Philippines Market Insights 2017.2.21


News Highlights: SM Prime Holdings (SMPH) announced a net income of P23.8bn (+14% YoY) for full year 2016. Revenues rose 12% to P79.8bn. Operating income also grew by 12% to P35.3bn. Moreover, Senate committee on public services began its hearings on Senate bill No. 1302, sought to extend the legislative franchise of PLDT Inc.’s (TEL) wireless unit, Smart Communications, Inc., by another 25 years.





Upbeat start, PSEi @7,281: Local equities rose as the market rides over the positive sentiment from Wall Street’s Friday performance. PSEi closed 36 points higher to 7,281 (+0.50% day-on-day), with all sectors in green territory, buoyed by mining/oil (+1.61%). Among actively-traded shares were: SCC (+P4 at P141); ALI (-P0.05 at P36.20); PGOLD (+P0.40 at P44.90), on P5.6bn turnover. Market breadth was tight, favoring gainers, 97-96, with net foreign outflows reaching P393.8mn.

Sideways trading ensued: Local markets are still likely to trade sideways with no market catalysts pushing the markets to trade higher. Moreover, investors are likely to profit-take, while Wall Street is closed for the holiday, and as no new pronouncements could likely spur any big movements. Immediate support is 7,220, resistance at 7,320.


Marts mostly up: With lack of catalysts, Wall Street’s Friday gains spilled over most Asian marts. China stocks led gainers with Shanghai (CSI 300) +1.46% and Shenzhen (SE Comp.) +0.90%, over speculations that Chinese pension funds will be injecting more money in equities.


US equities closed for the holiday: Bourses were closed today in observance of Presidents’ Day.


Crude up on Saudi exports data: Oil futures gained on optimism from reports of decline in Saudi Arabian oil exports. Saudi Arabia exported 8.01mn barrels/day in December, 244,000 lesser compared to data from November. West Texas Intermediate (WTI) for March settled $0.37 lower to $53.77/barrel.


SMPH’s profit up 14% in 2016: SM Prime Holdings (SMPH) announced a net income of P23.8bn (+14% YoY) for full year 2016. Revenues rose 12% to P79.8bn. Operating income also grew by 12% to P35.3bn. The results were mainly driven by the continued expansion of its malls and strong sales take-up of housing units. Apart from the 1.5mn sqm of retail space added in the past two years, same-mall-sales growth has been consistent at 7%. SMPH currently has 60 shopping malls in the Philippines with a combined GFA of 7.7mn sqm and 7 malls in China with a total of 1.3mn sqm. For 2017, it will open at least four new local malls that will add another 300k sqm in GFA. Meanwhile, RFO residential inventory under SMDC dropped by 34% to 2,374 units (which indicates a good churn) and reservation sales increased by 18% to P46.7bn. SMDC is putting up its first residential condominium in Davao City, the construction of which is scheduled to start in 3Q17.

Senate on Smart franchise extension: Senate committee on public services began its hearings on Senate bill No. 1302, sought to extend the legislative franchise of PLDT Inc.’s (TEL) wireless unit, Smart Communications, Inc., by another 25 years. The Senate targets passing the bill before it expires in March. Smart’s franchise due to expire on 17 March.

RLC to open Cebu hotel by March: Robinsons Land Corp. (RLC) is set to open Summit Galleria Cebu on 14 March. The flagship hotel of Summit Hotels and Resorts will feature 220 rooms, ballroom with a 600-capacity banquet, an indoor swimming pool with bar lounge among others. RLC has also partnered with Raintree Restaurants Group to provide the finest delicacies among its customers.

FLI rescinds SRP purchase: Filinvest Land, Inc. (FLI) announced its decision to rescind its 10.2 ha property purchase in South Road Properties (SRP), won through a public bidding last 2015. The move came after the City of Cebu failed to fulfill the needed requirements. Despite, its rescission, FLI expressed its continued commitment to Cebu, as it goes full blast with its projects valued at over P20bn in Cebu City.

NOW to issue P1.5bn preferred shares: Now Corporation (NOW) is looking to raise P1.5bn from its 15mn preferred shares offering, which will be priced at P100 per share. The proceeds will be used for its expansion plans, particularly in funding its fiber optic network and the expansion of Fiber-in-the-Air broadband service.

FNI’s PGMC renews supply contract: Platinum Group Metals, Corp. (PGMC), a subsidiary of Global Ferronickel Holdings, Inc. (FNI), renews contract with Baosteel Resources Int’l. Co. Ltd., to supply 1mn wet metric tons at prevailing market price. PGMC has been supplying Baosteel Resouces with high to medium grade saprolite ore and medium to low grade limonite ore since 2014.

PX received DENR show cause order: Philex Mining (PX) received the show cause order from the Dep’t of Environment and Natural Resources (DENR), directed to its wholly owned subsidiaries, Silangan Mindanao Mining Co., Inc. and Philex Gold Philippines, Inc. The show cause orders were directed to gain explanation as to why their Mineral Production Sharing Agreements (MPSAs) should not be cancelled for being located within watershed areas.
PSPC board approves name change: The board of Phoenix Semiconductors Philippines Corp. (PSPC) approved its corporate name change to SFA Semicon Philippines Corp. to align its corporate identity with its affiliated businesses. The SFA Group is grooming PSPC to become its manufacturing hub in Asia, providing semiconductor assembly services to Samsung Electronics Co., Ltd. of South Korea and other electronic companies in the world. Aside from the name change, the board approved the election of Mr. Hyunggoo Oh as director. Mr. Oh will serve the unexpired term of Mr. Intae Hwang, who resigned in accordance with SFA Semicon’s policy of rotating Korean expatriates in subsidiaries.

VITA gets approval from BIR: Vitarich Corp. (VITA) received its Certificate of Approval issued by the Bureau of Internal Revenue (BIR), granting VITA’s application for abatement/cancellation of 100% of the surcharge and compromise penalty for the 2013 and 2014 Withholding Tax on Compensation Expanded Withholding Tax amounting to P14.5mn.

Cebu Landmasters files for IPO: Cebu-based property developer Cebu Landmasters, Inc. has filed an application for P3.8bn worth of initial public offering (IPO). It is looking to issue in mid-May 430mn new shares with an oversubscription option of 75mn shares (total of 505mn), which will represent 34% of total outstanding common shares, at a maximum IPO price of P6.56/sh.


Balance of payments deficit narrowed for Jan: The Bangko Sentral ng Pilipinas (BSP) has reported that the balance of payments (BoP) incurred a deficit of $9mn for January, lower than the $214mn deficit recorded in December. The narrower deficit was mainly due to the debt payments made by the national government and the foreign exchange operations of the BSP. For 2017, the central bank is expecting $1bn BoP surplus, which is equivalent to 0.3% of GDP and will reverse the $420mn deficit of 2016.

Tourism workforce to reach 6.5mn by 2022: The Department of Tourism (DoT) is looking towards a 6.5mn workforce in the tourism sector by 2022. DoT based its forecast on its recently completed roadmap, the National Tourism Development Plan (NTDP), which focuses on the creation of jobs and improving the livelihood of the marginalized.

MICC to review mining operations for three months: Mining Industry Coordinating council (MICC) will propose a three-month review regarding the operations of 23 mining firms that have been ordered close by the Department of Environmental and Natural Resources (DENR). MICC is looking to tap experts from the academe and will set to start the review by March. The said review will encompass the technical, economic and social aspects of mining operations.









Philippines Market Insights 2017.2.20


Philippines Market Insights 2017.2.24