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Monday, December 29, 2014

Philippine share prices seen playing catch up to ascent of markets overseas

Philippine share prices may close the year above the 7,200 level on window dressing and following Wall Street’s record performance last week.

The local bourse may play catch up to overseas markets after a three-day break due to the Christmas holidays, said Astro del Castillo, managing director at First Grade Finance Inc.

Last Friday, US benchmark indices continued their ascent to uncharted territory, with the Dow Jones Industrial Average rising 23 points, or 0.1 percent, to 18,053, its 38th record close of the year, and the Standard & Poor's 500 adding 6.89 points, or 0.3 percent, to 2,088.70, its 52nd record close.

"We can see a bit more upside. Resistance is at 7,200 and we expect the market to hit that. There may be a bit of profit-taking on some of the blue chips that have gone up and we can see a resumption of the run on January 5," said Alexander Adrian Tiu of AB Capital Securities Inc.

The bellwether Philippine Stock Exchange index (PSEi) finishing above the 7,200 line translates to a gain of more than 22 percent this year compared to its flat finish in 2013. The PSEi rose 0.85 percent to end the holiday-shortened week at 7,186.32.

Low trading volumes may also be seen because of the lack of players and funds wanting to preserve their returns, said Luis Limlingan, business development head at Regina Capital Development Corp.

"Trading will be much slower unless there’s some surprising economic news or newsworthy event that will shock the market in either direction. It may swing a bit upward on window dressing," Limlingan added.

Sunday, December 21, 2014

Meralco expects oil price dividend

The country's biggest electricity distributor expects a dividend from the weakness in the international market for crude oil.

Manila Electric Co president Oscar S. Reyes said the continued dip in world oil prices could bring down power rates, encouraging higher demand.

Global oil prices have slumped on the back of higher production of U.S. shale oil coupled with the OPEC's refusal to cut production.

Consequently, the international oil cartel and the International Energy Authority separately forecast softer demand in 2015.

About 40 percent of Meralco's electricity supply is fueled by the Malampaya natural gas from offshore Northwest Palawan. The price of Malampaya gas is indexed to world oil prices.

Alfredo S. Panlilio, Meralco senior vice president, said sales volume would likely grow between 3 and 3.5 percent in 2015.

This is about the same increase the company expected this year, propped up mostly by an uptick in demand in the second half after the cooler weather in the first few months tempered electricity use.

“Next year, we are looking at around 3 to 3.5 percent driven by the same factors," Panlilio said.

These figures, however, do not account for possible pre-election spending that could boost demand, he added.

In the first nine months of this year, Meralco's profit rose seven percent led by growth in sales to its commercial and industrial customers.

- Interaksyon

Saturday, December 20, 2014

11 stocks that still have an upside in 2015

The Philippine Stock Exchange index (PSEi) may hit the 7,700 level in the next 12 months after weathering the volatility at the close of 2014.

In a briefing today, RCBC Securities vice president for research Raul P. Ruiz said the forecast is based on the projected 15 percent growth in earnings of the basket of 50 companies that the brokerage covers.

"A lot of the recent selloff is because of oil prices. In the long run, that's a plus for the Philippines. We expect the market to reverse next year, taking into account the lower oil prices which will be good for the Philippine economy," RCBC Securities president Gerald O. Florentino said.

Election-related spending ahead of the 2016 polls will also boost the Philippine economy, Florentino added.

As a result of these factors, RCBC Securities is overweight on consumer stocks like Robinsons Retail Holdings Inc, SSI Group Inc, Puregold Price Club Inc and Universal Robina Corp.

Despite the declining revenues of the casinos in Macau, RCBC Securities sees upside for gaming stocks, particularly Bloomberry Resorts Corp and Travellers International Hotel Group Inc.

The brokerage also likes First Gen Corp and Energy Development Corp for power and Megaworld Corp, SM Prime Holdings Inc and Vista Land & Lifescapes Inc for property.

