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Saturday, June 28, 2014

Jollibee eyes US acquisition, aggressive expansion in existing markets

The Philippines' leading fast-food chain is looking to expand its footprint in the United States, even as it unveils another wave of store openings back home.

On the sidelines of its stockholders meeting today, Jollibee Foods Corp (JFC) chairman Tony Tan Caktiong told reporters that the company "would like to have more play in the US market."

"Probably we are looking at a certain acquisition in the US. In terms of when we see it, there's no timetable yet. We are open to anything that may come up. It could be in the same category. We are still very flexible. More important is we want to go to a brand that is already growing. We don't want to go in a brand that needs to be turned around," Tan Caktiong said.

Ysmael Baysa, JFC chief financial officer, said the company's operation in the US was "profitable," with sales growing by 9.9 percent in 2013.

JFC's operation in Asia -- particularly in Brunei, Singapore, Hong Kong and the Middle East -- are also making money, except those in Vietnam and China.

"In China, the brand is profitable, but we have a lot of overhead because of our central plants and head office there. It 's quite manageable, not big numbers," Baysa said, referring to the losses of Jollibee's China operations.

JFC's sales growth in the Philippines expanded by 11.3 percent in 2013, while that in China was up 19.7 percent. Sales in the rest of Southeast Asia and the Middle East jumped by 32.2 percent.

Baysa said JFC has allotted P6.3 billion for capital expenditures to finance the opening of 300 stores this year, of which 200 will be in the Philippines and 100 abroad.

"The business continues to be very strong both in the Philippines and worldwide. We continue to experience double digit growth rates in some branch just like in several quarters," Baysa said.

Tan Caktiong said the outlook of the company is very positive this year because the Philippine economy is very strong.

"We look forward to another year of record performance in 2014, as we accelerate our profitable growth, expand our business in key markets around the world and reinforce our competitive strength," he said.

The government is aiming to grow the Philippine economy by 6.5-7.5 percent this year.

In the first quarter of the year, the homegrown fast food giant recorded a net income of P1.08 billion, up 20.50 percent from a year ago's P895 million.

System-wide retail sales, a measure of all sales to consumers from company-owned and franchised stores, jumped 14.6 percent to P27.31 billion from P23.84 billion in 2013 -- making the first quarter's performance the highest quarterly organic sales growth in 5 years.

The Philippine business posted a 12.3 percent expansion in system-wide sales on the back of a double-digit growth of Greenwich, Red Ribbon and Mang Inasal, coupled with higher same-store sales due to increased volume and consumer visits. The Jollibee group also raised selling prices to cover the increase in cost of raw materials.

Compared to domestic operations, JFC’s international business expanded at a faster pace of 24.3 percent with Southeast Asia and the Middle East business growing by 39.1 percent, China by 22.3 percent, and the US by

- Interaksyon

Friday, June 27, 2014

COL Model Portfolio: As of: June 26, 2014

As of: June 26, 2014

TickerCompany NamePriceRatingFVBelow

Banks and Financials










Wednesday, June 25, 2014

RANDOM WALKER | Selling on bad news can never be good (or, how the mind plays tricks on you)

Since the start of April, the Philippine equities market has not seen much action, listlessly bouncing around the range bounded by 6,500 at the bottom and 6,900 at the top.

The same surface composure, however, cannot be said of the much-reduced number of investors and speculators remaining in the market. This depleted number of market players and their tendency to panic similar to how a crowd would respond to a zombie attack in a Grade B movie may both be attributed to market and investor psychology. More precisely, how otherwise rational people can be so taken up in the moment, when they set aside all they know and swap these for emotion-based decisions.

A recent case in point would be the government’s release on May 29 of a disappointing first-quarter economic growth of 5.7 percent, against forecasters’ consensus of 6.4 percent. Not a few so-called “market experts” subsequently predicted the end of the market as we know it, based on their belief that the GDP numbers directed the market’s trend. It does not. Moreover, given an information-efficient market, the term “market expert” can be an oxymoron.

Thus, on the day of the GDP release, the benchmark PSE index immediately responded by losing 1.6 percent and further lost an additional 0.4 percent the next day to 6,647. The index has since recovered above 6,800, and appears to be on its way to retest the year’s high of 6,908. Clearly, the market’s abrupt drop on the GDP news was a knee-jerk reaction that had no lasting effect on the overall trend.

Those who sold on the bad news must, justifiably, feel real dumb. The bedrock lesson is not only the fact that it is not good to sell on bad news. People have psychological biases that they may not be aware of but which determine their investing decisions that inevitably lead to losses or less than optimum returns. The financial literature labels these irrational tendencies as cognitive biases.

