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Tuesday, April 29, 2014

TIPS | What are the 9 stocks to own in 2014, according to COL Financial?

The Philippine composite index is expected to finish a volatile year at the 6,600 to 6,900 levels despite continued fund outflows and a looming pick up in interest rates, according to online brokerage COL Financial Group Inc.

In a briefing today, COL Financial head of research April Lynn Tan said the targets are based on the assumption that 10-year bond rates will stay within the 5-5.5 percent band.

The projections represent an upside of 12-17 percent from the Philippine Stock Exchange index (PSEi)'s close of 5,889.83 in 2013.

Even as valuations seem expensive relative to historical average, equities remain the most attractive peso asset class with the prospects of higher interest rates already factored in, Tan said.

In contrast, the return of time deposits stood at 0.85 percent, special deposit accounts at two percent and 10-year Treasury bonds at 4.1 percent.

After a frantic performance in the first half of 2013 that pushed valuations to 21.2 times earnings -- the historical average is a price-earnings ratio of 15 -- the market has been on a correction mode, especially after the US Federal Reserve signaled in the middle of the year that it will start tapering its stimulus, a key driver of global asset rallies in recent years.

While valuations have yet to return to the historical norm, about 80-85 percent of the corrective intent has been priced in and the market may be bottoming out, Juanis G. Barredo, COL Financial chief technical analyst, said.

The Philippine stock market is undergoing a "very extended pause" but has managed to maintain the long-term bullish trend line that began in 2009 intact, Barredo said, adding that the sharp fund outflows from emerging markets will result in a wide consolidation range of 960 points between 5,500 and 6,460, consequently providing windows for range trading.

"The local market may be side-stripped for the meantime, but there will be standouts and good pockets of activity as deducted in year-to-date returns of about two percent...clearly higher than many other emerging markets that are expressly negative year-to-date," Barredo said.

The PSEi "shows a good chance" of rallying to the next resistance level of 6,200-6,400 in the short term, he said. Today, the PSEi stretched its winning run to a fifth session, closing at 6,106.03.

Emerging markets may have suffered the brunt of the selloff as a result of the "taper tantrums," but what sets the Philippines apart is its stronger fundamentals characterized by its growing current account surplus, Tan said.

Other positive developments that bode well for the country is the impact of the reconstruction spending in the wake of Typhoon 'Yolanda,' robust remittances and outsourcing revenues, recovery of exports, increasing foreign direct investment and the revival of the manufacturing sector, she added.

COL Financial recommends investors to accumulate shares of EEI, Megaworld, PLDT, D&L Industries, Ayala, BDO, Metrobank, Ayala Land and SM Prime.

While banks and property firms are the most sensitive to rising interest rates, valuations have become very attractive, Tan said.

Corporate earnings growth is expected to slow to 6.4 percent this year from 12-13 percent in 2013 dragged by the banks and their parent conglomerates.

"Given the favorable long term growth outlook of the economy, we believe that fundamentals will eventually catch up with valuation in 2015 assuming that the PSEi remains unchanged for the year," Tan said.

- Interaksyon

MER: 1Q14 results missed forecast as sales volume growth disappoints

Sales volume growth disappoints. Meralco’s 1Q14 core net profit rose marginally by 1.6% to Php4.088Bil, representing only 19.3% of COL and 21% of consensus full year forecasts. Earnings disappointed as net distribution revenues grew by 1.3% to Php12.8Bil, representing only 23.1% of our full year forecast. This was mainly due to the lower than expected sales volume growth of 1.7%. In our forecast, we assumed that sales volume would grow by 4.0%. Average tariff for the period declined 0.7% to Php1.63/kwh, but still exceeded our forecast of Php1.58/kwh. Costs were also higher than expected as operating and maintenance expenses excluding pass-on purchased power cost amounted to Php4.3Bil, representing 29% of our full year forecast

Sales volume growth disappoints on cooler temperature. As discussed earlier, 1Q14 sales volume grew only 1.7% to 7,908GWh. Sales volume growth of the industrial segment reached 5.7%, while that of the commercial segment reached 2.2%. The biggest disappointment was the residential segment which saw sales volume decline by 3.3%. Management attributed the weak residential sales volume growth to the cooler temperature this year (temperature was -1 C lower compared to 1Q13) and the negative impact of a potential price spike in electricity on consumers. However, management believes that volume growth should rebound in the second quarter given the warmer temperature.

Maintain HOLD rating with FV estimate of Php252/sh. We reiterate our HOLD rating on MER with a FV estimate of Php252/sh. Although the near term earnings growth outlook remains positive, we are concerned with the expected drop in earnings beginning in July 2015 once tariffs are reduced in the next regulatory period. Furthermore, the stock’s valuation is no longer attractive as the stock is trading at a slight premium to our fair value estimate of Php252/sh.

- COL Financial

Consumer Sector Outlook: Consumer companies deliver mixed results

Consumer companies deliver mixed results. Performance of consumer companies was mixed in 2013 with some companies encountering challenges while overall sales growth remained robust. Among those in our coverage, PGOLD’s results fell short of expectations following a weak third quarter while EMP and PIP did not meet expectations due to lower margins. Earnings growth remained strong in 2013 with net income growing by an average of 38.4% driven by an average revenue growth of 15.0%.

Robust consumption fuels revenue growth. Consumer companies reported strong revenue growth in 2013, supported by robust domestic consumption. Top line performance of consumer companies was mostly in line or better than expectations. Only PGOLD reported revenues that were below expected largely due to fewer operating days during the rainy season in 3Q13. Growth in OFW remittances and the continuous expansion of the BPO sector continued to drive consumption. In 2013, OFW remittances reached US$22.8Bil, up by 6.4% from last year while revenues from the IT-BPO sector rose by 14.0% to US$15.5Bil.

Margins being challenged. Although the majority of companies reported expanding margins in 2013, gross margins for EMP and PIP declined versus 2012. According to EMP, weakness of the peso relative to the dollar raised procurement costs of imported materials. Note that the peso depreciated by 8.3% from Php41.00/USD in 2012 to Php44.395/USD in 2013. EMP’s gross margin decreased by 370 basis points to 32.50% while PIP’s decreased by 60 basis points to 26.5%.

- COL Financial

Telecom Sector Outlook: Earnings grow in line with expectations

Broadband pushes earnings higher. The telecommunication industry’s aggregate 2013 earnings reached Php50.3Bil, up by 6.7% from the previous year and in line with both COL and consensus estimates. Growth was primarily driven by the improving competitive environment and strong broadband revenues. For the full year, aggregate service revenues reached Php254.5Bil, up by 5% from the previous year. The broadband segment continued to be a strong performer with aggregate revenues increasing by 16.6% to Php41.7Bil. In addition, broadband revenues now account for 16.4% of service revenues, an improvement from 14.8% in the previous year. We believe that broadband, especially mobile internet revenues, will continue to be a source of growth for the telco industry as smartphone penetration remains slim at less than 20%.

Subsidy expenses put pressure on margins. Globe and PLDT’s push for increasing postpaid subscriber base led to higher postpaid revenues. In 2013, aggregate postpaid subscribers reached 4.4Mil, up by 9% from the previous year. However, this came at a cost of paying higher subsidy expenses. Subsidy expenses rose by 36% to Php12.8Bil. As a result, combined EBITDA margin of GLO and PLDT declined to 44.8% from 45.5%. PLDT believes that the size of creditworthy postpaid market is just around 6Mil subscribers. On the other hand, GLO continues to be bullish on postpaid and expects to double its subscriber base in the next four to five years.

Globe gains market share as PLDT cleans up subscriber base. Total wireless subscribers of GLO and PLDT grew by 5% to 109Mil. The improvement was driven mostly by the increase in GLO’s subscriber base as PLDT redefined its subscriber base to exclude some units without real purchased load. As a result, GLO has now 35% of market share, a stark improvement from just 32% last year.

Reiterate BUY rating on TEL, and maintain HOLD on GLO. We reiterate our BUY rating on TEL with a fair value of Php3,260/sh. We continue to like PLDT for the defensive nature of its business and cost savings to be generated from the Digitel integration and modernization program. In addition, we believe that broadband will spur revenue growth for the industry. Valuations also remain attractive, with capital appreciation potential still substantial at 15%, and dividend yield at 6.6%

- COL Financial

Maynilad, Manila Water to spend P717M to boost Angat dam reserves

Metro Manila's water concessionaires have teamed up to boost the Angat dam's reserves.

In a statement, Maynilad Water Services Inc said it signed the Sumag River Diversion Project contract, along with Manila Water Co Inc and Cavite Ideal International Construction and Development Corp.

Under the agreement, Maynilad and Manila Water will share the cost of the project, which is expected to reach P717 million.

The Sumag project involves the construction of a 600 meter by 2.5 diameter tunnel from the Sumag River in General Nakar, Quezon to the Umiray-Angat Transbasin Tunnel in Angat, Bulacan.

Once completed, the tunnel will augment the inflow of water to Angat dam by 188 million liters per day (MLD).

The additional water supply will help address the increasing requirements of residents in Metro Manila and nearby areas.

The Angat dam, Metro Manila's primary water source, provides 4,000 MLD to Maynilad and Manila Water.

Maynilad operates the west zone of state-run Metropolitan Waterworks and Sewerage System (MWSS), while Manila Water handles the east zone.

- Interaksyon

U.S. business leaders to explore opportunities in PH, says Obama

United States President Barack Obama on Monday announced that American business leaders would be coming to the Philippines in June this year to explore more opportunities.

”I’m announcing that my Commerce Secretary Penny Pritzker will lead the delegation of American business leaders to the Philippines this June to explore new opportunities,” Obama said during the joint press conference after his bilateral meeting with President Benigno Aquino III in Malacanang.

