Philippines Market Insights 2018.1.19
News Highlights: Metro Pacific Investments Corporation (MPI) plans to buy 2‐3 logistics firms, with 1 likely for 2018, to expand its portfolio. San Miguel Pure Foods Company, Inc. (PF) plans to hold a share sale in 2Q18 to meet the new 15% minimum public ownership (MPO) requirement. Meanwhile, Phil. Treasury bureau (BTr) launched its $2bn, 10-year US bonds due 2028, $1bn of which will be for budget support & infra plan, $1bn to redeem 14 bonds issued between 2019-2037. Airline firms’ tax incentives will be removed once DoF’s proposed tax reform package 2 is passed into law.
Mart closes on red for 2nd time, PSEi @ 8,821: Back‐to-back announcements of stock rights offers from two of the biggest banks dragged the benchmark lower for the 2nd session, with Financials (-2.59%) leading declines. Meanwhile, infra stocks are some of today's most active movers as the benchmark tests 8,900 again. Among actively traded shares were: MBT (‐P0.50 at P98.20), BPI (+P0.50 at P115.00), BDO (‐P3.00 at P157.00), ALI (+P0.40 at P45.00), and AC (‐P25.00 at P1,035.00), on 9.98bn turnover. Gainers outperformed losers, 113‐103, with net foreign inflows at P383.38mn.
Might trade sideways: Investors might stay on the sidelines as they await relevant economic indications to support a rally, while some would opt to wait for further corrections before positioning. Immediate support 8,760, resistance 8,900.
Shares broadly higher: Asian shares were broadly higher on Thrusday, aided by strength in Chinese banks and tech companies and after fresh record highs from Wall Street. China’s economic growth also grew 6.9% in 2017, accelerating for the first time in 7 years.
Shares fell: US equities fell Thursday, following declines in energy & healthcare stocks.
Oil prices to rebound: Oil prices expected to rebound after the Energy Information Administration reported another large draw in oil inventories at 6.9mn barrels, significant enough to support a further rise in price. West Texas Intermediate (WTI) slid $0.02 to $63.95/barrel.
MPI to buy 2-3 logistics firms, 1 likely in 2018:
Metro Pacific Investments Corporation (MPI) plans to buy 2-3 logistics firms, with 1 likely for 2018, to expand its portfolio. Earlier, MPI said it was talking to Alberto Lina for Air21 Express.
PF to hold share sale in 2Q18 to meet minimum public ownership:
San Miguel Pure Foods Company, Inc. (PF) plans to hold a share sale in 2Q18 to meet the new 15% minimum public ownership (MPO) requirement. SMC will have 95.5% ownership in PF after the consolidation of SMC’s 7.86bn shares in SMB & 217mn shares in GSMI, with combined value of P336.35bn. PF, in turn, will issue 4.24bn shares to SMC & PF will be renamed San Miguel Food & Beverage, Inc.
ALI agrees to waive royalties or AGP of P277mn/year for next 35 years in favor of gov’t:
Ayala Land, Inc. (ALI) agreed to waive royalties or Annual Grantor Payment (AGP) of P277mn/year for the next 35 years in favor of the gov’t., for the Taguig Integrated Terminal Exchange (ITX). ITX is a 6-storey building on 5.57ha. lot inside FTI compound that will house a passenger concourse, centralised ticketing & retail establishments. ITX can accommodate 1,200 public utility vehicles, with construction slated 2H18, operation 1H20.
ALI & ETON to invest P53bn over next 10 years to develop 35ha. Parklands:
ALI & ETON will invest P53bn over the next 10 years to develop the 35ha. Parklands mixed-‐use township along C5 in QC & Pasig. Initial plans include a regional mall (58k sqm, completion 2019 with 3,500sqm. sports complex), residential condo (5 towers of 1,6888 units & 5 residential buildings of 3,700 units) & an iconic 25-meter‐wide bridge connecting Pasig & QC over Marikina River.
PCOR generates $401.957mn from its tender offer:
Petron Corporation (PCOR) generated $401.957mn from its tender offer from holders of its $750mn, 7.5% undated subordinated capital notes. Settlement will be on 22 Jan. PCOR will us its new issuance of $500mn senior perpetual notes to refinance debt at 4.6% interest.
MER & SPTC to seek ERC’s authority to implement PSA that would bring solar energy pricing to P2.9999/kWh:
Manila Electric Company (MER) & Solar Phils. Tarlac (SPTC) will seek ERC’s provisional authority to implement their power supply agreement (PSA) that would bring solar energy pricing to P2.9999/kWh. Hearing for the application was set in February. SPTC has 150MW solar farm in Concepcion, Tarlac, with the PSA set at 75MW‐85MW from the 1st to 5th year, 85MW for 6th to 20th.
PSE gets SEC clearance for 11.5mn rights offer at P275 apiece:
The Philippine Stock Exchange, Inc. (PSE) got SEC clearance for its 11.5mn rights offer at P275 apiece. Tentative date for the offer run is 5‐9 Feb, listing on 23 Feb. The rights would reduce brokers’ ownership to less than 20%, as required under the SRC.
BTr launches $2bn, 10‐year US bonds due 2028:
Phil. Treasury bureau (BTr) launched its $2bn, 10‐year US bonds due 2028, $1bn of which will be for budget support & infra plan, $1bn to redeem 14 bonds issued between 2019‐2037. The float would help address govt’s fiscal deficit, seen at 3% of GDP for 2018.
BSP might tighten policy as early as March.
The inflation impact of the TRAIN law would likely make the Central Bank revise its inflation forecast (3.4% this year) next policy meeting; consequently, BSP may have rates hiked sooner than expected, within Q1 this year.
Tax incentives for airline firms to be removed once tax reform package 2 is passed:
Airline firms’ tax incentives will be removed once DoF’s proposed tax reform package 2 is passed into law. Meanwhile, DoF wants to keep PAL’s franchise fee of 2% of gross revenues from all income sources, whether transport or non‐transport income. Incoming international passengers, freight & mail, will not be subject to tax. On CEB’s congressional franchise, the clause ensuring the airline enjoys a level playing field in the industry in terms of tax treatment, is removed.
TV5 to close Interaksyon news portal by end‐March:
By end‐March, TV5 will close its Interaksyon news portal website as part of rationalisation efforts. All digital news will be under news5.com.ph. The move would also affect 20 regular staff.