Philippines Market Insights 2017.5.22
News Highlights: GTCAP’s Toyota Motor Philippines (TMP) anticipates the demand for its vehicles to slow down amid the looming price increases that will come following the implementation of the proposed new taxes. Aboitiz Power Corp. (AP) signs deal with Eton Properties, property arm of LT Group, Inc. (LTG) for a clean and renewable energy source for its business process outsourcing (BPO) buildings in Eton Centris buildings in Quezon City. The country’s BoP reached $917mn surplus in April 2017 from $184mn same period the prior year. It is also the largest recorded for a little over 2 years.
Hunt for bargains, PSEi @7,767: Local equities closed green on Friday as investors scouted for fresh buys after the drop in prices last week. PSEi settled 9 points higher at 7,767, led primarily by industrials (+0.61%) and financials (+0.32%). Among actively-traded shares were: ALI (-P0.15 at P37.40); SM (-P4 at P775); and URC (+P0.70 at P159.60). Turnover reached P5.97bn, with gainers outnumbering losers, 108-73. Net foreign outflows pegged at P559mn.
Cautious hunting: Markets are likely to remain cautious, while it hunts for stocks that got beaten down by prior week's losses. Political news on the White House continued to be on investors' sentiments, which could eventually be a main drag for prices. Immediate support, 7,750, resistance at 7,820.
Marts spooked over Trump news: Asian marts ended mixed over fears on political news surrounding the White House drama last week.
Slightly recovering losses: Shares ended mostly up as investors primed by gains from the energy sector. Meanwhile, sentiments continued to hover on the firing of FBI Director James Comey.
Hoping for extension: Oil futures remained optimistic amid signs from Saudi Arabia and Russia backing up an extension on the output cut agreement. Gains, however, were off session highs over reports on continuous increase in US oil rigs. West Texas Intermediate ended $0.98 higher at $50.33/barrel.
GTCAP’s TMP expects slowdown in demand:
Toyota Motor Philippines (TMP) anticipates the demand for its vehicles to slow down amid the looming price increases that will come following the implementation of the proposed new taxes. If needed, TMP said they will reduce production volume in the short term to better manage inventory.
AP signs deal with Eton Properties for clean & renewable energy:
Aboitiz Power Corp. (AP) signs deal with Eton Properties, property arm of LT Group, Inc. (LTG) for a clean and renewable energy source for its business process outsourcing (BPO) buildings in Eton Centris buildings in Quezon City. The power will be sourced from AP's Makban Geothermal Power Plant in Bay and Calauan, Laguna and Sto. Tomas, Batangas. Currently, the geothermal facilities have a combined capacity of 390MW of clean and renewable energy.
ICT pursues new port projects in Africa:
International Container Terminal Services, Inc. (ICT) is currently monitoring two potential projects in Africa. Recall that last month, ICT made a bid for Greece’s second largest port but lost to German private equity firm.
DMC ventures into office space with two-tower development:
DMCI Holdings (DMC) is making its debut into the office space business for the first time with a two-tower development in Makati City. This project, possibly in joint venture with Japanese company NTT, would rise along Pasong Tamo in Makati City and would add P8bn worth of inventory.
SHLPH to expand in SCTEx:
Pilipinas Shell Petroleum (SHLPH) eyes expansion in Subic-Clark-Tarlac Expressway (SCTEx) to service motorists traversing the area. SHLPH has earmarked P12bn over the next 3 years, or P4bn each year, for its retail network expansion, bitumen project, and refinery optimization. Of the total, 20%-25% is allocated for retail expansion. SHLPH is also planning to build between 50-70 stations per year.
CNPF mulls more acquisitions for 2017:
Century Pacific Food, Inc. (CNPF) is looking to beef up its acquisitions for 2017, following the recent Hunt's license acquisition. The company is eyeing for interesting prospects where it can expand its product categories upon acquisition. CNPF currently has a market share of 84% in its tuna brand, while it has 55%-56^ market share across all product categories.
April surplus, 2-year high:
The country’s BoP reached $917mn surplus in April 2017 from $184mn same period the prior year. It is also the largest recorded for a little over 2 years. This trimmed the YTD BoP shortfall to $78mn deficit from $994mn gap as of end-March.
Real estate loans reached P1.3tn for 1Q17:
Bank lending to real estate sector has ballooned to P1.3tn for the first quarter of 2017, 21% higher YoY. Data from IHS Markit indicated that the local banking sector is well capitalized and could only face moderate credit risk, with its stable economic fundamentals. IHS Markit added that non-performing loans (NPLs) remain low and liquidity remains strong. Loans extended by the universal and commercial banks (U/KBs), accounts for 19.5% of the P6.75tn loan book.
Pres. Duterte signs EO22:
President Duterte signed the Executive Order 22 (EO22) where companies registered under the Board of Investments (BoI) can continue to exercise duty-free importation of capital equipment. Zero duty will be imposed on importation of capital equipment, spare parts and accessories, which could spur development for start-ups and companies currently registered with BoI.