RCBC Securities is projecting the PSEi would close this year between the 7,200 and 7,300 levels if the critical support level of 6,900 holds. The local equities market had a volatile trading session today with the main gauge settling at 7,029.28, up nearly a percent.

If the support level fails to hold, the benchmark index can fall to as low as 6,800 by yearend, Ruiz said.

He expects the last four trading days of the market to be volatile as oil prices remain the focal point of trades.

"It's been a good year. We're still up 20 percent. It's just a bit shaky because of the drop in oil prices. A lot of the funds are cautious because of higher valuations and with the market coming down, that should provide buying opportunities for these funds to come back into the market," Ruiz said.

"The funds are just standing by, waiting for good levels. You will see them coming back in. A lot of these funds made a lot of money so it’s easy for them to take profits," he added.

- Interaksyon

Monday, December 15, 2014

Alliance Global expects all business units to contribute to growth in 2015

The holding firm of billionaire Andrew Tan expects faster growth next year anchored on expansion across its business units.

"The growth momentum is there. We expect growth for next year obviously," Alliance Global Group Inc (AGI) president Kingson Sian said on the sidelines of Emperador Inc's special stockholders meeting on Monday.

AGI's net income attributable to equity holders was flat at P11.4 billion in the first nine months of the year due to reduced ownership in Emperador and Travellers International Hotel Group Inc.

Property arm Megaworld Corp will "continue to expand on all fronts," launching more projects fuelled by the country's high-growth trajectory and the recovery in the United States, Sian said.

Megaworld maintained an upbeat outlook on the sector even after the Bangko Sentral ng Pilipinas imposed stricter control on lending to real estate.

"Most of our buyers, majority is still funded out of equity. [It may affect] those that need more financing. Based on our financing plan, by the time we turn over [our projects], buyers would have paid 40-50 percent so pasok ka na sa value," Sian said.

Liquor maker Emperador will introduce new products and capitalize on synergies with Scotch whisky maker Whyte & Mackay for its expansion into new markets.

"With the acquisition, we need to be able to leverage off each other's network. Whyte & Mackay is expanding into new markets, same with Emperador, and also introducing new products to the market," Sian said.

A joint venture with Genting of Malaysia, Travellers International will continue expanding Resorts World Manila with the Marriott Grand Ballroom expected to be completed next year. The new wing of the Marriott Hotel will be unveiled in 2016, followed by the completion of the third phase expansion in 2017 and the opening of Bayshore City Resorts World in 2018.

Golden Arches Development Corp, the master franchisee of McDonald's in the Philippines, is on track to open its 500th store next year. McDonald's already has 430 stores in the Philippines.

During the special meeting, Emperador shareholders approved the issuance to Arran Investment Private Limited of up to P22 billion worth of common shares and equity linked securities convertible to common shares. Arran Investment is an affiliate of GIC, Singapore's sovereign wealth fund.

- Interaksyon

Friday, December 12, 2014

PSE expects companies to raise P200 billion in 2015

The Philippine Stock Exchange targets facilitating P200 billion ($4.49 billion) worth of capital raising next year as listed companies seek fresh funds for expansion amid strong macroeconomic fundamentals, PSE President Hans Sicat said.

Ten companies are seen to debut in the stock market next year through initial public offering (IPO) and backdoor listing, the top official of the PSE said.

"There's a lot of need for companies to raise capital because of the need to expand," Sicat told reporters late Thursday.

A number of fundraising programs, including the up to $172 million IPO of real estate firm Profriends Group Inc, were pushed back to next year, prompting the PSE to forecast a shortfall in its P200 billion target for this year, Sicat said.

Capital raised this year in the local bourse reached P128 billion as of end-September.

But capital raising activities will likely reach the P200 billion level next year driven by follow-on offerings, including the up to $336 million preferred share sale of San Miguel Pure Foods Co Inc.

"What we're hoping for is that publicly listed companies will continue to demonstrate strength in terms of increasing their revenue and net income, which is the PSE story over the last 4-5 years," said Sicat.

Sicat said he expects the consumption-driven economy to support growth despite global headwinds.