Obama congratulated President Aquino for the reforms he pursued to make the Philippines one of the fast growing economies in Asia.

”We agreed to keep deepening our economic cooperation. I congratulated President Aquino on the reforms that he’s pursued to make the Philippines more competitive through our partnership for growth and our Millennium Challenge Cooperation compact,” Obama said.

”We are going to keep working together to support these efforts so that more Filipinos can share in this nation’s economic progress because growth has to be broad-based and it has to be inclusive” the US leader added.

The two leaders also discussed the steps that the Philippines could take to position itself for the Trans-Pacific Partnership.

”I encouraged the President to seize the opportunity he’s created by opening the next phase of economic reform and growth,” Obama said.

”As a vibrant democracy, the Philippines reflects the desire of citizens in this region to live in freedom and to have their universal rights upheld. As one of the fastest growing economies in Asia, the Philippines represents new opportunities for the trade and investment that creates jobs in both countries,” the US President added.

Aside from deep economic cooperation, Obama renewed the commitment of the US to strengthen the defense and security alliance between the Philippines and the US.

”As I made clear throughout this trip, the United States is renewing our leadership in the Asia Pacific and our engagement is rooted in our alliances, and that includes the Philippines, which is the oldest security treaty alliance that we have in Asia,” Obama said.

He assured that the newly-signed Enhanced Development Cooperation Agreement (EDCA) will not open door of bringing back the US bases in the Philippines.

For his part, President Aquino expressed appreciation for the US support to the Philippine government’s program under the partnership for growth framework which enhances the policy environment for economic growth through US$ 145 million planned contribution from the US Agency for International Development (USAID).

President Aquino said the US support is also coursed through the Millennium Challenge Corporation which supports the implementation of projects on road infrastructure, poverty reduction, and good governance with a US$ 434 million grant from 2011-2016.

The Philippine leader also said the recent US Federal Aviation Administration (FAA) decision to reinstated the Philippines to a Category 1 status will redound to mutual benefit for both countries from opening more routes for travel between the two countries to creating more business opportunities, to facilitating increased tourism and business travel.

”We welcome the substantive agreement between our countries on the terms and concessions for the U.S. to support the Philippines’ request for the extension of special treatment for our rice imports until 2017,” he said.

President Aquino also thanked Obama for the US’ significant assistance and support for the Philippine peace process particularly the signing of the Comprehensive Agreement on the Bangsamoro between the government and the Moro Islamic Liberation Front (MILF) last March 27.

- Interaksyon

Monday, April 28, 2014

PHL to grow fastest among ASEAN-5 nations in 2014, 2015 – IMF

The Philippine economy will likely grow the fastest among the ASEAN-5 nations this year and next, the International Monetary Fund (IMF) said in a regional economic report.

Asean-5 includes Indonesia, Malaysia, Philippines, Singapore and Thailand.

Philippine output is expected to grow by 6.5 percent this year and in 2014, according to the IMF report, “Sustaining the Momentum: Vigilance and Reforms.”

IMF also noted: Indonesia would grow by 5.4 percent this year and 5.8 percent next year; Malaysia by 5.2 percent and 5 percent; Singapore by 3.6 percent and 3.6 percent; and Thailand by 2.5 percent and 3.8 percent.

“Official goals of rapid and inclusive growth will likely provide a boost to growth, as infrastructure spending is ramped up in a context where the near-term fiscal deficit target remains manageable,” the report read.

Philippine economy, as measured by the gross domestic product, grew by 7.2 percent last year. It was the fasted among among the ASEAN-5 nations compared with 5.8 percent for Indonesia, 4.7 percent for Malaysia, 4.1 percent for Singapore, and 2.9 percent for Thailand.

Even if supply problems that ensued in the aftermath of Typhoon Yolanda in November did not really impact on Philippine growth prospects, the Fund, however, noted escalating food prices posed risks to monetary policy, while the weakening of the peso could also put pressure on core inflation in the face of strong demand in the domestic domestic market.

Growth in the ASEAN region, except in the Philippines, was influenced by cyclical factors, according to IMF. “These have been mostly domestic, but external factors have also played an important role.
“Going forward, the anticipated upturn in global demand conditions should become more of a supportive factor, particularly in Malaysia and Singapore,” the Fund said.

- GMA News

MER: Meralco's first quarter earnings flat at P4B

The Energy Regulatory Commission's order to recompute and lower electricity spot market rates as well as higher expenses contributed to flat net earnings for Manila Electric Company (Meralco) in the first quarter.

In a disclosure to the Philippine Stock Exchange on Monday, Meralco said consolidated net income stood at P4 billion, 0.4 percent lower than the P4.02 billion a year earlier.

Core net income – which excludes one-time, exceptional charges – inched higher by 1.6 percent to P4.09 billion from P4.02 billion in the same comparable period.

"This was the result of the combined effect of a two-percent increase in volume attributable to new accounts in the gaming and entertainment sector... and significantly higher contributions from Meralco's operating subsidiaries, offset by the effect of the decrease in distribution rate," the statement read.

Consolidated revenues slipped by 15 percent to P55.1 billion from P64.8 billion on electric revenues which accounted for 98 percent of the total due to lowered Wholesale Electricity Spot Market (WESM) rates.

In March, Philippine Electricity Market Corporation (PEMC) said rates at the spot market were reduced by 80 percent after the ERC ordered the WESM operator to recompute and issue regulated prices from Oct. 26 to Dec. 25.

Operating expenses, meanwhile, increased by 9 percent to P4.3 billion from P4 billion.

With flat first quarter net income, "2014 is proving to be a highly challenging year for the company," Meralco chairman Manuel V. Pangilinan said.

"We will persist in strengthening our core distribution business, in seeing our power generation projects completed, and in maintaining our competitiveness in retail electricity supply," he said.

"We wish to have clear visibility on the commercial and financial results during the second quarter, and intend to provide guidance on the company's core net income expectations at our July 2014 briefing," Pangilinan added.

- GMA News

Bloomberry Resorts posts P1.46B in Q1 net income from year-earlier loss

Bloomberry Resorts Corp. posted a net income of P1.46 billion in the first quarter of the year, a 180-degree turn from a net loss of P1.05 billion a year earlier.

Gross revenues reached P7.38 billion, or more than 11 times over the P661 million in the same comparable period, the owner and operator of Solaire Resort & Casino said in a disclosure to the the Philippine Stock Exchange.

Bloomberry shares rose 3.87 percent to P11.80 a piece on Monday.

Solaire is the first integrated casino resort to open in PAGCOR Entertainment City in Parañaque City.

“It is significant that we were able to turn a profit after only a year of operation,” Bloomberry chairman and chief executive Enrique K. Razon Jr. told the exchange.

“This is proof positive that the group, without a third-party management company, has the ability and the acumen to manage an integrated resort,” Razon said.

“During the year, we labored on building our core business while working on the expansion that would make Solaire a truly integrated resort. By the fourth quarter of this year, we shall see the fruition
with the opening of Phase 1-A,” he added.

Revenues from gaming accounted for 95.7 percent of total revenues. The hotel, food and beverage operations contributed 3.9 percent to the total, while retail and others and interest income accounted for 0.4 percent.

Gross gaming revenues grew by 12 folds to P7.06 billion, and non-gaming revenues expanded by five folds to P286 million.
Total expenses for the quarter were up 2.5 times to P4.53 billion from P1.82 billion, and operating expenses were up 157 percent to P4.51 billion.

- GMA News

Thursday, April 24, 2014

Vista Land redeems majority of dollar-denominated debt

Holders of most of Vista Land & Lifescapes Inc's dollar-denominated notes have tendered the Villar-led real estate firm's IOUs in exchange for cash.

In a disclosure to the Philippine Stock Exchange, the country's largest homebuilder said $103.77 million worth of its guaranteed notes have been submitted as valid tenders prior to the end of the offer yesterday.

Vista Land had offered to redeem $150 million worth of IOUs ahead of next year's maturity. The debt papers carry an interest rate of 8.25 percent.

Vista Land earlier appointed The Hongkong and Shanghai Banking Corp and DBS Bank Ltd as joint dealer managers, BDO Capital & Investment Corp as domestic dealer manager and DF King Worldwide as information and tender agent.

The real estate developer's wholly owned subsidiary Vista Land International Inc is gearing up for the sale of new debt papers, but it has yet to determine the terms of the offering. Proceeds will refinance existing obligations, finance capital expenditures amounting to P21 billion this year and for general corporate purposes.

Last week, Vista Land was cleared to undertake its maiden bond issuance of up to P5 billion to partly bankroll the projects of its subsidiaries.

Vista Land is the holding company of five business units, Brittany, Crown Asia, Camella Homes, Communities Philippines and Vista Residences.

- Interaksyon

BDO Leasing's earnings up 6 pct in 1Q

BDO Leasing and Finance Inc today announced that its profit rose in the mid-single digits in the first quarter.

In a statement, BDO Leasing vice chairman Roberto E. Lapid said the company’s net income grew by six percent year-on-year to P121.4 million in the January to March period.

“While portfolio growth was strong, the impact on bottom line was tempered by margin compression from excess system liquidity, which moderated revenue growth to 8 percent," Lapid said.

He said the leasing firm's loan and lease portfolio jumped by 33 percent to P22.1 billion, resulting in a 13 percent increase in revenues to P533.8 million from P471.3 million a year ago.

“With the healthy first quarter results, BDO Leasing is on track to meet its full-year 2014 guidance of P440 million,” Lapid said.

The leasing unit of the country's biggest lender earned P420.3 million last year, 2.3 percent higher than the P410.7 million in 2012.

This was supported by a 22 percent hike in its loan and lease portfolio to P20.98 billion, coming from key industries such as mining, construction, real estate and health care.