One of the most basic cognitive biases to which everyone in the market can be prone to would be loss aversion, coupled with the disposition effect. Loss aversion refers to people’s tendency to hate losses from the status quo, to the point that they would attach higher emotional content (fear and loathing) to losing, say, P10,000, than to the emotional thrill of winning the same amount of P10,000 (just meh). People with a high sense of loss aversion would be likely to sell in a panic during a market meltdown.

The disposition effect would tend to dig a deeper hole for people with high loss aversion. The effect refers to the inclination of people to sell a stock that has climbed for a short while with minimal gains while holding on for a long time to the stocks that are losing money. People tend to sell their winners and hold on forever to their losers. When a stock they purchased at P100 drops to P50 before recovering to P75, people would prefer not to take the loss at this point but would wait for the stock to go back to their purchase price. It may never do so. But still they wait, with the eternal patience of Penelope weaving her shroud.

Availability bias and the 'disappointing' GDP numbers

Most market commentators and analysts fell into the behavioral error called “availability bias.” When these experts are called to predict or forecast the probability of a certain event, they will do so on the basis of the most easily available similar event in the past. If an event happened in the recent past, this event is “available” to the experts’ perception. While this is not necessarily a cognitive error, the experts tend to inflate the probability of recent past events happening again in the future.

In this instance, the task was to predict how the market would react to the news of below-par GDP growth. The most available event would then be the global financial crisis, when the sudden slowdown in global growth in 2008 led to near-zero growth in the domestic economy and a 48 percent plunge in the PSE index. Obviously, from today’s perspective, this year is no way near the events of 2008.

A bad choice of a starting point, the most “available” event, would be compounded by the cognitive bias called "probability neglect." Being depressive realists, or reverse Pollyannas, market investors tend to focus on the bad news and worst-case scenarios, letting their emotions run amok to cloud their decision- making. Certainly, the market risked a drop towards the 6,500 floor, with a breakdown of this major support imminent, following the GDP news. The probability for this happening was real, but was it high?

Corporate earnings continue to be within expectations despite the GDP slowdown. Furthermore, economic growth is slowing, as expected, but not to the levels of 2008. The bias towards negativity had less probability, as it turns out.

The market’s emotional rollercoaster, separate from the actual trend in the market index, has likewise led to thinner crowds playing in the market. Just a year or so ago, it used to be that everyone and his long-lost twin played the market and had something to say about its prospects, mainly that the index is headed towards 7,000 and beyond.

Now, the investor multitudes have dispersed and this stock market column is left preaching to the choir. This too is a product of the disposition effect, which may be seen in the market’s trading volume trend. During the bull market, market trading expanded to exceed P10 billion a day, as players bought and sold stocks for short gains. Now, with the market having dropped from the highs, trading volume likewise dropped, indicating that players who got trapped in the market are likely still holding on to their losing positions.

(An MBA degree holder, the author used to be research head of BusinessWorld, and before that of Anscor Hagedorn Securities)

- Interaksyon

Monday, June 23, 2014

SMPH: Draws portions of debt facility for China expansion

SMPH has already drawn portions between US$50Mil to US$100Mil from its US$300Mil syndicated loan for its shopping mall expansion in mainland China. The company is spending for the construction of SM Tianjin, which will be its largest shopping center when it opens in 2015 with a total gross floor area of 540,000 sqm. The loan will also fund the development of a new mall in the city of Yangzhou located in Jiangsu province, which will be constructed next year and completed in 2016.

- Col Financial

MEG: Acquires majority stake in GERI

MEG has ventured into the tourism business with the acquisition of an 80.4% stake in Global-Estate Resorts, Inc. (GERI), the country’s biggest tourism estate developer. The acquisition added 3,000ha to MEG’s land bank bringing the company’s total land bank close to 4,000ha. The acquisition also includes GERI’s properties in Tagaytay, Alabang, Iloilo, Cagayan de Oro and Boracay. Among GERI’s biggest projects is the 1,149ha Twin Lakes integrated tourism estate in Tagaytay. In Boracay, GERI is developing the 150ha Boracay Newcoast which occupies 14% of the entire island. GERI is also developing the 561ha Southwoods City, envisioned to be the next central business district south of Manila. Finally, GERI has a 170ha township being developed in Iloilo called Sta. Barbara Heights which will be connected to the new Iloilo International Airport. We currently have a BUY rating on MEG with a FV of 5.48.

- Col Financial

Thursday, June 19, 2014

Pilipinas Shell eyes IPO this year

The Philippine unit of Royal Dutch Shell is eyeing to undertake an initial public offering (IPO) this year.

"We are preparing for an IPO," Edgar O. Chua, Shell country chairman, told participants of a forum in Makati City today.

After the forum, Chua said the planned IPO would be pursued "hopefully this year," adding that the listing at the local bourse would depend on market conditions.

In 2013, the Department of Energy (DOE) asked Pilipinas Shell Petroleum Corp (PSPC) to explain its failure in the last 15 years to comply with the Oil Deregulation Act, which requires refiners to undertake an IPO.