Consolidated revenue of locally listed companies climbed 28.8 percent to P3.27 trillion in the first half, while aggregate net income rose 10.8 percent to P311.57 billion from a year earlier.

Seven companies have debuted in the PSE this year, increasing the number of listed firms to 263. The broader index has gained 21 percent year-to-date.

- ABS-CBN News

Philippine share prices rebound after Moody's rating lift

Philippine share prices on Friday rebounded from a five-day losing streak with the benchmark index returning above the 7,200 mark, as investors found reason to take positions following the upgrade in the country's credit rating.

At the Philippine Stock Exchange, the composite index surged 152.11 points, or 2.15 percent, to close at 7,224.21. The main gauge cut weekly losses to 0.1 percent after losing as much as 2.19 percent before today.

All counters gained at least 1.2 percent with the services, property and financials rising more than 2 percent each.

Advancers beat decliners, 128 to 49, while 44 issues were unchanged. A total of 1.81 billion shares worth P11.61 billion changed hands.

The most actively traded stocks were SM Prime, Universal Robina, BDO, EDC and Alliance Global. The top gainers were Bogo Medellin, Philweb and Republic Glass, while the biggest losers were Island Information, Jackstones and Anchor Land.

"The push is mainly propelled by the positive sentiment from the credit rating upgrade of Moody's. Technically, the market is ripe for a rebound, and coincidentally, the upgrade happened," said Alexander Adrian Tiu of AB Capital Securities Inc.

After the close of Thursday trades, Moody's Investors Service raised the Philippines’ debt rating by a notch to "Baa2" from "Baa3," while assigning a "stable" outlook.

Before today’s session, local equities have been on a five-day losing streak that dragged the PSE index below the 7,100 mark, with investors nearly giving up on the possibility of the composite index retesting all-time high levels before yearend.

"There's a chance of a late push given the positive sentiment but we still have to take into account that in terms of technicals, we're still in bear market territory. In terms of fundamentals, this could be the push the market needs," Tiu said.

Also yesterday, the Bangko Sentral ng Pilipinas decided to maintain its benchmark rates to further boost positive sentiment, said Jason Escartin of

"Also, positive economic data coming from the US may provide some support following the market’s rout in the previous session due to the continued decline in oil prices," Escartin said.

US stocks recovered last night as November sales of US retailers grew at their fastest pace in eight months. However, the rally lost steam due to a renewed slide in oil prices.

The Dow Jones Industrial Average rose 63.19 points, or 0.4 percent, to 17,596.34 after gaining by as much as 216 points. The Standard & Poor’s 500 Index inched up 8 points, or 0.4 percent, to 2,034.

- Interaksyon

Thursday, December 11, 2014

Moody's lifts Philippines' credit rating further into investment grade

The Philippines has gone further into uncharted terrain after one of the world's three leading credit rating firms delivered yet another upgrade.

In a statement, Moody's Investors Service today said it raised the Philippines' debt score by a notch to "Baa2" from "Baa3." The debt watcher assigned a "stable" outlook, which means the new score will remain in the next 12-18 months.

Moody's latest move comes more than a year after it first elevated the Philippines to investment grade pushing a country that had been dubbed the "sick man of Asia" further into uncharted territory.

According to Moody's, the government's success in reducing its debt was one of the key reasons for the fresh upgrade. Since the Arroyo administration, the Philippines has been trimming its debt, particularly the foreign component, which has been a source of instability in the past given the country's erratic foreign exchange earnings.

From more than half of its gross domestic product (GDP), the Philippines' debt has slipped to less than 40 percent so far this year. The foreign component of the country's debt also has slipped to about a fifth this year from a third a decade ago.

Besides an improving fiscal profile, the country's strong economy and limited vulnerability to financial risks that usually infect emerging markets like the Philippines also called for the increase in its debt score, the rating firm said.

Despite headwinds in the global economy that have pulled Japan and parts of the euro area back into recession, the Philippines has been growing above trend, making it one of Asia's fastest-growing in the last two years.