- Interaksyon

AboitizPower extends operations of 2 power barges in Mindanao

Aboitiz Power Corp has extended the operations of its power barges in Mindanao, which continues to suffer from a shortage.

In a statement, AboitizPower said subsidiary Therma Marine Inc (TMI) reported that its power barges have been running close to 24 hours on a daily basis.

"We are ensuring our customers we have enough fuel supply to meet the power supply requirements of our customers especially this summer," Therma Marine president and chief operating officer Jovy P. Batiquin said. "We want to be able to respond to our customers when they are in need of additional power supply."

Some 22 electric cooperatives and distribution utilities have power supply contracts with the AboitizPower subsidiary and have called on Therma Marine to fill in the supply gap created by a combination of power plant repairs and precarious water levels in Lake Lanao because of the summer heat.

Although the extended running hours will pull closer the scheduled maintenance schedule of the barges, Batiquin assured customers that the preventive maintenance work will not be scheduled until the Steag State Power coal plant, which is under repair, comes online as announced next month.

Therma Marine's maintenance schedule is based on its operating hours and is a critical activity to prevent the power plant from more damaging unscheduled interruptions.

Therma Marine operates two floating power barges in Maco, Compostela Valley and in Nasipit, Agusan del Norte. The two barges have a combined 200 megawatts.

Used as peaking plants, Therma Marine's barges have been operating lately as more of baseload plants to mitigate Mindanao's power shortage.

- Interaksyon

UCPB Savings Bank net income up 36% to P404M in 2013

Net earnings of UCPB Savings Bank grew by 36 percent in 2013, helped by marketing initiatives and improved revenues, the bank said Wednesday.

In an e-mailed statement, UCPB Savings Bank said it booked P404 million in net income from P297 million a year earlier.

The bank attributed its performance to a more aggressive marketing for commercial and consumer loans and efficient operating expense components that pushed the it to surpass the revenue target.

Total loans climbed 26.42 percent P8.6 billion from P6.8 billion, while deposits increased by 57.64 percent to P8.8 billion from P5.6 billion.

Non-performing loans stood at 3 percent of total portfolio while capital adequacy ratio registered at 26.61 percent or above the 10-percent minimum requirement under the Bangko Sentral ng Pilipinas standards.

The bank currently has 37 branches nationwide and 24 automated teller machines.

“We believe that we are on track towards growth. The challenge is to accelerate the momentum by providing relevant tools to our employees, our greatest asset," Joseph C. Justiniano, president and CEO, said in a statement.

Part of the bank's priorities is the development of training programs aimed at reinforcing our people’s skills, Justiniano said.
"We are also planning to roll-out the sales management process that will enable our sales people to spot and develop business potentials. Lastly, we are looking at a solid control and support system to back-up our sales endeavors,” he added.

- GMA News

BDO, UCPB units post profit growth

BDO Leasing and Finance Inc. posted a 6 percent jump in its net income for the first quarter of 2014, the BDO Unibank Inc. subsidiary said on Wednesday.

BDO Leasing’s net income increased to P121.4 million in the January to March period from the P114.7 million in the same period last year.

The growth was attributed to the continued expansion in BDO Leasing’s portfolio, with loan and lease portfolio up by 33 percent to P22.1 billion, which led to a 13 percent increase in revenues to P533.8 million in the first quarter.

BDO Leasing said it is on track to meet its full-year 2014 guidance of P440 million.

For 2013, BDO Leasing saw an increase in earnings to P420.3 million from P410.7 million in 2012 also due to a higher loan and lease portfolio, which increased 22 percent to P20.98 billion.

The portfolio growth came from key industries such as mining, construction, real estate and health care and medical sectors.

UCPB Savings' 2013 profit

Meanwhile, UCPB Savings Bank also reported growth in its net income in 2013, posting P404 million or a 36 percent jump from the P297 million in 2012.

The UCPB subsidiary attributed the growth to its more aggressive stance towards marketing commercial and consumer loan products.

The bank also said the increase was due to the combined performance of surpassing revenue target and more efficient operating expense components.

Its total loans also jumped 26.42 percent to P8.6 billion from P6.8 billion while deposits grew by 57.64 percent to P8.8 billion in 2013 from P5.6 billion in 2012.

UCPB Savings ended 2013 with total assets up 39.71 percent to P11.9 billion.

Six UCPB Savings branches have been relocated to Lapasan, Cagayan de Oro; Dipolog, Zamboanga del Norte; Sta. Rosa, Laguna; Morong, Rizal; Puerto Princesa; and Atimonan, Quezon while three branches in Lamitan, Basilan; Tuburan, Cebu; and Sta Cruz, Manila have been renovated.

“In line with our goal of providing our customers with a pleasant banking experience, we renovated and relocated several of our branches, incorporated the new logo to reflect a more personal relationship and lasting partnership with our customers,” said UCPB Savings president and chief executive Joseph Justiniano in a statement.

UCPB Savings currently has 37 branches nationwide and all have been automated.

- ABS-CBN News

SMIC gets SEC nod on P15-B bond sale

To pay for maturing debt and finance expansion, Sy-led SM Investments Corp. is selling P15 billion worth of seven- and 10-year bonds, a move the Securities and Exchange Commission en banc approved late Tuesday.

The sale of fixed-rate retail bonds features a P5-billion overallotment in case investor demand overshoots the offering.

SMIC intends to refinance P13.15-billion of obligations maturing this year.

BDO Capital and Investments Corp. was hired as lead underwriter for the bond sale.

Last March, revealed it would be spending P80 billion in capital expenditures for the year to expand of its property, retail and banking businesses.

- GMA News

PSEi snaps 4-day rally

Philippine shares snapped a four-day rally, joining a region-wide downswing after China's manufacturing output contracted for a third straight month.

The Philippine Stock Exchange index on Wednesday ended 0.23% lower at 6,769.52.

One of the day's big losers was Meralco, which fell 0.70% after the Supreme Court indefinitely extended the TRO on its December rate hike.

Banking giants BPI and BDO also fell more than half a percent.

Bucking the downtrend is Enrique Razon's Bloomberry, which operates Solaire Casino. Bloomberry surged to a 5-month high of P10.40, on bets of strong first quarter earnings.

In other corporate news, Manny Pangilinan said First Pacific is eyeing more investments in the country's agriculture sector, ahead of the ASEAN economic integration next year.

He said listed sugar producer Victorias Milling and unlisted SL Agritech are among the options.

At the foreign exchange market, the peso is slightly weaker, closing at P44.72 against the US dollar.


Wednesday, April 23, 2014

Ayala Land unveils 5-year plan to convert former FTI property into business district

Ayala Land Inc (ALI) today unveiled a five-year plan to convert the former Food Terminal Inc complex into the company's latest central business district and gateway to Metro Manila from the south.

In a briefing, ALI vice president Meean Dy said the company is investing P80 billion over a five-year period to develop the first phase of the 74-hectare Arca South, consisting of 870,000 square meters of gross floor area evenly split between residential and commercial use.

The first phase of Arca South will house 3,645 residential units from the AyalaLand Premier, Alveo and Avida brands; nine office buildings catering to business process outsourcing companies; three retail centers; a 200-room Seda Hotel; and a 250-bed QualiMed hospital.

Upon completion, Arca South will accommodate as many as 60,000 residents and 400,000 office workers.

ALI has sold 19 lots ranging from P160,000 to P200,000 per square meter to assist the property company in priming the mixed-use project. The lots are valued at a combined P9-10 billion.

"Arca South is different from various products we developed in the past. All product lines will develop at the same time. We will come in very big in this project that's why we're allocating P80 billion of our funds in this project alone," said Jun Bisnar, ALI vice president and head of operation for Arca South.

Located near the southern ends of major thoroughfares EDSA and C5 and right along the South Luzon Expressway, Arca South is in close proximity to the government’s Southeast Intermodal Transport System (ITS) project, a central station for all provincial buses carrying passengers to and from Laguna, Batangas, Quezon and Bicol. The terminal is expected to accommodate an estimated 4,000 buses and 200,000 commuters a day.

AyalaLand Premier's Arbor Lanes will be the first residential project in Arca South, comprising five blocks of 13-15 storey condominiums. The sprawling garden community will have a total of 1,100 units, with the first block offering 208 units at an average size of 108 square meters, generating P3.5 billion in sales. Turnover has been set to begin in the first quarter of 2018.

Upper-middle brand Alveo expects P9.2 billion in sales from 900 units, while affordable brand Avida targets P5 billion from 1,600 units.

Arca South will have its own version of Bonifacio High Street, a lifestyle mall, and a transit-oriented mall that will be linked to the Southeast ITS project. For a complete shopping experience, ALI will open a regional mall with 150,000 square meters of leasable space.

The lifestyle mall will open in the fourth quarter of 2017 with the bigger mall slated to open three years after.

Nine towers with a gross leasable area of 200,000 square meters will be launched within the next five years, with two expected to be operational by 2017.

The 250-bed QualiMed hospital is set to start offering highly specialized medical treatment by late 2017 or 2018. Around that time, the Seda Hotel will open its doors to the public.

Called a "city in sync," Arca South will be a modern business district equipped with a 24/7 operations center for efficient traffic and road management, and real-time alerts and emergency response. Integrated basement parking will be built to facilitate smoother vehicular flow above and below ground of Arca South, while energy-efficient programs will be instituted.

With the first phase comprising only a fourth of the 74-hectare property, it may take about 15-20 years to develop the entire complex, which the company secured in August 2012 from a government auction.

- Interaksyon

MEG: GMR-Megawide gets Mactan-Cebu airport concession from DOTC

The Department of Transportation and Communications (DOTC) signed the concession agreement for the Mactan-Cebu International Airport on Tuesday, paving the way for consortium GMR-Megawide to upgrade the second-busiest airport in the Philippines.

