Philippines Market Insights 2017.10.9
News Highlights: Meralco (MER) will be exposed to price swings in the wholesale electricity spot market (WESM) if government terminates San Miguel Corp (SMC)'s contract to operate 1,200MW Ilijan plant in Batangas. Metro Pacific Investments (MPI) unit, MPCala Holdings would be signing a deal with Leighton Holdings of Australia next month to build the Cavite side of the Cavite Laguna Expressway (Calax) Project for P7.3bn. Meanwhile, Moody's Analytics sees Aug. industrial output -2% from July's -1.1% due to high base effects.
Marts up, PSEi @8,310: Local bourse gained tracking Wall Street performance. PSEi inched 16 points higher to 8,310 (+0.20% day-on-day), with sectors ending mixed. Among actively-traded shares were: ALI (-P0.25 at P42.90); AC (+P18 at P1,015); and SM (+P11.50 at P911). Turnover reached P7.3bn, with gainers-losers at 99-96. Net foreign inflows at P11mn.
To trade lower: We might see some downward bias today as some might opt to profit take given the latest development in the US. Moreover, local bourse might weigh on the pace of the implementation of tax reforms before positioning themselves to riskier assets. Immediate support is 8,250, resistance at 8,350.
Bourses higher: Marts rose after optimism over US tax reform plans.
Shares flat: Equities ended relatively flat, with investors shrugging off latest jobs data showing a monthly drop in payroll in seven years.
Oil fell: Crude futures dropped amid the latest evacuating platforms and rigs in the Gulf of Mexico ahead of Tropical Storm Nate. West Texas Intermediate (WTI) lost $1.50 to $49.29/barrel.
Termination of SMC contract to expose MER to WESM swings:
Meralco (MER) will be exposed to price swings in the wholesale electricity spot market (WESM) if government terminates San Miguel Corp (SMC)'s contract to operate 1,200MW Ilijan plant in Batangas. This plant is operated by SMC unit, South Premiere Power Corp. (SPPC), with 1,180MW contracted to MER & provides cheaper electricity to MER end-users.
MPI unit to sign with Leighton:
Metro Pacific Investments (MPI) unit, MPCala Holdings would be signing a deal with Leighton Holdings of Australia next month to build the Cavite side of the Cavite Laguna Expressway (Calax) Project for P7.3bn. Construction will start by January. Meanwhile, for the Laguna side of the project, MPCala tapped DM Consunji Inc. in which construction started in April.
SMPH to open 2 malls more in 2017:
SM Prime Holdings (SMPH) would launch 2 more malls this year, bringing its total outlets to 66 with 8mn sqm of retail space. SMPH will launch SM Center Tuguegarao Downtown next week, with 30,000sqm retail space. Meanwhile, SMPH will also launch SM Lemery in Batangas province by December.
Pacific Global One launches chartered airlines:
Pacific Global One - owned by PLDT Inc. (TEL), MER and Philex Mining Corp. (PX) launched its chartered airline that could fly to Balesin / Amanpulo / Baguio & Boracay. Fleet is 2 aircraft: Beechcraft Super King Air 350 (8 pax capacity) & Bell 429 helicopter (5 pax).
AC eyes tapping hospitals & financing:
Ayala Corp. (AC)'s Ayala Healthcare Holdings is eyeing investments in hospitals & financing to complement Generika Drugstore, FamilyDOC & MedGrocer. Plans include a mobile venture to connect patients with medical professionals, which will be launched very soon.
PHEN to pursue new RE projects:
Phinma Energy (PHEN) plans to put up 120MW renewable energy capacity, targeted to be completed by 2019. The three projects would include a 45MW solar project in Batangas, another 45MW solar station in Pangasinan and a 30MW hydro plant in Negros island.
CNPF unit gets BoI approval for coco milk plant:
Century Pacific Food (CNPF) wholly-owned affiliate, Century Pacific Agricultural Ventures Inc. got the Board of Investments (BoI) grant of project perks to the expansion of the coconut milk production facility in Mindanao. CNPF unit is investing P246mn to set up a separate production line in its Gen. Santos City plant, to produce up to 15.3mn kilograms of coconut milk annually when commercial operation starts in January next year. The output will then be exported to Malaysia through Linaco Manufacturing Sdn. Bhd., a supplier of coconut related products.
Fruitas owner might IPO next year:
The Lush Company Inc. (TLC), the company behind the popular Fruitas brand, may embark on an initial public offering (IPO) as early as 1Q18. Insider sources said the company wants to raise funds for expansion on the back of the booming growth of the food retail business across the Philippines. TLC joins the pipeline of companies seeking to embark on an IPO which also includes Audiowav Inc. (P2.7bn); Pure Energy Holdings (P1.5bn); Xeleb (P736mn) and The Big Chill (P500mn to P600mn).
Industrial output down 2% in August:
Moody's Analytics sees Aug. industrial output -2% from July's -1.1% due to high base effects. However, it sees positive local demand & upbeat global manufacturing growth to support expansion. Official data from PSA will be out Oct 10.
Russia-PH in talks of a nickel processing facility:
Talks are ongoing between Russia's VI Holding Group & government-owned, Phil. Mining Dev't Corp., for the set-up of a nickel processing facility in the Philippines. VI Holding plans to deploy its patented technology to process nickel-bearing (limonite) ore to produce high-grade FeNi with high Ni content. This technology is used on its pilot plant in Orenburg, Russia.
Solar PH might sell output to 2 contestable customers:
Solar Phils. might sell output from its 2 solar farms to contestable customers, in case the power supply agreement (PSA) with MER remains pending with the Energy Regulatory Commission (ERC). The plants are: 50MW in Tanauan, Batangas; 150MW Concepcion, Tarlac. MER has 3 pending solar PSAs (2 are with Solar), which offered P2.99/kWh, vs. P8.69/kWh approved by ERC under a 20-year feed-in-tariff (FiT).