Adjustments by advanced economies to the global financial crisis of 2008-2009 also have created financial market volatility, but the Philippines remains less vulnerable than its emerging market peers given the country's strong current account, which has been in surplus for more than half a decade.

Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said the latest credit-rating upgrade is welcome news coming at a time when the global economy remains fragile.

“The latest credit rating upgrade is a recognition of our efforts to keep the Philippine economy resilient amid constant challenges posed by the external environment. Contributing to this resiliency are the country's comfortable external liquidity, strong financial system, and a favorable inflationary environment," Tetangco said.

Finance Secretary Cesar V. Purisima said Moody's latest move is the result of the Aquino administration's "efforts... to institutionalize reforms to help ensure the agenda of good governance continues."

“The upgrade is an acknowledgment of the sound management of the economy. There should be no turning back as far as good governance is concerned; the only direction we should see for the Philippine economy is forward,” Purisima added.

- Interaksyon

Wednesday, December 10, 2014

Pure Foods sets fundraiser in first quarter

San Miguel Pure Foods Co Inc is raising up to P15 billion from a public sale of shares early next year.

Documents from the Securities and Exchange Commission (SEC) show Pure Foods will sell 10 million preferred shares at a maximum offer price of P1,000 apiece. An additional 5 million shares will be sold in case of strong demand to jack up the gross proceeds to P15 billion.

The preferred shares are cumulative, non-voting, non-participating and non-convertible. Preferred shares represent ownership in a company, but dividends on them are paid ahead of those on common shares.

Pure Foods will use the net proceeds from the share sale to finance the redemption of outstanding preferred shares amounting to P15 billion, which are callable starting March 3, 2014 or on any dividend payment date thereafter.

The dividend rate of the new shares will be set on February 11, 2015 with the offer period scheduled to run from February 16 to March 5. The shares will be listed on the Philippine Stock Exchange on March 12.

BPI Capital Corp, China Banking Corp, RCBC Capital Corp, SB Capital Investment Corp and Standard Chartered Bank were tapped as the joint issue managers, joint lead underwriters and joint bookrunners of the offering.

Last month, Pure Food's board cleared the issuance of up to 25 million preferred shares at P1,000 apiece with the proposed offering covered by a shareholders approval in a meeting last November 2010.

Pure Foods posted flat earnings of P2.7 billion in the nine months through September on higher costs caused by Typhoon Glenda and the Manila port congestion.

The company behind the Magnolia, Monterey, Star, San Mig Coffee, and B-Meg brands, Pure Foods is part of San Miguel Corp, which has interests in beverage, packaging, power generation, oil refining and retailing, mining, telecommunications, property development, and infrastructure.

- Interaksyon

Ayala, Datem, Filinvest and Megawide shortlisted for south metro transport hub project

Four companies have been shortlisted for a P4-billion public transport terminal project in the south of Metro Manila.

The Department of Transportation and Communications (DOTC) identified the four qualified bidders for the Integrated Transport System (ITS) - South Terminal as Ayala Land Inc (ALI), Datem Inc, Filinvest Land Inc (FLI) and Megawide Terminals.

DOTC said these four were found to have fulfilled the legal, technical and financial qualification requirements for the project.

They have until April next year to submit their bids.

One of the Aquino administration's public-private partnership (PPP) projects, the ITS - South Terminal will be located near the Food Terminal Inc, the development contract for which ALI earlier bagged.

The project will connect passengers coming from the provinces of Laguna and Batangas to other urban transport systems, such as the future North-South Commuter Rail, city buses, taxis and other public utility vehicles that serve the inner Metro Manila.

The terminal will include a passenger terminal building, arrival and departure bays, public information systems, ticketing and baggage holding facilities and park-ride facilities.

The winning bidder will build, operate and manage the said terminal for 35 years.

- Interaksyon

Tuesday, December 9, 2014

Government starts search for challenger to Metro Pacific Group's SCTEX proposal

The government has opened the floor to third parties wanting to challenge the Metro Pacific Group's proposal to operate and maintain the Subic-Clark-Tarlac Expressway (SCTEX).