The 25-year concession was signed after the consortium fulfilled all post-award requirements that included paying the Mactan-Cebu International Airport Authority (MCIAA) the P 14.4-billion premium GMR-Megawide offered in its financial bid.

“Operations and maintenance (O&M) of the airport will be turned over by MCIAA to GMR-
Megawide within the next six (6) months, which means that the public can expect private sector
efficiency and more customer-oriented services at the airport beginning in October 2014,” the DOTC said in an e-mailed statement.

Part of the deal is for the concessionaire to start building a new passenger terminal building by January 2015 and to complete the project in three years or by January 2018. The new terminal – next to the present passenger terminal – will be dedicated to international flights.

Once the international terminal is complete, GMR-Megawide start the renovation works on the present terminal which is expected to be complete and to start serving domestic passengers in January 2019.

The contract was signed between the Philippine government and GMR-Megawide after a 15-day window for those with complaints against the winning concession to file a motion has lapsed. No bidder filed any motion, according to DOTC.

The department said it also hasn't received any injunction from the Supreme Court to keep the government and GMR-Megawide from signing the concession agreement and fulfilling its terms and conditions.

GMR-Megawide, a partnership between Megawide Construction Corp. and GMR of Bangalore, India, won the Mactan-Cebu International Airport expansion project last Dec. 12 by bidding P14.404 billion for the public-private partnership undertaking.

It bested other investors led by SM Group, Ayala Corp., San Miguel Corp., JG Summit Holdings Inc., and Metro Pacific Investments Corp.

- GMA News

PAL sees bottom line turn around in 2014

Flag carrier Philippine Airlines (PAL) is on its way to improving its bottom line starting this year after incurring huge losses in 2013.

“2013 was a clean-up year for PAL as we go through the costly, yet necessary, fleet renewal process but we are on track with our goals and we remain committed to improving your airline’s financial and operational performance,” president and chief operating officer Ramon S. Ang said in an e-mailed statement Tuesday.

Owner and operator PAL Holdings Inc. incurred P9.12 billion in losses in the fiscal first nine months ending Dec. 31, up P6.38 billion from P2.74 billion a year earlier.

“PAL reported comprehensive loss amounting to $229.7M for the first nine months of 2013, following a one-off expense of $261M covering the retirement of its aging jets,” the company said.

“With the significant one-off expense out of its way, PAL is confident it will end 2014 healthier with a more efficient fleet planning program from the deployment of its various new aircraft, an expanded network and further upgrading of service standards on the ground and in the air,” it added.

With the Philippines now back in the Category 1 status of the US Federal Aviation Administration, “PAL can now deploy its new planes to the US and explore vast opportunities, including network expansion and partnership with other airlines, in one of the Philippines’ largest passenger markets,” the company noted, the airline now expects to generate substantial yearly savings from lower maintenance and fuel costs.

PAL will own one of Asia’s youngest fleets at 3.5 years with the completion of a modernization program that involves, among others, the replacement of 20 aging aircraft with modern, fuel-efficient planes that are will reduce costs amid expected productivity gains.

“The retirement of PAL’s old fleet is part of a turnaround strategy aimed at transforming the flag carrier into Asia’s airline of choice through a simple game-changing program of fleet modernization, network expansion and service innovation,” the airline said.

- GMA News

SEC approves SM's P15B debt sale

The listed holding firm of Henry Sy and family obtained Securities and Exchange Commission (SEC) approval of its planned debt sale.

SEC commission secretary Gerard Lukban said the regulator, in an en banc meeting today, cleared SM Investments Corp's fixed-rate retail bond offering.

In a previous filing, SM said it would raise up to P15 billlion from a debt offering that includes an oversubscription option for another P5 billion in case of strong demand.

The bonds, which received the highest rating from the Philippine Rating Services Corp, will be offered in one or two tranches with tenors of seven and/or 10 years.

BDO Capital and Investment Corp was tapped as the issue manager for the offering.

SM is pouring P80 billion for its capital expenditures this year, P70 billion of which will be earmarked for its property business.

SM is in the business of retail, mall operations and development, financial services, residential and property development, hotel and convention centers, and gaming. Aside from its core businesses, the group also has interests in mining, infrastructure, and geothermal energy.

SM posted a net income of P27.45 billion last year, 11 percent higher from the P24.67 billion in 2012, on the strength of its banking and mall businesses.

- Interaksyon

Monday, April 21, 2014

PH economic managers retain 2014-2016 inflation targets

Philippine economic managers have decided to keep the inflation targets for 2014 to 2016 in line with the country's growth prospects.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said the inter-agency Development and Budget Coordinating Committee (DBCC) sees the inflation target of 3-5 percent for 2014 as appropriate, based on the current inflation developments, evolving economic and financial trends as well as indicators of the public’s inflation expectations and emerging forecasts.

At end-March, inflation averaged 4.1 percent.

The country’s gross domestic product (GDP) is seen to grow between 6.5-7.5 percent this year from 7.2 percent last year.

The BSP’s inflation target of 2-4 percent for 2015 and 2016 also remains, consistent with the country’s current inflation dynamics and outlook for the next couple of years and the expected higher potential capacity under a low inflation environment.

As Subic project stalls, Meralco banks on tieups with EGCO, Global Power to secure supply

With its maiden power plant project in Subic stalled, Manila Electric Co (Meralco) expects its other joint ventures to move ahead.

Meralco president Osacar S. Reyes told that the company's projects with Thailand's Electricity Generating Public Co Ltd (EGCO) and the Metrobank Group's Global Business Power Corp (GBPC) could be completed ahead of the 600-megawatt Subic coal plant, which Redondo Peninsula Energy (RP Energy) is building.

Meralco PowerGen Corp is part owner of RP Energy.

"We're working with EGCO on San Buenaventura. That's 500-megawatt (MW) gross, 455 MW net expansion of Quezon power plant. GBPC, you know we took up 20 percent interest, they are expanding, and then we're looking at their projects," Reyes said.

The Subic project has been in the backburner since 2010 owing to a number of legal challenges hurled by opponents of coal-fired power plants. Energy Secretary Carlos Jericho L. Petilla earlier said the Subic coal project is needed to avoid tight supply in Luzon by 2016.

Once the Quezon plant expansion is completed, Meralco may opt to secure the output of the facility, Reyes said.

Meralco, through its power generation arm, last year inked a joint venture deal with EGCO for the expansion of the latter's majority controlled 460-MW coal plant in Mauban, Quezon. Construction of the coal-powered facility is targeted late this year.

Meralco likewise bought a 20 percent stake in GBPC, the biggest independent power producer in the Visayas with an installed capacity of 627 MW. Both companies also signed a memorandum of understanding for potential power projects in Mindanao.

Meralco and GBPC however have yet to identify potential projects.

Besides the tie-ups, Meralco is also scouting for power projects that will address peak demand, or demand at that time of day when electricity use is at its highest and usually calls for the use of expensive fossil-fuel based power plants, Reyes said.

"We're also looking at potential for peaking capacity but wala pa specific," he said. is the online news portal of TV5, which like Meralco is chaired by Manuel V. Pangilnan.

- Interaksyon

PSEi pierces 6,700-level as local, foreign funds position ahead of Q1 earnings

Share prices on the Philippine Stock Exchange extended gains for the third straight day Monday, and the PSEi climbed over 6,700 as local and foreign fund managers anticipate good numbers from first quarter corporate results.

The benchmark PSEi climbed 96.33 points or 1.44 percent to 6,767.51. The broader All Shares index increased by 50.74 points or 1.26 percent to 4,063.77.

More than 1.49 billion shares valued at P8.78 billion were traded. Gainers eclipsed losers, 123 to 54, while 39 issues were unchanged.

"The two-day holiday for the market prompted aggressive buying today," Asiasec Equities Inc. market strategist Manny Cruz told GMA News Online.

Philippine financial markets were closed on Thursday and Friday for a Holy Week break.

Cruz said there were no exceptional news that led the index to pierce the 6,680 critical resistance level but investors were upbeat about first quarter corporate earnings.

"Both foreign and local funds took big positions ahead of first quarter earnings results towards the tail-end of April or the start of May," he said.

"Consensus growth is 7 percent but early indications show companies may be able to surpass that," he added.

In Asia, stock markets started the week on a subdued note on Monday, as tensions in Ukraine kept investors cautious amid an absence of catalysts as several markets remained closed for the Easter holiday, Reuters reported.

Except for the Philippine market, "the region remains in holiday mood as some were only closed on Friday," Cruz said.

Earlier, Unicapital Securities Inc. research head Lexter Azurin said the local market played catch-up after the S&P 500 went up big time last Thursday.

US stocks ended a holiday-shortened week – market was closed for Good Friday – with mostly modest gains on Thursday, though the S&P 500 notched its biggest weekly advance since July as Morgan Stanley and General Electric rallied after strong results, Reuters said in a separate report.

Cruz said the next resistance level is pegged at 6,880. "The market has enough steam to break this level," he said.

- GMA News

SMC: San Miguel eyes 2018 completion of MRT7

San Miguel Corp (SMC) expects to complete the construction of the Metro Rail Transit Line 7 (MRT 7) by 2018.

In a disclosure to the Philippine Stock Exchange, SMC said the project has secured government approval to proceed with construction, adding that the engineering procurement contract has been awarded to Marubeni Corp.

The government however has yet to release the performance undertaking, SMC said.

The Department of Finance (DOF) will issue the performance undertaking - - a requirement for financial closure of a project that would be funded by official development assistance (ODA).

A performance undertaking represents a financial guarantee on the part of the government. ODA refers to foreign aid in the form of grants or loans that carry below-market interest rates and longer repayment terms.

