Philippines Market Insights 2017.3.27
News Highlights: Filinvest Land, Inc. (FLI) has set its capex at P20bn (+39% YoY) for 2017. It is launching P14bn worth of new residential projects and is rolling out 3 new MRB projects & 3 expansion projects with a combined sales value of roughly P3bn while bringing to the market 2 high‐rise mixed‐use buildings valued at P4bn. Cebu Air (CEB) posted 122% growth in net income this year at P9.8bn, driven by 4.1% increase in passenger volume at 19.1mn. Meanwhile, the national government spent P536.66bn for debt payments in 2016, 0.5% higher from P534.14bn in 2015. Of the total amount, P304.45bn was spent for interest payment alone, while the remaining P232.2bn was for principal loans. The central bank (BSP) said that it is not in hurry to reduce the reserve requirement ratio currently pegged at 20%.
Mart down in anticipation of WLCON IPO, PSEi @7,269:Local marts were down on Friday as investors continued to cash out in preparation for the listing of Wilcon Depot, Inc. on 31 March. Moreover, the decision of the US Congress to delay the vote on its healthcare act took a toll on investors’ risk off sentiment. PSEi lost 31 points to 7,269 (‐0.43% day‐on‐day), while sectors ended mixed. Market breadth was tight with losers‐gainers, 90‐89, on P7.1bn turnover. Net foreign reached P1.1bn.
Might track Wall Street losses:Local mart is seen to trade lower today as concerns now arise on the possibility of delay in implementing the tax reform program in US. This was on the back of the US government’s failure to secure enough votes to repeal the healthcare bill. Immediate support 7,200, resistance 7,300.
Marts mostly higher amid optimism:Most markets are still on an optimistic note on Friday’s close despite the delay in repealing the Affordable Care act in the US. Bourses mostly were driven by any political sentiments with the lack of major economic indicators to spur any market activity.
Shares down amid failure to passed healthcare bill:Equities continued its losing streak with the failure to secure enough votes to repeal the health‐care bill, hereby raising concerns on the outlook of US President Trump’s economic agenda.
Crude up on optimism over OPEC’s efforts:Oil futures slightly gained, while players continued to weigh in OPEC’s efforts to cutback global production. West Texas Intermediate (WTI) rose $0.27 to $47.97/barrel.
FLI sets 2017 capex at P20bn:
Filinvest Land, Inc. (FLI) has set its capex at P20bn (+39% YoY) for 2017. It is launching P14bn worth of new residential projects and is rolling out 3 new MRB projects & 3 expansion projects with a combined sales value of roughly P3bn while bringing to the market 2 high‐rise mixed‐use buildings valued at P4bn. To add, it plans to triple the GLA of its BPO office buildings by 2019 and is adding another 46,705 sqm to the GLA of Festival Supermall in Alabang.
CEB 2016 net income doubled at P9.8bn:
Cebu Air (CEB) posted 122% growth in net income this year at P9.8bn, driven by 4.1% increase in
passenger volume at 19.1mn. Meanwhile, gross revenues rose 12% to P63.78. The 75% of which came from passenger revenues at P46.6bn (+9.2%), while 5.8% was from cargo services at P3.56bn (+3%) and the remaining 18.9% from ancillary services at P11.74bn (+3%). CEB ended 2016 with 57 aircraft, adding two brand‐new ATR 72‐600 aircraft in February 2017, to bring its current fleet to 59.
PAL in talks with strategic investor:
PAL Holdings (PAL) is currently in talks with an airline strategic investor, with due diligence already completed. PAL said that this investor is interested in taking up less than 40% stake and is expected to help PAL better manage its fleet and reach 5‐star full service carrier status by 2020.
GLO offers call promos to P1/minute:
Globe Telecom (GLO) is offering allnet calls for as low as P1/minute as a result of lower voice interconnect access charges across telecom companies. Earlier, GLO and PLDT (TEL) signed an agreement to reduce interconnection rate for voice calls between the two operators for P2.50/minute from P4.00/minute to mobile and landline to mobile voice calls.
Wilcon’s IPO gets strong interest:
According to the issue manager, the P7bn‐IPO of Wilcon Depot, Inc. (1,393.9mn shares at P5.05) has received strong interest. The portion of the IPO set aside for trading participants was more than 6 times oversubscribed at the close of the offer period last Friday. Wilcon (PSE ticker symbol WLCON) is scheduled to list on the Main Board of the PSE on March 31.
Government spent P536.66bn for debt payments in 2016:
The national government spent P536.66bn for debt payments in 2016, 0.5% higher from P534.14bn in 2015. Of the total amount, P304.45bn was spent for interest payment alone, while the remaining P232.2bn was for principal loans. Total interest payments accounted for only 11% of total expenditures in 2016, lower than the 13.9% share in 2015. Meanwhile, government borrowings in 2016 grew by 40% to P453.14bn.
BSP in no hurry to lower reserve requirements:
The central bank (BSP) said that it is not in hurry to reduce the reserve requirement ratio currently pegged at 20%. BSP Deputy Gov. Diwa Guinigundo said that “in the face of the inflationary pressure building up, it may not be necessarily at this point to reduce the reserve requirement and in the process infuse more liquidity into the system.” Currently, the BSP continues to mop up liquidity from the system to rein in inflation.
Congress to enact on tax amnesty proposal for estate taxes in 2016:
Congress is set to enact on a proposal to grant amnesty program covering estate taxes for the year 2016 and the previous years that have remained unpaid as of end‐December 2016. This was after the bills were approved at the House of Representatives and transmitted to the Senate for action.
NPLs of big banks rise but NPL ratio drops:
The non‐performing loans (NPLs) of universal and commercial banks stood at P95.172bn as of end‐
January 2017, slightly higher than the P94.423bn and P93.801bn reported in the same period last year and end‐December 2016, respectively. Total loan portfolio, however, rose by 17% YoY in January to P6.615 trillion. Thus, the NPL ratio actually declined to 1.44% from 1.67%, still on a downtrend.