Shell, however, had said it needed time to come up with a final investment decision on the expansion of its 110,000 barrel per day refinery in Tabango, Batangas, to determine how much it would need to raise.

The facility is one of only 2 oil refineries in the country, the other one owned by homegrown Petron Corp.

To date, only 2 oil companies -- Petron and Phoenix Petroleum Philippines Inc -- are listed at the Philippine Stock Exchange.

- Interaksyon

Tuesday, June 17, 2014

First Phil Holdings mulls bid for provincial airports PPP project

First Philippine Holdings Corp (FPH) is interested in the provincial airports that the government is auctioning off as a bundle under its Public-Private Partnership (PPP) Program.

"We will look at it," FPH president Elpidio L. Ibañez told reporters today.

The government is bidding out the operation and maintenance of the following international airports as one PPP project: Laguindingan, Panglao, Puerto Princesa, Bacolod, Davao and Iloilo.

Ibañez said the company is studying other projects that the Aquino administration will bid out.

“We'll still look at the projects. It also depends on the timing. Kasi just to study a project takes a lot of time and effort," he said.

FPH earlier partnered with Malaysia Airports Holdings Berhad for the P17.5-billion Mactan-Cebu International Airport Project, but lost to the GMR-Megawide Consortium.

In the first three months of the year, Lopez-owned FPH posted a net income of P2.2 billion, lower by P1.1 billion from last year's P3.8 billion. Consolidated revenue amounted to ₱23.2 billion, 5 percent lower than the previous year’s ₱22.2 billion.

- Interaksyon

Monday, June 16, 2014

Tanduay to double exports to the U.S.

The liquor company of tycoon Lucio Tan is boosting its sales to the United States as it prepares to sell its premium rum to the Philippine market.

Tanduay Distillers Inc chief financial officer Nestor Mendones last week said the company targets to double the sales of Tanduay Asian Rum to 3,000 cases in the US this year after selling 1,500 cases last year.

Tanduay is also covering more ground in the US with the addition of 3 to 4 more states that will allow the company to penetrate the lucrative cities of Los Angeles and New York.

"We also plan to sell it locally in select stores. We are just arranging the pricing and some issues because it was approved initially for exports. We will now have a product in the premium segment of the market," Mendones said.

The company’s push to the overseas market is part of its effort to transform Tanduay into a global brand. Established in the Philippines in 1854, Tanduay Rum ranks second behind Bacardi in worldwide sales, according to an AC Nielsen Retail Study in 2011.

Tanduay is banking on its Compañero brandy blend and Tanduay Rum Five Years to surpass last year’s net income after realizing a net loss of P11 million in the first quarter on higher cost of raw materials and expenses.

Tanduay’s net income last year fell 82 percent to P185 million, which included one-time expenses of P105 million arising from the closure of the old plant in Quiapo, Manila.

Tanduay has suffered from declining volumes because of intense competition and higher taxes ushered in by the Sin Tax Reform Law. So far, the company has seen a recovery in sales volumes with figures in April showing a 10 percent year-on-year growth.

Tanduay is part of LT Group, which has interests in banking, tobacco, real estate and beverage.

- Interaksyon

Megaworld earmarks P230 for capex until 2018

Megaworld Corp has set a P230-billion, five-year warchest for the expansion of all its real estate products across its various township developments in the country.

On the sidelines of the company's 20th listing ceremony, Megaworld senior vice president Jericho P. Go said the condo developer's capital expenditure (capex) until 2018 will be used to beef up its residential, office, hotels, commercial and retail projects as well as its land bank of 300 hectares.

Of the total capex, P40 billion will be earmarked for expansion this year, said Megaworld investor relations officer John Hao. The subsidiary of Alliance Global Group Inc will fund its five-year spending program through internally generated funds and debt issuances.

The total capex excludes the spending program of Megaworld's middle-income arm, Empire East Land Holdings, and affordable housing developer, Suntrust Properties.

"As we continue to break old records and set new trends in the Philippine property market, we are motivated to work even harder to maintain our leadership position as the no. 1 residential condominium developer and BPO office landlord in the country,” said Megaworld chairman Andrew Tan.

Megaworld is set to roll out an average of at least 10 residential projects and six office towers every year. It is also expected to open new commercial spaces in Quezon City, Taguig City, Makati City, Cebu, Iloilo and Davao in the next five years.

Megaworld has allocated P80 billion to develop its townships in Iloilo, Cebu and Davao in the next 10 years.

By 2018, rental income will account for bulk of earnings with a share of 50 percent, up from its current share of 40 percent, while the contribution of residential development will go down to 40-45 percent.

Megaworld is on track to have one million square meters of office space in the next five years, Go said.

"We have more opportunities to pursue. In terms of track record, we have a very good upward," Go said.