"From there, the processing of the financial closure can immediately be initiated and is expected to be received by 2014," SMC said.

"Construction of the 44-kilometer road and rail transportation will begin immediately after this, and will take an estimated 42 months to complete," the conglomerate said.

The P62.7 billion MRT 7 Project involves the construction of a 22.8-kilomenter rail system from North Avenue corner Edsa in Quezon City, passing through Commonwealth Avenue, Regalado Avenue and Quirino Highway up to the proposed Intermodal Transportation Terminal in San Jose del Monte, Bulacan.

This project will cover 14 stations. The railway will serve an estimated two million commuters in the northern parts of Quezon and Caloocan cities.

Apart from the elevated transport system, the proponent, Universal LRT Corp (ULC) will also build at no cost to the government a 17-kilometer, six-lane asphalt access road in Marilao, Bulacan that will lead to its depot in Tala. SMC controls ULC.

- Interaksyon

Friday, April 18, 2014

SPH: Higher sales, lower costs lift Splash's 1Q net income

Higher sales and lower costs boosted Splash Corp’s profit in the first quarter of the year.

In a disclosure to the Philippine Stock Exchange, the homegrown personal care manufacturer said it netted P32.9 million in the three-month period, up 157.6 percent from last year’s P12.7 million.

Sales amounted to P832 million, an increase of 8.7 percent year-on-year.

Its local personal care business rose 14 percent on the back of advertising efforts and improved sales from key accounts. International personal care sales expanded by nearly a third on increasing revenues from Africa, while international food sales climbed by a quarter on higher sales in North America and the Middle East.

"This sharp rebound in sales and net income validates the steps taken by Splash in 2013 to strengthen its operations and profitability. A key step that Splash took was to strengthen the relationship with certain key accounts to ensure mutually beneficial terms of engagement. This resulted in a more efficient inventory management and promo fund spending for both parties," the listed company said.

Last year, Splash’s net income slid 21 percent to P73 million from P92 million in 2012 on the back of a five percent drop in sales, as the personal care industry experienced flat growth or declines in various categories.

Splash is the company behind the brands Kolours, Vitresse, Extraderm, Maxi-Peel, Skin White, Biolink, and Theraherb VCO.

In 2011, Splash marked its foray into the food business with the acquisition of an 80-percent stake in Barrio Fiesta Manufacturing Corp. A year later, it took over Moondish Foods Corp, a manufacturer of canned ready-to-eat Filipino products.

Source: Interaksyon

PH stock market nears 9-month high after Wall Street gains, China growth data

The Philippine benchmark index on Wednesday closed at its highest level in nearly nine months ahead of the Holy Week break, buoyed by a rally in property shares and gains on Wall Street with investors digesting the latest data on China’s economic growth.

At the Philippine Stock Exchange, the composite index went up 49.52 points, or 0.75 percent, to 6,671.18, its highest finish since closing at 6,728.00 on July 30, 2013. The local barometer ended the shortened trading week with a gain of 1.13 percent.

All counters finished in the green led by the property sub-index, which rose 1.43 percent.

Advancers dominated decliners, 119 to 63, while 40 issues were unchanged. Value turnover improved to P8.39 billion from yesterday's P7.05 billion, as 2.65 billion stocks changed hands.

SM Investments and SM Prime were the most actively traded stocks, rising 0.52 percent and a percent, respectively. Yesterday, the real estate conglomerate announced a five-year plan to spend P400 billion for the expansion of its mall, residential, commercial and leisure business that will double earnings by 2018.

Top gainers were Unioil, Swift and Island Information, while the biggest losers were Lorenzo Shipping, Primex and Euro-Med.

"Investors took their cue from an extended rally in US stocks to push the local measure to a second day of advance," said Jun Calaycay of Accord Capital Equities Corp. Today is the last trading day in the local stock market in observance of Maundy Thursday and Good Friday.

Overnight, US stocks advanced after a see-saw trading session as favorable earnings reports from blue-chip companies like Coca-Cola Co and Johnson & Johnson overshadowed soft regional manufacturing data. The Dow Jones Industrial Average added 89.32 points, or 0.55 percent, to 16,262.56.

Optimism flooded the Asia-Pacific region after China's economy grew 7.4 percent in the first quarter, the slowest pace in the last six quarters but a tad higher than the 7.3 percent forecast, relieving fears of a sharper slowdown.

Jollibee board clears P800-million loan from BPI

Jollibee Foods Corp (JFC) is borrowing P800 million from Bank of the Philippine Islands.

In a regulatory filing, the homegrown fastfood giant said its board of directors authorized the application for a loan or credit facilities from the Ayala-led bank.

JFC did not elaborate on how it intends to use the loan facility, but the company is embarking on a record capital spending this year as it accelerates the expansion of its store network worldwide.

The Jollibee group is earmarking P6.3 billion for its 2014 capex, higher than the P4.1 billion spent in 2013, to finance investments in new stores as well as renovations and upgrade of existing stores both in the Philippines and abroad.

JFC is investing P3 billion in additional capex to increase the capacity of its manufacturing plants in the Philippines and China to serve the fast growth of demand of the businesses. It is also investing heavily in the upgrade of its information systems.

JFC is coming off a banner year with earnings rising 24.50 percent, the fastest pace in seven years, to P4.64 billion from P3.73 billion in 2012. Likewise, sales surpassed the P100-billion mark for the first time in the company's 35-year history.

JFC operates the largest food service network in the Philippines with 2,181 stores at end- 2013 comprising the flagship Jollibee, Chowking, Greenwich, Red Ribbon, Mang Inasal and Burger King. It was operating 583 stores abroad, including Yonghe King, Hong Zhuang Yuan, San Pin Wang and Chow Fun.

JFC has a 50 percent interest in joint ventures for Highlands Coffee (Vietnam, Philippines) at 84, Pho 24 (Vietnam, Indonesia, Philippines, Hong Kong, Macau and Japan) at 70 and 12 Sabu (China) at 8.

Source: Interaksyon

PAL's losses widen on costlier jet fuel, maintenance expenses

Losses at Philippine Airlines (PAL) ballooned in the first nine months of its fiscal year ending March amid costlier jet fuel and higher maintenance expenses.

In a disclosure to the Philippine Stock Exchange, PAL Holdings Inc said its losses widened 332.5 percent to P11.85 billion in the April to December period compared with P2.74 billion in the previous year.

The flag carrier’s revenues increased slightly to P55.98 billion from P55.69 billion previously, whereas expenses inched up 5.3 percent to P61.50 billion from P58.43 billion.

PAL Holdings said flying operations expenses accounted for the biggest spending for the period. Jet fuel cost it P24.26 billion, while maintenance expenses reached P7.42 billion.

The airline's aircraft and traffic servicing expenses -- which consist mainly of landing and takeoff fees and ground handling expenses in airports where its planes landed -- amounted to P9.11 billion.

PAL operated 17,372 roundtrip flights from April to December last year.

The Federal Aviation Administration last week upgraded the country's aviation status to Category 1, allowing PAL and other Philippine carriers to mount direct flights and expand their operations in the United States.

The upgrade would translate to a $160 million in annual savings for PAL, according to its president Ramon S. Ang.

PAL operates a total of 26 weekly flights to the US, with frequencies to Los Angeles, San Francisco, Honolulu and Guam.

PAL operates a fleet of 79 aircraft, which consist of six Boeing 777-300ER, four Boeing 747-400, five Bombardier DHC 8-400, four Bombardier DHC 8-300, eight Airbus A340-300, 14 Airbus A330-300, six A321-231, 28 Airbus A320-200, and four Airbus A319-100.

San Miguel Corp is running both PAL and budget unit PAL Express, after Lucio Tan sold a 49 percent stake in both carriers to the diversifying food-and-beverage conglomerate.

Source: Interaksyon

PHL banks closing down for Holy Week break, assure ATMs to stay well-stocked

Most bank branches in the Philippines will close for the Holy Week break starting Thursday, April 17, but all automated teller machines (ATMs) will be available to accommodate the needs of clients during the long weekend.

The banks said branch operations will resume April 21, Monday.

All branches of Bank of the Philippine Islands and unit BPI Family Savings Bank will be closed, while their ATMs will continue to service clients that include interbank customers.

"We have not scheduled any downtime for them during this time...This is true for both BPI and BPI Family," Teodoro K. Limcaoco, president of the Ayala-led savings bank, told GMA News Online in an e-mail message Wednesday.

"We have actually done extra preparations to ensure our ATMs are up and with cash to service our customers' cash requirements," he added.

Sy-led BDO Unibank Inc. and China Banking Corp. branches will also be closed from April 17 to April 20.

In an e-mail advisory, BDO said its ATMs will continue to handle withdrawals and its online banking channels for other services.

For Chinabank, customers can count on the bank's eBanking channels at over 500 ATMs nationwide, phone banking, internet and mobile banking, and mobile app, marketing services head Ann Ducanes said in a separate text message to GMA News Online.

Philippine Veterans Bank said its ATMs in 50 branches and 84 offsite locations will be available over the long weekend.

It said clients may use the ATMs for their cash needs, and the online banking system via for balance inquiries, bills payments, and money transfers.

The same goes for Philippine Business Bank. All PBB branches will be closed but all ATMs will be online for the holiday break, chairman Alfredo Yao said in another text message.

For Philippine Savings Bank (PSBank), more than 500 ATMs nationwide will be online for withdrawals, inquiries and other transactions during the four-day weekend.

“We anticipate the increased need for cash... [by] our kababayans at this time. We have a dedicated team that will continuously monitor all branch and offsite ATMs to ensure that our clients' banking needs are served during the lenten holiday,” PSBank Branch Banking Group Head Francis Llanera said in a statement.

