Philippines Market Insights 2017.3.3
News Highlights: JG Summit Holdings, Inc. (JGS) and Filinvest Development Corp. (FDC) have submitted a P187bn unsolicited proposal to develop Clark
International Airport. Metro Pacific (MPI) and DMCI (DMC)’s joint venture company, Maynilad was shortlisted for a big bulk water and distribution project in
Indonesia. On the economic side, the government posted a budget deficit of P353.4bn in 2016, widening by 190% from 2015’s P121.7bn as the administration
ramps up infrastructure spending, translating to 14% expenditure growth.
Mart higher after tracking US gains: Local mart ended its losing streak following the overnight rally in the Wall Street. PSEi added 64 points to close at 7,234 (+0.90% dayon-
day). All sectors inched higher, save for mining & oil (-0.01%). Among activelytraded shares were: ALI (+P0.60 at P36.15); BDO (+P1.50 at P117.50); and URC (unch.
at P163.00), on P5.6bn turnover. Market breadth was positive at 111-74, however, foreign funds outflow continue as it registered $415.41mn.
Might trade slightly lower: Local bourse might trade sideways with a downward bias following the overnight decline in the US markets. Investors will be monitoring closely the development of a possible US Fed rate hike on March citing the improved economy and the latest US jobless claims at 223,000, below the 243,000 estimate. Immediate support at 7,140, resistance 7,300.
Bourses up after tracking US gains: Bourses in the region traded mostly higher, after Wall Street surged to record highs.
Equities took a breather, Snap debuts: Shares closed lower from their previous record levels as investors took some profits. Snap, the parent company of the multimedia mobile app Snapchat, raised $3.4bn in its IPO. On the economic side, US jobless claims read at 223,000, lower than the 243,000 estimate.
Crude fell further on unchanged Russia stance: Oil prices suffered its biggest loss since January after Russia showed weak compliance on the deal to cut oil output.
Russia reported an oil output of 11.11mn bpd in February, unchanged from its January data. West Texas Intermediate (WTI) for April declined $1.22 to settle at $52.61/barrel.
FDC submits proposal for Clark airport: JG Summit Holdings, Inc. (JGS) and Filinvest Development Corp. (FDC) have submitted a P187bn unsolicited proposal to develop Clark International Airport. The project specifically covers the improvement of current facilities at Clark International Airport, capacity augmentation in 5 phases to accommodate 36mn passengers annually, and operations and maintenance of the airport. The current capacity of Clark airport is 4.2mn passengers per annum.
MPI-DMC’s unit Maynilad shortlisted for project in Indonesia: Metro Pacific (MPI) and DMCI (DMC)’s joint venture company, Maynilad was shortlisted for a big bulk water and distribution project in Indonesia. The project involves bulk and water distribution to 500,000 households. Earlier, Maynilad inked an agreement with PT Moya Indonesia to put up a joint venture company, named PT Water Tecnologia Indonesia, that would provide water and wastewater services in Jakarta.
AC unit Zalora sees higher topline: Ayala Corp’s (AC) unit, Zalora expects to increase revenues following the investment by the Ayala Group. In 2015, Zalora Philippines managed to grow its topline by more than 300%.
MER’s rate hike petition to be decided by ERC next week: Manila Electric (MER)’s petition to stagger this month’s rate hike is tabled for approval in Energy Regulatory Commission’s (ERC) meeting on Monday, 06 February. ERC said that it still waiting for pertinent documents to come up with a decision. To recap, MER has proposed to stagger the implementation of the expected power rate hike starting March until May, requesting to impose a generation charge of P0.30/kwh in March and April, and the remaining balance of P0.3174/kwh in May.
DNL to expand facility: D&L Industries (DNL) plans to expand current production capacity by 3Q17 to sustain growth across all business segments. Currently, the average utilization rate of DNL’s plants is at 65% and it has 6 production facilities, including 5 in Metro Manila and 1 in Laguna.
HLCM’s 2016 recurring profits up 24% YoY: Holcim Philippines (HLCM) posted a recurring net income of P6.8bn for full year 2016, 24% higher YoY on 7.5% revenue growth and effective cost management. Note that the reported net income in base period 2015 was P8.1bn but this included a one-time gain of P2.6bn from the revaluation of HLCM’s investment in an affiliate. Thus, the recurring profits in 2015 was only P5.5bn. EBITDA in 2016 increased by 14% to P10.8bn.
Wilcon eyes retail acquisitions: Wilcon Depot is currently studying acquiring companies in the retail sector to accelerate expansion. The company said that it should not necessarily be in the construction line or home improvement. The expansion plan will be funded by the proceeds from planned P7.9bn initial public offering of the company.
Eagle Cement discloses IPO plans: Ramon Ang’s Eagle Cement Corp. pegged to market debut with an initial public offering (IPO) of P9.2bn or 575mn common shares. The cement firm sought SEC approval to issue 500mn common shares from the authorized capital stock and 75mn shares of Far East Cement Corp. in case of oversubscription. On its initial prospectus, maximum price is P16 a piece, while offer period would be on 2-9 May, with target listing at the Exchange (PSE) on 16 May, subject to application progress and market conditions. China Bank Capital Corp., PNB Capital and Investment Corp. and SB Capital Investment Corp. will manage and underwrite the proposed IPO. Proceeds would primarily be used to finance the construction of a cement plant and associated facilities in Cebu along with marine terminals in Southern Luzon, Visayas and Mindanao.
Budget deficit widens at P353.4bn in 2016: The government posted a budget deficit of P353.4bn in 2016, widening by 190% from 2015’s P121.7bn as the administration ramps up infrastructure spending, translating to 14% expenditure growth. The latest figure, however, was 9% lower than the revised budget deficit target of P388.9bn. In proportion to the GDP, the deficit of 2.4% was the highest level posted in 5 years.
PAGCOR clarifies selective approval issue: PAGCOR chair Andrea Domingo denied allegations in their agency regarding selective approval of gaming permits. This was after allegations by Chinese businessman Jack Lam. Domingo said that the agency is just adhering to regulations and in Jack Lam’s case the process were caught up during the 24 November raid.