A pioneering developer of live-work-play lifestyle concepts, Megaworld introduced this year its newest township in Woodside City, a P35-billion "green" township development along C5 in Pasig City. It also launched Davao Park District, its first township in Mindanao and is positioned to be a central business district.

Aside from building new mixed-use projects, Megaworld has announced the expansion of Eastwood City in Quezon City and The Mactan Newtown in Lapu-Lapu City.

The real estate firm expects earnings to grow by double digits this year, Hao said. The firm's earnings climbed by nearly half to P2.69 billion in the first quarter from P1.81 billion in 2013 on the strength of its property development and leasing businesses, coupled with extraordinary gains.

In the last five years, the company posted a compounded annual growth rate of 18-20 percent.

Megaworld has become the holding firm for Tan's real estate assets following the consolidation of Empire East and Suntrust Properties, allowing the company to capitalize on real estate opportunities and to capture the expected growth momentum of its affiliates.

Megaworld is also acquiring AGI's stake in GERI, paving the way for completion of the consolidation process of all real estate businesses under the Megaworld brand.

- Interaksyon

Saturday, June 14, 2014

Puregold takes in Japan's Lawson for a cut in Philippine convenience store business

Puregold Price Club Inc., operator of the supermarket chain bearing its namesake, is entering the convenience store business, clinching a deal to open Japan-based Lawson Inc. convenient stores in the Philippines.
In a disclosure to the Philippine Stock Exchange Friday, Puregold said it entered into a joint venture agreement with Lawson Asia Pacific Inc. and Lawson Inc. to build and operate convenient stores in the Philippines.
Puregold accounts for 70 percent in the partnership with Lawson having 30 percent.
Major retailers in the Philippines are expanding toward the convenience store space as competition and demand for the business grows.
This could be attributed to the growth of the business process outsourcing (BPO) industry and the changing lifestyle of the people due to improving income of the middle class, Peter Lee U, University of Asia and the Pacific (UA&P) School of Economics dean, said in a phone interview.
"The economy has been growing, helped by remittances and the BPO sector. The consumption power of the public is also increasing," he said.
The format, which operates 24/7, will also allow the retailers to capture the BPO market.
"Most convenience stores are located in commercial areas, and this is a reflection of the growing BPO, call center areas, which are also operating 24/7," U said.
In a separate phone interview, Puregold Investor Relations officer Jimmy Perez said the agreement, signed on June 12, formed a joint venture vehicle called DG Lawson Inc.
"Lawson disclosed to the Japanese Stock Exchange it targets to open 500 stores by 2020 in the [Philippines]," he said.
The decision to go into the convenience store business is a "natural extension of Puregold's presence in the local retail landscape," the disclosure read.
"It's a different format from our present businesses," Perez said. At present, the company operates hypermarkets through "Puregold Price Club," supermarkets under "Puregold Junior" and discounters through "Puregold Extra."
It also has S&R Membership Shopping, a wholesale and retail supermarket chain which caters mostly to registered members.
"We're basically going into food service with Lawson," the company official added.
According to its website, Lawson is a Japanese retailer which operates over 11,000 convenience stores throughout Japan. It also operates stores in China, Thailand, Indonesia and Hawaii.
In April, the SM Group said it intends to operate convenience stores this year as part of its business expansion and strategy.
The Villar group of former Senator Manuel B. Villar is also joining the fray via All Day which was originally called Finds Store.
In November 2012, Ayala Land brought Japanese convenience store FamilyMart into the Philippines after its joint venture with Tantoco-led Rustan's group signed a shareholder agreement with FamilyMart Co. Ltd. and Itochu Corp. 
The Gokongwei group, under Robinsons Convenience Stores Inc., has been operating Mini Stop since 2001. Mini Stop is a Japanese convenience store chain owned by the Mitsubishi Group of Japan.
Meanwhile, Philippine Seven Corp. is the local franchise holder of 7-Eleven convenience stores.

- GMA News

Century Properties secures $30M funding from int'l private equity firm

Century Properties Group Inc has secured funding for its mixed-use tower in Makati from an affiliate of one of the world's largest private equity fund managers.

In a disclosure to the Philippine Stock Exchange, the property company of former ambassador Jose EB Antonio said wholly owned subsidiary Century City Development Corp signed a $30-million secured facility agreement with Golden First Century Pte Ltd.

Golden First is an affiliate of Phoenix Property Investors, which has approximately $4.7 billion of assets under management.

Phoenix invests on behalf of some of the world’s leading institutional investors and its portfolio consists mainly of multi-residential developments, retail and office properties in key gateway cities across Asia. It has offices in Hong Kong, Shanghai, Singapore, Taipei and Tokyo.

Proceeds from the facility will be used to partly finance the development of Century Spire located in Century Properties' vertical mixed-use community Century City in Makati City.