MEG: Megawide profit jumps more than a third on completion of first PPP project

Megawide Construction Corp grew its profit by more than a third after the company completed its first classroom project under the government’s Public-Private Partnership (PPP) program.

In a regulatory filing, Megawide said its net income amounted to P1.40 billion in 2013, or 38 higher than the P1.01 billion registered in the prior year.

Gross revenues jumped by a third to P10.88 billion from P8.20 billion in 2012 due to the completion of the School Infrastructure Project of the Department of Education.

One of the most active participants of Aquino administration’s PPP scheme, Megawide secured two of the five contracts under the second phase of the School Infrastructure Project.

Megawide and partner World Citi Inc also bagged the contract to construct, operate and maintain the P5.7-billion Philippine Orthopedic Center for 25 years. The consortium submitted the lone offer for the project.

Early this month, the consortium of Megawide and India-based GMR Infrastructure was awarded the P17.5-billion Mactan Cebu International Airport Terminal Project.

The awarding of the project faced a delay because the Department of Transportation and Communications had to resolve conflict of interest issues raised by the second highest bidder, the Filinvest-Changi Consortium.

Incorporated in July 28, 2004 to engage primarily in general construction, Megawide began as the contractor of the SM group, particularly for its high-rise condominiums under SM Development Corp.

Megawide has since diversified by taking on contracts with other property developers and by venturing into the manufacturing of pre-fabricated materials. The company, which went public two years ago, is also eyeing construction ventures overseas.

Source: Interaksyon

US stocks: Earnings lift S&P 500, Nasdaq; S&P's best week since July

Stocks ended a holiday-shortened week with mostly modest gains on Thursday, though the S&P 500 notched its biggest weekly advance since July as Morgan Stanley and General Electric rallied after strong results.

The two were the latest to post earnings that topped expectations, helping to lift the S&P 500 and the Nasdaq to their fourth straight daily advance. Tech bellwethers Google and IBM fell on disappointing figures and limited the broader market's gain. IBM's slide pushed the Dow into slightly negative territory at the close.

With less than one-fifth of S&P 500 companies having reported results so far, about 63 percent have topped earnings expectations, according to Thomson Reuters data, exceeding the 56 percent average over the past four quarters. About 52 percent have beaten revenue forecasts, about even with the 54 percent average over the past four quarters.

Morgan Stanley (MS.N) rose 2.9 percent to $30.76 after the financial services company reported a rise in first-quarter earnings, while Goldman Sachs (GS.N) edged up 0.1 percent to $157.44 after reporting earnings that fell less than expected.

General Electric (GE.N) posted a 12 percent rise in overall industrial profits and its stock gained 1.7 percent to $26.56.

"Today's earnings were mixed, with some beating and others missing expectations, but the results we've seen this week have given the season a positive tone," said Kate Warne, investment strategist at Edward Jones in St. Louis, which has $787 billion in assets. "We had expected a greater impact from weather, but industrials and banks are all doing better, which relieves that area of concern."

Tech shares capped the S&P 500's gain, with Google Inc (GOOGL.O) down 3.7 percent at $543.34 and IBM (IBM.N) off 3.3 percent at $190.01 a day after both reported earnings that failed to impress Wall Street. The results raised questions about those of other tech-sector companies.

The Dow Jones industrial average .DJI slipped 16.31 points, or 0.10 percent, to end at 16,408.54. The Standard & Poor's 500 Index .SPX rose 2.54 points, or 0.14 percent, to finish at 1,864.85. The Nasdaq Composite Index .IXIC gained 9.29 points, or 0.23 percent, to close at 4,095.52.

For the week, the Dow rose 2.4 percent, the S&P 500 added 2.7 percent and the Nasdaq advanced 2.4 percent. The Dow had its best week since December while the S&P 500 closed out its best week since July.

Trading volume was light ahead of the Good Friday market holiday. About 6.1 billion shares traded on all U.S. platforms, according to BATS exchange data, below the month-to-date average of 6.88 billion.

The CBOE Volatility index .VIX, a measure of investor anxiety, fell 21.6 percent over the week, its biggest weekly drop since January 2013.

After the closing bell, Advanced Micro Devices Inc (AMD.N) reported first-quarter results that beat expectations, sending its shares up 2.9 percent to $3.86 in extended trading.

During the regular session, SanDisk Corp (SNDK.O) was the S&P 500's biggest gainer and helped boost the Nasdaq 100 .NDX. SanDisk's stock shot up 9.4 percent to close at $82.99 a day after the company reported first-quarter revenue ahead of expectations.

Baker Hughes (BHI.N) shares hit their highest price since August 2011 after the world's third-largest oilfield services company posted better-than-expected results as revenue in its core North American business rose nearly 7 percent. The stock climbed 3 percent to close at $68.33 after earlier rising as high as $69.78.

UnitedHealth Group (UNH.N) fell 3.1 percent to $75.78 after the health insurer said it has spent more than $100 million to cover a pricey new hepatitis C drug from Gilead Sciences (GILD.O), a higher cost than it expected by "multiples." Peer company WellPoint (WLP.N) slid 3.8 percent to end at $92.
NEW YORK - Stocks ended a holiday-shortened week with mostly modest gains on Thursday, though the S&P 500 notched its biggest weekly advance since July as Morgan Stanley and General Electric rallied after strong results.

Questions from U.S. lawmakers on the cost of that drug prompted a sharp selloff in Gilead in mid-March that lasted for nearly a month. The stock rose 1 percent to $70 on Thursday.

The latest data showed the U.S. economy's health was improving. The number of Americans filing new claims for unemployment benefits rose less than expected in the latest week and came near pre-recession levels. Factory activity in the U.S. mid-Atlantic region expanded in April at a faster clip than anticipated, according to a survey from the Federal Reserve Bank of Philadelphia.

Shares of China's Weibo Corp (WB.O) opened slightly below the $17 pricing of its initial public offering, which was at the lower end of expectations on concerns about the microblogging service's slowing user growth. The stock, however, turned sharply higher in afternoon trading and ended up 19.1 percent at $20.24.

Western Union (WU.N) fell 5 percent to $15.25 after Wal-Mart Stores (WMT.N) said it was launching a domestic money transfer service in partnership with Euronet Worldwide (EEFT.O) subsidiary Ria Money Transfer.

Shares of MoneyGram International (MGI.O), which currently provides money transfer services for Wal-Mart, plunged 17.7 percent to $14.81. Euronet rose 4 percent to $42.44. Wal-Mart gained 0.6 percent to $77.66.

About 56 percent of stocks traded on the New York Stock Exchange ended the day higher while 61 percent of Nasdaq-listed shares ended in positive territory.  - Reuters

Wednesday, April 16, 2014

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Tuesday, April 15, 2014

Strong sales boost Anchor Land's net income in 2013

Anchor Land Holdings Inc saw profit inch up last year on strong take up of its projects.

In a disclosure to the Philippine Stock Exchange, the niche property developer said its net income rose eight percent to P1.11 billion in 2013 from P1.02 billion in the previous year.

Revenues jumped 38 percent to P5.70 billion from P4.14 billion in 2012 as real estate sales climbed 41 percent to P5.08 billion from P3.60 billion over the same period.

“Anchor Land benefitted from the continuing strength of the Philippine economy and the real estate sector,” the company's chairman Stephen Lee said. “This translated to robust demand for our projects from both local and overseas investors, as well as for our property management services.”

Anchor Land will soon turn over the second phase of Solemare in Aseana Business Park in Paranaque City. It is developing the P11-billion Monarch Parksuites to expand its footprint in the Bay City.

Anchor Land continues to focus on Binondo, Manila – home to its core clients, the Filipino-Chinese business elite—with the development of Oxford Parksuites, Princeview Parksuites, and Anchor Skysuites.

This year, the real estate firm plans to build another residential project in Binondo. It will be located on a historical lot along Masangkay St. on which once stood a house that national hero Jose Rizal frequented and where the original Noli Me Tangere draft was kept hidden.

Outside Manila, Anchor Land has embarked on Clairemont Hills, an exclusive project featuring 23 townhouse units in San Juan. The property developer is also building a 16-storey residential tower in the area.

“With our unparalleled financial strength, fortified by the dedication and foresight of our team, Anchor Land is well equipped to stay on the growth path and build the landmarks of tomorrow, today,” Lee said.

This year, Anchor Land is allocating P5 billion for its capital expenditures, higher than the P4.5 billion spent in 2013, as the property developer launches two residential projects in Manila and two warehouse developments in Binondo and Baclaran.

Anchor Land has 11 ongoing projects in various stages of development.

Source: Interaksyon

PLDT says home wireless broadband service grew threefold in 2013

Philippine Long Distance Telephone Co (PLDT) said its home wireless broadband service saw growth tripling last year.

The Home Bro service chalked up P4.5 billion in revenues in 2013, triple what it earned the previous year, according to PLDT.

Last year, Home Bro made several process enhancements to ensure applications can be processed and activated within 24 hours. Together with these improvements, the brand also introduced low-cost plans for first time internet users with basic needs through a full marketing campaign in April last year.

“With the continuous growth in revenues and subscribers of Home Bro, we are offering more innovative plans and bundles for all our customers,” Ava S. Española, PLDT Home Fixed Wireless Solutions head said in a statement.

“The significant increase in Home Bro’s subscriber base can be attributed to its becoming an important part of the Filipino family as an enabler of education for children. This 2014, we continue this thrust as we launch our new bundles to respond to the needs of families for laptops and printers in their homes so that kids no longer go out to accomplish their school assignments,” Española said.

