Philippines Market Insights 2017.5.18
News Highlights: Megawide (MWIDE) reported P549 mn net income for 1Q with revenues reaching P4.77bn, representing 26% of FY17 target. Meanwhile, JG Summit (JGS) pegged P48.2bn as its capital expenditures for the year to be able to fund its core business segments’ expansion programs. Aboitiz Equity Ventures (AEV) plans to spend $250mn-$300mn over the next 3-5 years to expand its cement production.
Mart climbed anew ahead of 1Q GDP release, PSEi @7,826: Local mart sustained its rally as investors continue to position their trades a day before the release of 1Q GDP results. PSEi added 35 points to close at 7,826 (+0.46% day-on-day), with sectors ending mixed. Among actively-traded shares were: URC (+P0.80 at P159.20); ALI (-P0.30 at P38.60); and MBT (+P1.00 at P89.00), on P8.01bn turnover. Losers edged gainers, 98-92, as net foreign inflows reached P510.5mn.
Might track US losses: Our local bourse might trade lower, mirroring the decline in Wall Street. However, the Philippine Statistics Authority (PSA) is set to release the results of GDP for the first quarter of 2017. Estimates are pointing towards a 6.8% growth during the first quarter, slightly higher from the 6.6% mark during the fourth quarter of the previous year. Immediate support 7,780, resistance 7,880.
Marts lower on Trump uncertainties: Marts across the region closed mostly lower as investors digest the recent turmoil surrounding the White House.
Equities tumble on White House jitters: Shares plunged as investors were dismayed over the latest development on Pres. Trump’s firing of former FBI Director James Comey. Several news outlet confirmed that Pres. Trump commanded Comey to drop the investigation on former national security adviser Michael Flynn.
Crude up on declining US inventories: Oil prices rose on US Energy Information Administration (EIA) data that showed a decline in US crude inventories by 1.8mn barrels, way below the 2.4mn barrels forecast. West Texas Intermediate for June increased by $0.41 to close at $49.07/barrel.
MWIDE 1Q income reached P549mn:
Megawide (MWIDE) reported P549 mn net income for 1Q with revenues reaching P4.77bn, representing 26% of FY17 target. Construction revenues, which accounted 88% of total revenues, were brought by ongoing projects that include DoubeDragon, Urban Deca Tondo, Arthaland, among others. Revenues from operations of Mactan-Cebu Airport, which accounted 12% of MWIDE total revenues, climbed to P570mn (+32% YoY). Meanwhile, MWIDE airport subsidiary, GMR MWIDE Cebu Airport Corp. increased its net income at P271mn (+44% YoY), representing 49% to MWIDE earnings. Strong airport revenue was driven by higher passenger traffic.
JGS earmarked P48.2bn capex in 2017:
JG Summit (JGS) pegged P48.2bn as its capital expenditures for the year to be able to fund its core business segments’ expansion programs. A report showed that JGS core businesses would be raising their own funds for this year’s capex. Universal Robina (URC) and Robinsons Land (RLC) budgeted P7.2bn and P16bn for their planned expansions, while the remaining capex would be used for fleet expansion of Cebu Air (CEB), operating & maintenance of its petrochemicals group and expansion projects of Robinsons Bank.
AEV to spend $250mn$300mn for cement group:
Aboitiz Equity Ventures (AEV) plans to spend $250mn-$300mn over the next 3-5 years to expand its cement production. The planned investment would increase the group’s capacity by 1mn metric tons from the current 7mn MT across 6 cement plants. The expansion involves ‘debottlenecking’ existing cement plants and construction of a new kiln.
SHLPH pegs P12bn capex:
Pilipinas Shell Petroleum (SHLPH) allots P12bn in capex in the next 3 years for its refinery upgrade, bitumen facility and retail network expansion. SHLPH plans to put up 1,200 retail stations around the country by 2020 while instituting refinery improvements to allow for longer refinery turnaround and increased efficiencies.
DMC power unit replaced reclosers to Masbate power outages:
DMCI Power, DMCI Holdings (DMC) off-grid power segment, partnered with Masbate Electric Cooperative (MASELCO) in replacing the reclosers in the distribution line feeders located in PV Corpuz, Magsaysay, Buenavista and Mobo in Masbate province. Thus, power supply interruption due to line faults decreased significantly in MASELCO service area. A recloser is a circuit breaker that automatically switches off power in a distribution line segment or section during power overload or line faults. DMCI Power has a 15-year power supply agreement (PSA) with MASELCO.
Thai-firm buys 40% of PERC wind project:
PetroEnergy Resources (PERC) wind power unit, PetroWind Energy welcomed the entry of BCPG Public Co. Ltd. Of Thailand in the 36MW Nabas-1 wind power project in Aklan. BCPG acquired a 40% interest through the acquisition of CapAsia Asean Wind Holdings Cooperatief U.A. BCPG, along with existing PetroWind shareholders, PetroGreen Energy Corp. (40%) and EEI Power Corp. (80%), also signed a new shareholders’ agreement governing the company.
IMI completed STI Enterprises acquisition:
Integrated Micro-Electronics (IMI) completed the 80% acquisition in STI Enterprises Ltd. as part of its diversification strategy. The acquisition is expected to strengthen IMI’s industrial and automotive manufacturing competencies, broaden its customer base, enable it to have access to the UK and facilitate its entry in the aerospace and defense sectors.
Term deposit auction slightly oversubscribed:
The central bank (BSP) term deposit auction remained oversubscribed with investors’ strong demand for week-long term deposits offset sluggish demand on month-long instruments. Total tenders amounted to P182.33bn, with 7- and 28-day, reaching P55.3bn and P127.03bn total bids respectively. Average accepted yields from 7- and 28-day terms fetched 3.24% and 3.47% respectively.
Gov't to practice fiscal prudence:
The Department of Finance (DoF) vowed to practice "fiscal prudence" and reponsibility in investing and borrowing by making sure first that investments would provide more revenue and drive growth. DoF said that the government's thrust for accelerating infrastructure spending would bridge the country's infrastructure gap and create more jobs.