capacity. Zaneco and Hedcor signed last November 2016 for the additional supply to raise the contracted power from the plant in Manolo Fortich, Bukidnon to 10MW.

DNL’s unit DLPC develops key raw material used in Hatchimals toy: D&L Polymer and Colours’ (DLPC), a 100%-owned subsidiary of D&L Industries, Inc. (DNL) has developed a key raw material used in award winning Hatchimals toy with safety as a primary concern. The toy is composed of a
plastic egg, which contains what DLPC manufactures that allows it to hatch without splintering. Hatchimals quickly became a famous toy after it was launched in October 2016.

Ayala-Austrian group begins motorcycle production: An Ayala and Austrian group firm begins motorcycle production in the Philippines this month after it gained approval from the Board of Investments (BoI). KTM Asia Motorcycle Manufacturing Inc. is now a new participant under Classification III (motorcycle) of the new Motor Vehicle Development Program. Investment worth P290.6mn would be for assembly operations, while another P114.17mn would be for parts manufacturing. KTM Asia is a partnership between Ayala Corp. (AC) and Austria-based KTM AG.

Lower cane productivity sour VMC profits: Sugar miller Victorias Milling Compani, Inc. (VMC) posted lower profits in Sept-Nov due to lower productivity. VMC reported P119mn in net income for Sept-Nov, 60% lower from the same period in 2015. Total canes hauled were reduced by 283,810 tons, while raw sugar production decreased to 1.23mn 50kg bags from 1.89mn in 2015 due to lower quality of canes. Alcohol produced were also lower by 34% to 1.4mn liters.


BOI targets P500bn for 2017: The Board of Investments (BOI) aims to breach the P500bn target for project approvals this 2017. The agency aims to break the record of P466bn investment approvals set in 2013. The outlook banks on the strong outcome of the previous year where investment pledges approved by the BOI reached P441.8bn. Currently, 80% of the investments come from the local firms, while the remaining 20% are from foreign investors.

More foreign banks express interest in local banks: According to Deputy Governor Nestor A. Espenilla, Jr., there are more foreign banks interested in investing in local banks as partners. The idea is to look into buy-in opportunities.

BOI and HLURB ink deal to expedite housing construction: The Board of Investments (BOI), together with the Housing and Land Use Regulatory Board (HLURB) has inked an agreement for the ease of processing applications of housing permits, licenses and clearances. The said agreement will simplify requirements to secure clearance, development permits, certificate of registration and license to sell of subdivision and condominium projects.

PPA net income reached P7.2bn: Philippine Ports Authority (PPA) net income jumped to P7.16bn, +17% for the first 11 months of 2016 due to higher government fees such as higher roll-on, roll-off fees, berthing fees and vessel lay-up fees. Moreover, as of end-November, PPA has completed 55 projects, with 64 ongoing projects, 1 suspended and 51 others were about to start. PPA allocated P6.068bn for these projects, targeted to improve the capacity, service standards, and efficiency of ports.









Philippines Market Insights 2017.1.13


Philippines Market Insights 2017.1.19