The 60-storey Century Spire will have 98,954 square meters of gross floor area, over 500 residential units, and 27,047 square meters of gross office space that will be retained by Century for commercial leasing.

Century Properties is launching P9.5 billion worth of residential and office developments in the second half of the year. The projects are Forbes Media Tower in Century City, the sixth tower at Acqua Private Residences in Mandaluyong and the first residential tower at Azure North in Pampanga, its first project outside Metro Manila.

Century Properties' profit rose 3 percent year-on-year to P513.06 million in the first quarter from P500.56 million in 2013. Consolidated revenues jumped by a tenth to P2.85 billion from P2.60 billion over the same period.

- Interaksyon

Aboitiz-Ayala tandem tops bidding for Cavite-Laguna Expressway Project

The joint venture of Ayala Corp and Aboitiz Equity Ventures has topped the bidding for the P34.5 billion Cavite-Laguna Expressway (CALAX) Project.

During the opening of bids held today at the Department of Public Works and Highways (DPWH), Team Orion submitted the highest bid of P11.65 billion.

Team Orion's bid narrowly beat the P11.33-billion offer of MPCALA Holdings, a unit of Metro Pacific Investments Corp (MPIC). MTD Capital Berhad, the Malaysian group that built the Skyway, submitted an offer of P922 million.

Only three groups participated in the bidding after the DPWH disqualified Optimal Infrastructure Development Inc (OIDI), a unit of San Miguel Corp, because of a defective bid security.

Optimal Infrastructure would have won the bid after authorized representative Raoul Eduardo C. Romulo said it offered P20.105 billion for the project.

San Miguel had said its disqualification would come at the expense of the public, citing its aggressive bids, such as the P11-billion for the NAIA Expressway Project, which the company bagged. The conglomerate yesterday said it may seek court redress.

MPCALA had written DPWH to point out that OIDI didn't comply with bidding rules, alleging that the bid security had an invalid period and that the proposal was "not properly packaged, sealed and labeled."

The P35.4-billion CALAX involves the financing, design, construction, operation and maintenance of a four-lane, 47-kilometer closed-system toll expressway connecting the Cavite Expressway (CAVITEX) and the Southern Luzon Expressway (SLEX).

- Interaksyon

Iraq conflict weighs on PH stock market

Philippine share prices tumbled on Friday as violence in Iraq triggered profit-taking in the local equities market.

At the Philippine Stock Exchange, the benchmark index shed 24.23 points, or 0.36 percent, to close at 6,784.95. The mining and oil counter gave up 1.18 percent to pull all counters in the red.

Decliners beat advancers, 121 to 57, while 41 issues were unchanged. Value turnover improved to P7.76 billion from P7.61 billion last Wednesday, as 1.84 billion shares changed hands. The market was closed yesterday for the Independence celebration.

The most actively traded stocks were BDO, Ayala Corp, SM Investments, Universal Robina and Alliance Global. IRipple, Da Vinci Capital and I-Remit were the top gainers, while Now Corp, Island Information and Abacore Capital were the biggest losers.

The local market tracked the overnight weakness on Wall Street with the S&P 500 dropping 0.7 percent to 1,930.11 and the Dow Jones Industrial Average falling 109.69 points, or 0.7 percent, to 16,734.19.

Three years after US troops pulled out of OPEC's second-biggest oil producer, violence is again on the rise in Iraq, threatening to escalate into an all-out sectarian conflict and pusing oil prices to an 8-month high.

- Interaksyon

Tuesday, June 10, 2014

PH stock market bucks regionwide ascent on valuation concerns

Philippine share prices slipped on Tuesday as the local market continued to consolidate amid concerns that its overvalued.

At the Philippine Stock Exchange, the composite index fell 24.75 points, or 0.36 percent, to close at 6,777.98. All counters finished in the red with the property index leading the way with losses of 0.90 percent.

Decliners dominated advancers, 105 to 67, while 42 issues were unchanged. Value turnover improved to P7.99 billion from yesterday's P6.24 billion, as 1.76 billion shares changed hands.

Most actively traded stocks were PLDT, Ayala Land, Universal Robina, EDC and BDO. Top gainers were Now Corp, Vitarich and Pacifica, while the biggest losers were United Paragon, IP E-Game and PBCom.

"The view that the market is overvalued is becoming more of a consensus view. Several funds are overweight on emerging markets except the Philippines because of high valuations. We are somehow coming down to Earth after reaching lofty valuations for a pretty long period of time," said Jose Vistan of AB Capital Securities Inc.

The wake-up call came from a slowdown in economic expansion in the first quarter, raising doubts about corporate growth, said Vistan.

The Philippine Statistics Authority reported today that exports at the start of the second quarter were flat because of weak demand for electronic products.

