Philippines Market Insights 2017.1.25


News Highlights: San Miguel Corp.’s (SMC) Global Power Holdings targets the 150MW Limay coal plant to start commercial operations by May. Metro Pacific Investments Corp. (MPI), through subsidiary Premier Logistics, Inc., acquired Ace Logistics Inc. for P280mn. Manila Water Co. (MWC) through Manila Water Philippine Ventures, Inc., was awarded the development of Obando, Bulacan’s water supply system. On the economic side, the Department of Transportation (DoT) yesterday released an invitation for prospective bidders for the development, operation and maintenance of 5 airports under PPP.





Mart flat on Trump’s protectionist pronouncements, PSEi @7,370: Mart ended relatively flat as investors weighed US President Trump’s protectionist trade policy pronouncements. PSEi slipped 3 points at 7,370 (-0.05% day-on-day), with property (-0.97%) and financials (-0.16%) pulling the index lower. Among actively-traded shares were: SM (+P4.00 at P710.00); AC (+P22.00 at P834.00); ALI (-P0.55 at P35.95), on P7.89bn turnover. Gainers still managed to outnumber losers at 97-86, with net foreign selling at P823mn.

Might go up on upbeat sentiment: Local mart is likely to take cue from Wall Street’s ascent after yesterday’s volatile session. Investors’ sentiment is seen to be on an upbeat tone today as optimism might reverberate ahead of the Q4 GDP data due tomorrow. The country’s economy is expected to grow by 6.9% in full year 2016, higher than the 5.9% expansion registered in the previous year. Immediate support 7,280, resistance 7,440.


Bourses broadly higher despite US TPP pull out: Most marts ended higher despite US President Donald Trump’s decision to pull out from the Trans-Pacific Partnership.


Shares rallied on upbeat earnings: Equities rallied after a solid batch of corporate earnings bolstered investor sentiment.


Crude up, recouping previous session’s losses: Oil prices inched higher, recouping some of yesterday session’s losses. Traders are still on a wait-and-see stance as they expect further updates on the progress of OPEC’s output-cut agreement. West Texas Intermediate for March rose $0.43 to settle at $53.18/barrel.


SMC Limay coal plant fires up by May: San Miguel Corp.’s (SMC) Global Power Holdings targets the 150MW Limay coal plant to start commercial operations by May. This is the first unit for its 600MW project that would run on diesel, in time for the scheduled Malampaya maintenance shutdown. Second unit will start 3 months after, while the remaining units should be running by 2018.

MPI acquires another logistics business: Metro Pacific Investments Corp. (MPI), through subsidiary Premier Logistics, Inc., acquired Ace Logistics Inc. for P280mn. The move is set to expand MPI’s logistics business, on the back of expectations for strong demand and growth in the industry. The transaction would be carried out in an asset purchase agreement, aimed to be completed within February.

FLI to continue expansion for the next three years: Filinvest Land, Inc.(FLI) is set to expand its Filinvest City in Alabang as the Polaris and Capella office towers are about to be completed, together with the Far Eastern
University in the south. The developer will also complete Botanika Nature Residences Tower 1 and Bristol at Parkway Place in the next three years. Recently, FLI has expanded Festival Mall which added at least 150,000sqm in leasable area.

MWC bags Obando project: Manila Water Co. (MWC) through Manila Water Philippine Ventures, Inc., was awarded the development of Obando, Bulacan’s water supply system. MWC received the notice of award from the Obando Water District (OWD).

AC’s Ayala Foundation to build first drug rehab center in ARMM: Ayala Foundation, Inc., the social development arm of Ayala Corporation (AC), is building the first drug rehabilitation facility in the Autonomous Region in Muslim Mindanao (ARMM). The facility will be called ‘Siyapen’. This is to support the government’s efforts to combat substance abuse in the country.

VMC to complete 40MW biomass plant in September: Victorias Milling Company Inc. (VMC) is set to complete the 40MW biomass power plant that will run on sugar cane residue by September 2017. The project which costs P2bn will be able to export 25MW to the grid, while 15MW is for own use. The plant will run on bagasse, a sugar cane by-product. If it qualifies under FiT (feed-in-tariff), the biomass plant will get priority in the spot market with a fixed price of power at P6.63/kWh for the next 20 years.

Unlisted property firm TLDC to complete 20 projects by 2020: Torre Lorenzo Development Corp. (TLDC), a property developer not listed in the PSE, is investing about P32bn in capex to complete at least 20 residential and leisure projects by 2020. TLDC is known for developing premium student residences. For this year alone, the Company will launch 5 university residences, mixed-use estates and hotels.


Five-year T-bonds oversubscribed, fetch higher rates: The Bureau of the Treasury (BoT) raised P15bn for the new issuance of 5-year treasury bonds (T-bonds) maturing on 26 Jan 2022. The gov't securities met high demand with offers reaching P35.6bn as liquidity still persists. The average rate was at 3.876%, +63bps from the previously reissued 7-year T-bonds (3.246%). Gov't securities reached higher yields as uncertainty still looms the market coming from President Donald Trump's policies.

Bidding process for 5 airports kicks off: The Department of Transportation (DoT) yesterday released an invitation for prospective bidders for the development, operation and maintenance of 5 airports under PPP. These airports are Bacolod-Silay, Davao, Iloilo, Laguindingan Misamis Oriental and Bohol. The deals are worth P108.18bn in total.

SSS to trim opex by P1bn for 2017: The Social Security System (SSS) plans to reduce operating expenses by P1bn to improve its financial performance. SSS will cut its operating expenses from P13.22bn to P12.21bn to keep the pension fund afloat.