Philippines Market Insights 2017.12.18
News Highlights: : Starting Jan 2018, Maynilad’s water rate will rise by P0.97/cubic meter (cu.m.) to P34.51, to cover its CPI adjustment. This covers 2.8% of the P34.51/cu.m. average basic charge in 2017. Aboitiz Equity Ventures (AEV) plans P40bn-‐P50bn capex for 2018, P13bn of which will finance the Apo-‐Agua full renewable energy-‐powered water treatment project. On the economic front, the Department of Finance (DOF) expects Congress to approve early next year additional provisions to be included in the tax reform bill, which will plug the shortfall in revenues to be generated by the recently ratified tax measure.
Mart retreats post‐TRAIN passage, PSEi @ 8,337: The rally after the passage of the TRAIN was short-‐lived as the market retreated 124 pts. All sectors ended on red, with Mining and Oil (-3.62%) and Property (‐2.78%) taking the brunt. Among actively traded shares were: ALI (‐P0.90 at P42.40), SMPH (‐P1.80 at P36.00), SM (‐P22.50 at P974.50), AC (‐ P9.00 at P1,006.00), and SCC (‐P1.90 at P35.10), on 10.73bn turnover. Losers outpaced gainers, 81‐123, with net foreign selling at P1.10bn.
Mart might recover: Mart might recover from prior session's sell‐off as inventors could use this opportunity to look for bargains, especially on stocks likely to benefit from the TRAIN and the massive infrastructure program. Immediate support 8,300, resistance 8,450.
Asia shares lower: Thursday’s lower close on Wall Street dragged down markets in Asia- Pacific on Friday. With doubts on Senate passing the all-important tax reform bill, global markets were generally lower on Friday morning.
US shares bounced back: US shares gained Friday, primed by consumer staples, after the tax overhaul plan cut corporate taces from 35% to 21%.
Oil prices mixed: Oil prices settled on a mixed note Friday, indicating a third- consecutive weekly loss over rising U.S. crude production. U.S. benchmark crude, however, climbed for the session, buoyed in part by a fall in the weekly U.S. oil-rig count, which offers a peek at drilling activity. West Texas Intermediate (WTI) rose $0.26 to $57.30/barrel.
MWC’s water rate to rise by P0.97/ cu.m. to P34.51:
Starting Jan 2018, Maynilad’s water rate will rise by P0.97/cubic meter (cu.m.) to P34.51, to cover its CPI adjustment. This covers 2.8% of the P34.51/cu.m. average basic charge in 2017. Manila Water Company (MWC) meanwhile, will raise rates by P0.16 to P35.13/cu.m. for foreign currency differential adjustment (FCDA).
AEV allots P40bn‐P50bn capex for 2018:
Aboitiz Equity Ventures (AEV) plans P40bn‐P50bn capex for 2018, P13bn of which will finance the Apo‐ Agua full renewable energy-‐powered water treatment project. This will supply 300mn liters:day potable bulk water from Tamugan River to Davao City Water District, with construction slated at the start of 2017 & completion in 2020. Also, AEV’s cement plant expansion is targeted 2018 or 2019, & expressed its interest to join the P108.2bn regional airport project through its JV firm, Maya Consortium, with Vinci Airports of France.
MGen in discussion with ESB International to be the operations and management partner:
Meralco Powergen (MGen) is discussing with ESB International, a wholly-owned firm by the Electricity Supply Board of Ireland, to become its operations & management (O&M) partner for the Atimonan One Energy (A1E) plant.The P135bn project’s completion is targeted late 2021, with financing component at 70%, 30% equity.
CEB renews insurance with Pioneer Insurance:
Cebu Air (CEB) has renewed its insurance cover with Pioneer Insurance. Pioneer meanwhile, has appointed the UK arm of Marsh, as its reinsurance broker.