Overnight, US stocks advanced, with benchmark indices extending their record run, on reports of mergers and acquisitions and an improving outlook for the world's largest economy. The Standard & Poor’s 500 Index rose 0.1 percent to 1,951.27, while the Dow Jones Industrial Average gained 18.82 points, or 0.1 percent, to a record 16,943.10.

Asian stocks also rose, buoyed by the record-breaking rally in Wall Street.

- Interaksyon

Pancake House to increase capital

Pancake House Inc is beefing up its capital in preparation for future share issuances.

In a disclosure to the Philippine Stock Exchange, the listed casual dining restaurant operator said it will increase its capital stock to P1.4 billion from P400 million.

The capital stock hike will create an additional 740.79 million authorized and unissued shares that will be “readily available for issuance by the company if and when deemed necessary and appropriate by its board of directors,” Pancake House said.

“We plan on infusing more resources to our brands to keep them relevant in an increasingly competitive landscape. At the end of the day, our surest path to business success and consumer loyalty is a strong commitment to quality and service,” Robert Trota, president and chief executive officer of Pancake House, said in a statement.

The capital stock hike will also support its declaration of a 100 percent stock dividend amounting to 259.21 million common shares at a par value of P1 per share, or one share for each share held, from the unrestricted retained earnings of the firm at end-2013.

Pancake House has yet to determine the record and payment dates for the stock dividend declaration.

In February, the Max's Group completed the takeover of Pancake House, acquiring 89.95 percent of the listed firm's outstanding capital stock.

PHI operates restaurant brands, namely, Pancake House, Dencio's, Kabisera ng Dencio's, Teriyaki Boy, Sizzlin' Pepper Steak, Le Coeur De France, The Chicken Rice Shop, Maple and Yellow Cab.

Aside from the Filipino heritage brand that started in 1945, Max's has brought the popular international brands Krispy Kreme and Jamba Juice to the Philippines.

Pancake House posted a net income of P29.7 million in the first quarter of 2014, down from P40.55 million in the prior year.

- Interaksyon

San Miguel sees revenue share of new businesses hitting 76 pct this year

San Miguel Corp (SMC) expects its new businesses to grow by at least a fifth this year, boosting their revenue contribution to the diversified conglomerate.

On the sidelines of the firm’s stockholders meeting, SMC president Ramon S. Ang told reporters that the refinery upgrade of Petron Corp and the consolidation of the Southern Tagalog Arterial Road (STAR) will give a lift to revenue.

Last year, new businesses accounted for 72 percent of revenue and climbed seven percent to P750 billion.

"Because of the faster growth of the new businesses, their share may reach 76 percent," Ang said.

San Miguel’s food, beverage and packaging business will grow by 5-10 percent this year after expanding by 2 percent in 2013 as volumes recover from intense competition and higher excise taxes.

San Miguel has been trimming its stake in its traditional businesses of food, beverage and packaging since 2007 to support its diversification into high-growth sectors of infrastructure, power, oil retailing, telecommunications and mining.

It recently entered the airline business through the acquisition of a 49 percent stake in Philippine Airlines (PAL).

- Interaksyon

Monday, June 9, 2014

FMIC to launch P3B fixed-income ETF this year


The investment banking arm of the Metrobank group is launching its second exchange traded fund (ETF) later this year.

First Metro Investment Corp (FMIC) president Roberto Juanchito Dispo last week told reporters that it will roll out a fixed-income ETF with an initial capitalization of P3 billion.

"We're very keen on launching an ETF that will track the bond index in the country. The fixed-income market in the Philippines is much deeper than the equity markets. We're laying the groundwork. Hopefully, before end of the year, we will be able to do it," Dispo said.

In introducing its new ETF, Dispo noted the robust Philippine fixed-income market especially with credit rating agencies raising the country’s sovereign debt score to investment grade.

"The recent credit upgrade put us on the radar screen of regional and global investors so the opportunity is very ripe to for us to launch an ETF tracking the bond index. That will allow opportunities for investors to buy directly corporate and government securities issuances simply by investing in that ETF fund," Dispo said.

FMIC was the company behind the country's first ETF, the First Metro ETF, which reflects the performance of the PSE index (PSEi), a basket of 30 publicly traded shares regarded as the benchmark of the market's overall performance.

Considered as the world's fastest growing asset class, an ETF is similar to a mutual fund that tracks an index but is traded on a stock exchange.

To promote awareness on bond trading, FMIC is launching a bond exchange challenge that will be open to all universities in the country.

The competition will be similar to the Stock Exchange Challenge, a partnership with the Philippine Stock Exchange that has attracted about 120 universities. The competition offered a prize money of P150,000 for the winning team.

"We hire the winners. These are the crème de la crème," Dispo said.

- Interaksyon

Monday, June 2, 2014

P35.4B Cavite-Laguna Expressway gets four bids, says DPWH

Four groups on Monday made a bid for the P35.4 billion Cavite-Laguna Expressway project, a public-private partnership initiative of the Department of Public Works and Highways (DPWH).