Launched last January, one of Home Bro’s new bundle offers is Plan 1799, which gives subscribers unlimited internet at 2 Mbps, an HP Laptop, and an HP printer for just P60/day. Another bundle, Plan 1069, comes with unlimited internet at 2 Mbps and an HP printer.

“We believe that the internet is society’s great equalizer as it enables a large number of people to get an education. Home Bro is keen on making its reliable service available to all Filipino families to level the opportunities for everyone,” Española said. is the online news portal of TV5, which is a member of the PLDT Group.

Source: Interaksyon

PSEi climbs over 6,600 points on Wall Street rise, PHL GDP

The PSEi climbed beyond the 6,600-level at early trades Tuesday, reflecting optimism over the rebound of Wall Street stocks overnight and expectations good economic results for the first quarter.

The bellwether PSEi was up 27.66 points or 0.42 percent to 6,617.21 as of 10:17 a.m. The broader all shares index increased by 14.94 points or 0.38 percent to 3,990.56.

"The positive cue was from overseas markets, with the Dow Jones up over 100 points last night," Papa Securities Corp. analyst Joanna Capiral told GMA News Online.

US stocks closed higher on Monday as Citigroup reported strong earnings and retail sales were up, giving investors more than enough reasons to take on risk despite a resurgence of geopolitical uncertainties in Ukraine, Reuters reported.

Capiral said the optimism over the first quarter gross domestic product (GDP) fueled the market.
"The Department of Finance said first quarter GDP could reach 7 percent," she said.

Philippine output may reach 7 percent in the first quarter, anchored on strong exports, reconstruction activities, and the roll-out of infrastructure projects, Finance Undersecretary Gil Beltran said Monday.

Source: GMA News

EastWest Bank to issue 500-M preferred shares to meet Basel III capital requirement

EastWest Banking Corp. is going to offer up to 500 million preferred shares and use the proceeds to boost its capital to meet Basel III requirements.

The board of directors approved the plan last Thursday, the bank said in a disclosure to the Philippine Stock Exchange Monday

“ [The board] authorized the bank to issue and list up to a maximum of 500,000,000 perpetual non-cumulative Tier 1 preferred shares at par value of P10.00 per share, that would qualify as additional Tier 1 capital of the bank under Basel 3 regulations,” the bank said.

As of end-December 2013, EastWest registered a  17 percent capital adequacy ration and a 13.8 percent Tier 1 ratio.

EastWest was also tasked by the board bank to create a wholly-owned finance and leasing company.

What the board approved will be presented for ratification by shareholders during the annual stockholders’ meeting on April 25, the bank said.

Basel III is a set of reforms forged by global banking regulators in light of the global financial crisis, to strengthen the industry, principally in terms of capitalization.

Source: GMA News

SM Prime to spend P400B in aggressive five-year plan

SM Prime Holdings Inc. plans to spend P400 billion in capital expenditures in the next five years in hopes of doubling revenues and income as a consolidated property firm of the Sy group, ranking officials revealed Tuesday.

SM Prime targets to have 85 malls – 74 in the Philippines and 11 in China – 41 residential projects, seven office and 10 hotels and eight leisure development by end-2018, CFO Jeffrey Lim told reporters at a briefing after the company's annual stockholders' meeting at the Mall of Asia in Pasay City.

The P400-billion capex will be financed through internally-generated cash and debt, Lim said.

This year, SM Prime will spend over P70 billion, of which 55 percent will finance new malls and expansion, 28 percent for residential projects, and the balance for offices, hotels and convention centers.

Source: GMA NEWS

CHINA BANKING CORPORATION (CHIB): Prices Php8.0Bil rights offering at Php49.50/sh

Rights offer details announced. China Bank disclosed that its stock rights offering will be conducted at an offer price of Php49.50 per rights share, a 21% discount to yesterday’s closing price of Php62.10/sh. The bank is offering up to 161.62Mil shares at the entitlement ratio of 1 rights share for every 8.83 existing common shares held. Assuming full subscription, total gross proceeds would reach Php8Bil


Maintaining HOLD rating; pullbacks could be opportunities to BUY. We currently have a HOLD rating on CHIB with a pre-rights FV estimate of Php56/sh. Accounting for the discount on the rights offering, our FV estimate would be adjusted to Php55.30 effective April 21 (ex-date). We believe that the share price could remain depressed over the short term as the market takes time to absorb the additional shares. Our buy-below price is set at Php48.70 pre-rights and at Php48.00 post the ex-rights date.

Source: COL Financial

Monday, April 14, 2014


As of 11:45 am, PSEi 6,572.53 down 24.43 points or 0.37 percent.

ABS-CBN Corporation: Earnings outperform on non-recurring gains

Earnings up 25%, above COL estimates. For the FY13 period, ABS’ earnings settled at Php2.0Bil, up 25% y/y. Earnings exceeded COL forecasts by 10.6%, by fell below consensus estimates. ABS’s earnings exceeded our expectations mostly due to higher than expected non-recurring revenues. ABS’ non-recurring revenues, mostly comprising of election-related ad placements, settled at Php1.5Bil, 66% higher than our estimates. Without non-recurring items, earnings would have been flat at Php1.9Bil, in-line with our forecasts.

Core businesses perform as expected. ABS’ recurring net revenues settled at Php31.5Bil, up 9% y/y and in-line with COL estimates. Growth in the company’s core businesses was driven by the 8% average ad rate hike for the year, as well as organic growth in its consumer sales businesses. Total operating costs were also in-line with COL estimates, settling at Php30.2Bil, up 11% y/y. The growth in operating costs was mainly driven by 10% growth in production costs due to the reformatting of weak timeslots, especially in the morning block.

Mobile segment registers strong take-up sales, but losses still expected this year. ABS’ mobile segment, which is one of its most notable new segments, is registering take-up sales that are stronger than management initially expected. Management reports that the segment currently has 250,000 subscribers, and is seeing 2500-3000 activations on a daily basis. In light of this, management has revised its breakeven target from 4Mil subscribers to 2Mil subscribers at an ARPU assumption of Php300 per subscriber. Management expects a total of Php700Mil in losses for the year.

Reiterate BUY rating

We currently have a BUY rating on ABS with a FV estimate of Php40.5/sh. We continue to like ABS for its leadership position in the industry, as well as its attractive valuation. Even though ABS’ stock price has risen 15% to Php34.50/sh since we initiated coverage, upside to our FV estimate is still significant at 17.4%. Moreover, ABS is currently trading at an EV/EBITDA of 5.0X, a significant discount to the regional average of 9.2X and GMA7’s 9.4X.

Source: COL Financial

BPI to focus on growing its loan portfolio

The Bank of the Philippine Islands (BPI) will focus on growing its loan portfolio despite the expected increase in interest rates, a bank official said Sunday.

"The overall strategy is to increase our loan book," said BPI global market strategist Antonio Paner.

“The remaining funds available for investments would be placed in relatively shorter tenors as we expect interest rates to eventually rise," he said.

Paner said BPI has allocated a sizeable amount to invest in short-term vehicles.

"As our loan-to-deposit ratio increases, the amount of funds available for investment contracts," he said.

BPI's earnings reached a record P18.8 billion at end-2013 on the back of better deposit levels and lending transactions, with an 18.1-percent return on equity and a 1.9-percent return on assets.

Source: GMA News

George Ty holding firm allots almost P40B for 2014 capex

The listed holding company of tycoon George Ty has set a capital expenditure budget of nearly P40 billion this year, mainly to expand its power generation and real estate businesses.

In a regulatory filing, GT Capital Holdings Inc said Global Business Power Corp (GBPC) is pouring P16.08 billion to construct the 150-megawatt expansion of its 164-megawatt coal-fired power plant in Iloilo. Part of that amount would also fund repairs and maintenance of existing power facilities.

Federal Land Inc is allocating P12.81 billion to develop residential, commercial and retail projects, as well as to finance land banking initiatives.

The parent firm is spending P7.14 billion to acquire direct shares in Charter Ping An Insurance Corp and Toyota Manila Bay Corp (TMBC), as well as to participate in the equity call of GBPC for P2.66 billion.

Metropolitan Bank & Trust Co is investing P2 billion to expand its branch network and renovate existing ones, install ATM machines and upgrade IT systems.

Toyota Motor Philippines Corp is allotting P1.46 billion for capacity expansion, plant rehabilitation and model change.

The balance of the capex will be earmarked for Charter Ping An, TMBC and AXA Philippines.

GT Capital earlier programmed P35-40 billion for its 2013 capex.

The conglomerate's consolidated net income reached P8.6 billion in 2013, up 31 percent from P6.5 billion in the prior year, on the strength of its banking and automotive businesses.

Consolidated revenues surged 359 percent to P105.5 billion from P23.0 billion following the significant growth in revenues from the consolidation of TMPC, Charter Ping An, and GBPC.

Source: Interaksyon

Property, banking units lift Filinvest Group's 2013 earnings

Real estate and banking businesses lifted the earnings of Filinvest Development Corp (FDC) last year.

In a statement, the holding firm of the Gotianun family reported a 12 percent increase in consolidated net income to P6.5 billion last year from P5.8 billion in 2012.

Consolidated revenues jumped 17 percent to P34.8 billion from P29.8 billion in the prior year.

Property and financial services contributed 47 percent and 42 percent, respectively, to FDC’s revenues. Sugar operations accounted for eight percent while hotel operations contributed three percent.

“We look forward to improved performance in the group not only because of the strength of our real estate and banking businesses but also because we are optimistic about the prospects of our other operations,” said FDC president and chief executive officer Josephine Gotianun-Yap.

"Construction of our 405 megawatt power plant in Mindanao is in full swing and expected to be the third major leg of the group by 2016. The FDC strategy is to employ our business experience and strength to nurture these nascent operations to help them become full contributors to the group,” Yap added.