MAC’s CPCS declares P85mn cash dividend:
MacroAsia (MAC)’s 40%- owned Cebu Pacific Catering Services (CPCS) declared P85mn cash dividend, payable on 29 Dec. 2017. The other owners are Cathay Pacific Catering (40%) & MGO Pacific Resources (20%). CPCS is the only full service airline catering firm that operates at Mactan-‐Cebu International Airport.
SLF’s current president will be appointed as EVP:
Sun Life Financial (SLF)’s current president, Kevin Dougherty, will be EVP for Innovation & Partnerships in the field of digital health solutions, insurance research lab, external innovation, data analytics & reinsurance. Meanwhile, Jacques Goblet will be appointed president of Sun Life Financial Canada.
CHP granted ECC by DENR:
Department of Environment and Natural Resources (DENR) granted the Environmental Compliance Certificate (ECC) of Solid Cement, a unit of Cemex Holdings Philippines (CHP). The ECC covers additional capacity of 1.5mn MT per year.
CGCC will invest P6bn to develop Clark Freeport:
Udenna’s affiliate, Clark Global City (CGCC), will initially invest P6bn to develop 177ha. in Clark Freeport Zone into a new central business district. Of the 177ha., 47ha. was developed by previous owner, Global Gateway Development.
Udenna plans to list Lapu‐lapu Leisure Mactan:
Udenna plans to list its leisure arm, Lapu-‐Lapu Leisure Mactan, in the future, to finance its $341mn integrated resort & casino venture in Cebu. This project covers 12.5ha. beach‐front lot in Mactan Island. There are plans to engage Enderun as management partner
PPC to increase authorized capital from P2bn to P2.098bn:
Pryce Corporation (PPC) will increase its authorised capital from P2bn to P2.098bn, to cover the subscription of Josefina Multi-‐Ventures Corp. of 24.5mn shares at P5/share.
MJIC appoints Evora as new COO:
MJC Investments Corporation (MJIC) appointed Jeffrey Rodrigo L. Evora as its new COO effective 14 Dec. 2017. Evora has over 20 years experience in mega-resort casino operations in the US & Phils. He was previously the Dir. of Gaming Marketing at RWM prior to his appointment.
Higher FDI & hot money inflows in 2018:
The Bangko Sentral ng Pilipinas (BSP) expects sustained growth in foreign direct investment (FDI) inflows as well as lower outflow of foreign portfolio investments in 2018 on the back of the country’s strong macroeconomic fundamentals and the ramp up of infrastructure investments. The BSP specifically eyes FDI inflows inching up 2.5% to $8.2bn in 2018.
Package 1B under TRAIN to be passed 2018:
The Department of Finance (DOF) expects Congress to approve early next year additional provisions to be included in the tax reform bill, which will plug the shortfall in revenues to be generated by the recently ratified tax measure. The Tax Reform for Acceleration and Inclusion (TRAIN) Act has been divided by the Congress into package 1A and 1B, the latter of which will be discussed in 1Q18. Package 1A constitutes the measures ratified by both chambers of Congress, while the remaining Package 1B involves the proposed tax amnesty program, adjustments in the Motor Vehicle Users Charge, and amendments to the Bank Secrecy Law.
PSE buoyant to SEC for Pdex merger:
The Exchange is hoping that the SEC will finally allow it to merge with the fixed income bourse by the 1Q18, or even before the end of 2017. PSE’s compliance with the 20% ownership cap is one of the conditions imposed by the Securities and Exchange Commission before allowing it to acquire PDS Holdings Corporation and its merger with the Philippine Dealing and Exchange Corporation, the country’s fixed income bourse.
Mining industry will adopt Canadian practices:
The Chamber of Mines of the Philippines and its members tomorrow will ink an agreement with the Mining Association of Canada.
ADB raises funds for its microfinance guarantee:
Asian Development Bank (ADB) has raised the funding for its microfinance guarantee and risk-‐sharing program by an additional $100 million. Under the program, ADB selects partner finance institutions that provide wholesale local currency loans to ADB-‐approved MFIs. ADB then assumes up to 50 percent of the default risk arising under loans made by these financial institutions to MFIs, having a maximum tenor of three years.