According to the DPWH, the investors vying for the PPP project are Alloy MTD Philippines of Malaysia, Team “Orion” of Ayala Corp. and Aboitiz Group, MPCALA Holdings Inc. of Metro Pacific Investments Corp., and Optimal Infrastructure Development Inc. of San Miguel Corp.

The department will issue a for the submission and opening date of the financial offer by bidders that will pass the technical hurdle, DPWH Secretary Rogelio Singson told the representatives of the investors. "We hope to complete the process by Friday," he said.

At this point, the Special Bids and Awards Committee and the Technical Working Group will review the legal and technical proposals of the participants and see how well they have met the requirements, DPWH Undersecretary Rafael Yabut said.
The project involves financing, design, construction, operation and maintenance of a four-lane, 47-kilometer tollway linking South Luzon Expressway and Manila-Cavite Tollroad Expressway.

- GMA News

Belle board approves transfer of gaming assets to Sinophil

The board of Belle Corp has approved a reorganization that involves transferring the company’s gaming assets to subsidiary Sinophil Corp.

In a disclosure to the Philippine Stock Exchange, Henry Sy-owned Belle said its board approved the transfer of its 100 percent stake in Premium Leisure Amusements Inc (PLAI) and its 34.5 percent stake in Pacific Online Systems Corp to Sinophil.

Sinophil is another Sy-controlled company that holds investments in gaming and resorts. Before a change in its primary purpose in 1997, Sinophil used to be engaged in oil exploration.

PLAI is part of the consortium that holds the license for City of Dreams Manila, the casino resort that Belle and Melco Crown Philippines are building at the Entertainment City of state-run Philippine Amusement and Gaming Corp (Pagcor).

Despite giving up its interest in PLAI, Belle would continue to receive rental income, as it would retain direct ownership of the land and building on which City of Dreams Manila would rise.

Belle will also retain direct ownership and continue to develop its other assets, principally its properties in the Tagaytay Highlands and Midlands complexes, including surrounding residential and leisure assets of over 800 hectares of undeveloped land.
The reorganization is expected to be completed in August.

Belle earned P309.90 million in the first quarter, a 60 percent drop from the P777.8 million in the same three months of last year.

The 2013 income figure includes a non-recurring gain of P949.6 million received from the Philippine unit of Melco Crown Entertainment Ltd (MCE) upon the commencement of the Macau-based casino operator's lease on Belle's property, the site of the City of Dreams Manila integrated resort project.

Taking out the extraordinary gain, Belle’s consolidated profit would have surged by 174 percent in the first quarter of 2014.

- Interaksyon

Metro Pacific plans P100B capex for 2015-16

Metro Pacific Investments Corp (MPIC) plans to raise capital spending over the next two years for its infrastructure and power businesses.

David J. Nicol, MPIC chief financial officer, told reporters last week that the company's capital expenditures may reach P50 billion each for 2015 and 2016.

"For the group, I could see that Meralco is investing in power generation, and for AFCS and LRT Line 1 Cavite Extension Project, if it will be awarded to us," Nicol said.

MPIC controls Manila Electric Co, and is part of Light Rail Manila Consortium, the lone bidder for the P64.9-billion LRT1 Cavite Extension Project. MPIC also is part of AF Consortium, which earlier won the bidding for the P1.72-billion Automated Fare Collection System, a project that will provide a common ticket for the LRT and MRT train services.

For 2014, MPIC has set aside a P40 billion capex.

Nicol said MPIC, which owns 55 percent of Light Rail Manila, would infuse P4-5 billion in the consortium. Ayala's AC Infrastructure owns 35 percent, while Australia’s Macquarie Infrastructure Holdings holds the remaining 10 percent.

Nicol said MPIC is optimistic that its proposal for the LRT1 Cavite Extension Project complies with the requirements of the Department of Transportation and Communications (DOTC).

He said the consortium expects to make money in the first 10 years of the 32-year contract, earlier than the other bidders' projection of 20 years.

DOTC said the LRT1 Cavite Extension Project involves the construction of 11.7-kilometer track from the terminus of the LRT Line 1 at the Baclaran Terminal, to the Niyog Station at Bacoor.

More than 500,000 commuters everyday use LRT1, which runs from Baclaran in Pasay City to Roosevelt in Quezon City. The southern part of Metro Manila and neighboring Cavite province is home to nearly four million people.

In the first quarter of the year, MPIC reported a consolidated core net income of P2.2 billion, up 15 percent from P1.9 billion a year ago. The conglomerate attributed the growth to higher traffic and increased ownership in Manila North Tollways Corp (MNTC), higher volumes sold at Maynilad Water Services Inc and Meralco, as well as strong organic growth and new investments in the healthcare business.