Filinvest Land Inc's net income climbed 14 percent to P4 billion last year from P3.5 billion in 2012 on higher real estate sales and revenues from mall and rental operations.

Net income of East West Banking Corp went up 13 percent to P2.1 billion from P1.8 billion over the same period as a result of double-digit growth in consumer lending and corporate loans and core businesses.

Sugar sales and other income advanced 12 percent to P2.8 billion from P2.5 billion in 2012 due to increased capacity as a result of investments in efficiency improvements.

Hotel revenues and other income increased by 40 percent to P1 billion because of higher occupancy and room rates in Crimson Mactan as well as the addition of Crimson Alabang, which was launched in March last year.

Source: Interaksyon

Century Tuna maker snags deal to distribute coconut water

 The maker of Century Tuna is venturing into the beverage business and the premium canned meat segment, as it explores possible acquisitions and partnerships ahead of the Asean economic integration.

In a briefing last week, Century Pacific Foods Inc president Christopher T. Po said a US company tapped the company to distribute coco water products. The definitive agreement however has yet to be signed.

Century Pacific is leveraging on its extensive distribution network and experience for its foray into the beverage business, Po said.

The Po family owns a privately held company that is supplying the coco water requirements of a "market leader in the US."

Century Pacific is repositioning the Swift brand for its entry into the premium canned meat segment to boost the market-leading share of its canned meat products. The Po family acquired the Swift brand from Concepcion-owned RFM Corp in late 2012.

“The brand has kind of slipped over the years but we saw the opportunity to leverage on our canned meat strengths to that of the brand to serve the needs of higher end of the segment," said Century Pacific chief operating officer Teodoro T. Po.

Canned meat contributed 24 percent to revenues but accounted for nearly half of earnings last year. The company is also in the business of dairy and mixes, canned and processed fish, and tuna export through its brands Century Tuna, 555 Sardines, Argentina Corned Beef, Swift, Angel and Birch Tree.

Century Pacific is scouting for acquisitions and is engaged in "very preliminary" discussion with rivals.

"We believe in what's happening in the Philippines. It's on a higher growth trajectory and opportunities will come up and we're sniffing around in our category and outside," the company’s president said.

Century Pacific is also keen on taking advantage of the opportunities presented by the Asean economic integration, as the company eyes potential acquisitions in the region.

Century Pacific is set to complete a second tin can manufacturing facility in the third quarter. The plant will produce approximately 25-30 percent of its requirements, bringing down costs by 15-20 percent.

Century Pacific is raising as much as P3.33 billion from an initial public offering to repay debt, fund working capital and potential acquisitions, expand production capacity and improve efficiency.

Source: Interaksyon

Skyway Stage 3, NAIA Expressway seen operational by mid-2015

The president of the company operating the Skyway said two projects meant to help ease traffic in Metro Manila would be operational by middle of next year.

"We are required to deliver the first phase -- from Buendia to Plaza Dilao -- by mid of next year and it would be operational by then," Skyway O&M Corp (SOMCO) president Manuel Bonoan told participants of the Economic Journalists Association of the Philippines-San Miguel Corp (SMC) Business Journalism Seminar held in this city.

The P26.7 billion Skyway Stage 3 Project involves the construction of a 14.8-kilometer, six-lane elevated expressway that will connect the end of the Skyway in Buendia to Balintawak.

Citra Central Expressway Corp, the proponent of and concessionaire of Skyway Stage 3, is a joint venture among SMC, Citra Lamtoro Gung Persada and state-owned Philippine National Construction Corp (PNCC).

The project has eight access points, namely Buendia, Quirino, Nagtahan, Aurora Boulevard, E. Rodriguez, Quezon Avenue, Sgt. Rivera and Balintawak.

The project, which would link the South Luzon Expressway (SLEX) to the North Luzon Expressway (NLEX), will provide 6,000 direct jobs and an additional 10,000 indirect jobs during construction.

The project, which started construction early this month, is scheduled for completion by June 2016.

It is meant to help decongest Edsa and reduce travel time between Buendia in Makati City and Balintawak in Quezon City to 20 minutes or less from the existing two hours.

A Japan International Cooperation Agency (JICA) report said traffic congestion in Metro Manila has cost the country P2.4 billion in economic and opportunity losses.

A second project -- the P15.5 billion NAIA Expressway Project Phase 2 -- is likely to be completed by middle of next year, Bonoan said.

The project involves the design and construction of a 7.15-kilometer elevated structure from the terminus of Phase I at Sales Avenue going to Andrews Avenue, Domestic Road, MIA Road, before ending at Diosdado Macapagal Boulevard and going to/from Manila and to/from Entertainment City.

One of the Aquino administration's public-private partnership (PPP) ventures, included in this project is the construction of the 2.20 kilometer six- to eight-lane at-grade road going to the Entertainment City.

SMC, through unit Private Infrastructure Development Corp, won the contract to build the project.

Source: Interaksyon

Cebu Pacific forecasts passenger count hitting more than 17 million this year

The operator of Cebu Pacific expects to carry more than 17 million passengers this year, including the traffic of recently acquired Tigerair Philippines.

Lance Y. Gokongwei, president of Cebu Air Inc (CEB) told reporters last Friday that Cebu Pacific alone would carry an excess of 15 million passengers this year.

He said growth this year would come from both the domestic and international passage businesses.

Load factor at Tigerair improved after CEB took over last month, Gokongwei said, referring to the number of seats taken per flight.

"Since our entry on March 20, we already see dramatic improvements in their load factor because of the distribution that we have created for them. So it’s really working together," he said.

Last month, the shareholders of Singapore's Tiger Airways Holdings Ltd and the Civil Aeronautics Board separately approved the 100 percent acquisition of Tigerair by CEB. The transaction was valued at $15 million.

Gokongwei said Cebu Pacific is helping Tigerair make its product available through the former’s website.

Furthermore, Cebu Pacific will assign four Airbus A320s to Tigerair for its operations.

Source: Interaksyon

Saturday, April 12, 2014

PAL expects $160M in fuel, maintenance savings after FAA upgrade

MANILA - Philippine Airlines (PAL) expects at least $160 million in annual fuel and maintenance cost savings with the lifting of the country's aviation rating to Category 1.

PAL president Ramon Ang told reporters on Thursday night that the airline will use its new aircraft for its Los Angeles and San Francisco flights.

Ang said PAL expects annual savings of $100 million from fuel and $60 million from maintenance costs.

Following the country’s upgrade, the flag carrier will deploy in a month’s time a fleet of newly-acquired Boeing 777-300ER aircraft for its long-haul flights to the US.

“This latest development allows us to deploy our modern and fuel-efficient Boeing 777-300ER fleet to the US, and enables us to explore new destination opportunities in one of the Philippines’ largest passenger markets,” Ang said.

For its flights to Honolulu and Guam, PAL will continue to use its wide body Airbus A330-300s and single-aisle A320-200s.

PAL operates a total of 26 weekly flights to the US, with frequencies to Los Angeles, San Francisco, Honolulu and Guam.

After more than six years in Category 2, the Federal Aviation Administration yesterday announced the Philippines' return to Category 1 safety rating, allowing local airlines to mount more flights to the US.

PAL operates the widest route network among all other Philippine carriers, with 29 domestic and 35 international destinations.

Source: Interaksyon

Ayala raises $300 million from equity-linked bond sale

MANILA – Ayala Corporation (AC) has raised $300 million from the issuance of bonds that can be exchanged for shares in the conglomerate's real estate arm.

In a disclosure to the Philippine Stock Exchange, the Philippines' oldest conglomerate said its wholly owned unit AYC Finance Limited issued the bonds, carrying an interest rate of 0.5 percent per year, exchangeable to common shares of Ayala Land Inc (ALI) at P36.48 per share, a premium of 20 percent over its closing price on Thursday.

The offering was 2.5 times oversubscribed, AC president Fernando Zobel de Ayala said during the conglomerate's stockholders' meeting.

ALI shares fell following the Ayala group’s disclosure but AC chief financial officer Delfin Gonzalez clarified the issuance will not result in a dilution of ownership in the property firm because the shares to be exchanged will come from the conglomerate's stake in the real estate firm.

AC’s holdings in the property company will fall to 46.5 percent from 49 percent if all bondholders will exchange their debt for shares in ALI.

In explaining why AC opted to link the offering to its real estate business, Gonzalez said: "We decided not to use Ayala Corp because the Ayala Corp share price has a conglomerate's discount to net asset value. We decided to use Ayala Land because Ayala Land comprises the largest proportion of the value of Ayala Corp."

The offering is the first equity-linked international issuance by a Philippine issuer in the past two years. It has also achieved the lowest cost of financing across Asia ex-Japan in 2014.

"This offering is important as it enables us to continue the pursuit of investment opportunities in new growth areas and the realignment of Ayala Corporation’s portfolio mix to further optimize shareholder returns. Ayala Land remains an important and integral part of Ayala Corporation. It is a significant growth driver of the Ayala group and we continue to share synergies as we work on targeted projects particularly in energy and transport infrastructure,” AC chairman Jaime Augusto Zobel de Ayala said in a statement.

The Ayala group intends to use proceeds from the issuance for general corporate purposes and investments, particularly those at the parent level.

The offering is expected to close on or about May 2. The bonds will be exchangeable starting June 11 until the tenth day prior to its May 2, 2019 maturity date.

Starting May 2, 2017, bondholders will have the right to require the company to buy back their debt for cash at a price equal to 100 percent of the principal amount of the bonds. On the same date, AC can call the bonds if the closing price of ALI shares for any 30 consecutive trading days is at least 130 percent of the exchange price.

Goldman Sachs International acted as the sole international bookrunner of the offering and BPI Capital acted as sole domestic lead manager.

Source: Interaksyon