- Interaksyon

Century Properties to roll out P9.5B worth of residential, office projects in 2H

Century Properties Group Inc is launching P9.5 billion worth of residential and office developments in the second half of the year.

Century Properties director for investor relations Kristina Garcia told reporters last week that the projects that will be rolled out are the Forbes Media Tower in Century City, the sixth tower at Acqua Private Residences in Mandaluyong, and the first residential tower at Azure North in Pampanga.

The property company of former ambassador Jose EB Antonio has budgeted P8-9 billion in capital expenditures this year for its projects.

Century Properties will generate P5.5 billion from the sale of 40,000 square meters of office space at Forbes Media Tower, the first of a network of Forbes-branded projects around the world. The office tower will have a total gross floor area of 64,000 square meters and the remaining 24,000 square meters will be leased out to tenants to boost the recurring income Century Properties.

Forbes Media Tower and Century Spire, a 60-storey residential and office tower, will complete the premium office block in Century City, the property developer's vertical village in the country's premier financial district.

Century Properties expects P2.2 billion in sales from the residential component of the sixth tower of Acqua, which will also house a condotel.

The real estate developer will introduce the maiden residential offering in Azure North with an estimated sales value of P1.8 billion.

Azure North is an eight-hectare mixed-use development in Pampanga that will feature residential, commercial, and office components. This is Century Properties’ first project outside Metro Manila.

Century Properties' profit rose 3 percent to P513.06 million in the first quarter from P500.56 million in the same period last year. Consolidated revenues jumped by a tenth to P2.85 billion from P2.60 billion a year ago.

- Interaksyon

Cebu Pacific passenger traffic up 6.6 pct at start of 2Q

Cebu Pacific’s passenger traffic grew in the single digits at the start of the second quarter of the year.

Data from the Gokongwei-led budget airline show that it flew 1.44 million domestic and international passengers in April, up by 6.6 percent from 1.35 million in the same period last year.

The airline's load factor, which pertains to number of seats occupied per flight, inched up by 0.8 points to 89.8 percent last month from 89 percent last year.

In the first four months, Cebu Pacific's passenger traffic grew by 6.1 percent to 5.18 million from 4.89 million passengers last year. Its load factor went down to 84.4 percent from 85.2 percent in 2013.

Sought for comment, Cebu Air Inc (CEB) spokesperson Jorenz Tanada said the growth in passenger traffic was because of increased presence in key markets, strategic seat sales offering the lowest possible fares and continuous network expansion.

CEB president Lance Y. Gokongwei had said the budget airline would carry in excess of 15 million passengers this year. Including the traffic of recently acquired Tigerair Philippines, CEB expects more than 17 million passengers in 2014.

In March, 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.

CEB posted a net income of P164.164 million in the January to March period, down by 85.8 percent from the P1.157 billion in the same three months of last year.

Revenues of P11.76 billion however were 11.6 percent higher than the P10.54 billion in 2013. Passenger revenues amounted to P8.85 billion, up 8.3 percent from P8.17 billion last year.

- Interaksyon

Meralco subsidiary proposes P182-million expansion of Clark facility amid higher demand

Meralco’s subsidiary at the Clark Freeport Zone is seeking regulatory approval for an expansion of its distribution capacity in light of growing demand in the economic zone.

In a filing with the Energy Regulatory Commission (ERC), the Clark Electric Distribution Corp (CEDC) proposed the construction and installation of a new 100-megavolt ampere (MVA) 230-kiloVolt/68 kiloVolt power transformer at its substation.

The new transformer and related equipment would cost P182.25 million, and would result in an increase of P0.04 per kilowatt-hour in the rates of CEDC customers.

The proposed equipment will address the electricity requirements of a number of new locators and the expansion of existing ones scheduled by mid-2014.

Additional demand would come from Taiyo Nippon Sanso Clark Inc's air separation plant, which requires 9 megawatts (MW); the Medical City Hospital, 3.59 MW; the Midori Hotel, 1.40 MW; the Widus Hotel expansion, 1.09 MW; SM's two business process outsourcing multi-storey buildings, 1.75 MW; MSK's industrial development, 3.51 MW; SIA Engineering's expansion, 1 MW; and Yokohama Tire Philippines' load growth, demand from which was not specified.

"These additional loads will be on top of the growth of native load of 5.79 percent in [regulatory year] 2012-2013 and the expected development of the new areas within the Clark Freeport Zone," CEDC said.

Without the construction of the new 100-MVA power transformer, CEDC said the 80 MW limit of the transmission lines that deliver power to the utility will be breached, resulting in overloading.

This "would make it impossible to accommodate these large load projects," CEDC said.

CEDC is 65 percent owned by Manila Electric Co, through subsidiary Meralco Industrial Engineering Services Corp (MIESCOR). The Angeles Electric Corp owns the remaining 35 percent.

- Interaksyon