In an invitation published in a newspaper, state-run Bases Conversion and Development Authority (BCDA) said the Office of the President had directed that the Manila North Tollways Corp's (MNTC) offer to operate and maintain SCTEX until 2043 be subjected to a price challenge in the interest of transparency and for competition.

Controlled by Metro Pacific Investments Corp (MPIC), MNTC bagged the SCTEX contract in 2011, or the final year of the Arroyo administration, but the Aquino government sought to renegotiate the terms of the deal in a bid to increase the state’s share in toll revenue.

MNTC had proposed to amend the contract terms twice to no avail. According to BCDA’s guidelines, challengers should at least:
  • Pay upfront P3.5 billion in cash, including the 12 percent value added tax (VAT);
  • Offer a 50-50 sharing of the gross toll revenues between BCDA and the private sector partner;
  • Assumption of the operation and maintenance costs and responsibilities over SCTEX; and 
  • Assumption of the ongoing integration agreement for the toll collection system of the North Luzon Expressway (NLEX) and SCTEX.
"The objective of the price challenge is the upfront cash only, which should be higher than P3.5 billion, payable upon signing of the agreement. While the other terms should be accepted by the proponents," BCDA said.

BCDA, however, said MNTC has the right to match the upfront cash proposal of the highest rated and responsive proponent (HRRP) in which case, MNTC shall be awarded the contract.

"If MNTC fails to match the upfront cash offer of the HRRP, the latter shall be awarded the contract," BCDA said.

To be eligible, challengers should satisfy the following minimum requirements:
  • The proponent should meet the 60 percent Filipino ownership requirement for public utilities. In case the proponent is a joint venture/consortium it should be 60 percent Filipino owned before the signing of the agreement. 
  • The proponent or any of the members of the consortium must have at least three years experience in the management, operation and maintenance of a toll road within the last 10 years.
  • The proponent or any of the consortium members should have a net worth or a credit line issued by reputable commercial bank(s) in the amount of at least P5 billion as of December last year.
  • The proponent should buy the terms of reference worth P500,000, which will be available on December 11. 
  • The proponent should be a corporation registered with the Philippines’ Securities and Exchange Commission (SEC), or in case of a joint venture/consortium at least one member should be registered with the same agency. 
The BCDA scheduled the pre-selection conference to discuss the terms of reference and the SCTEX at 2 p.m. of January 6, 2015.

The SCTEX is a 94-kilometer fully-operational four-lane expressway traversing the provinces of Bataan, Pampanga and Tarlac. The road, which has an average daily traffic of 30,855, provides a direct link to Metro Manila through NLEX.

Sought for comment, MNTC president Rodrigo Franco said, "Generally, we are supportive of BCDA's effort to conduct a price challenge, especially that it was ordered by President Aquino as part of the process."

Franco said the company has yet to see the final terms of the price challenge.

"But our concern is that if BCDA's process is not fair there's a possibility that there will be a legal issue," he said, without providing any detail.

- Interaksyon

Tuesday, December 2, 2014

Phoenix Semiconductors flat on Philippine stock market debut

Shares in Phoenix Semiconductors Philippines Corp closed flat on its stock market debut on Monday, as other upcoming listings prompted investors to lock in their gains.

The local arm of one of Samsung's South Korean suppliers saw its stock open at P3.40 per share, an increase of 7.94 percent from its listing price of P3.15 apiece. The stock pared its gains to finish unchanged for the session.

"It's satisfactory. It opened strong, but the gains became unsustainable due to some liquidity issues. The listings are simultaneous and being the first, it became the victim of profit-taking on its first day of trading," said Jose Vistan of AB Capital Securities Inc.

Xurpas Inc, Megawide Construction Corp and Integrated Micro-Electronics Inc have recently concluded their respective equity offerings and are set to list their shares in the next few days. The Philippine Stock Exchange index advanced 0.51 percent.

Phoenix Semiconductor raised P1 billion from the sale of 459.39 million shares with institutional investors cornering half of the total offer and the issuance enjoying "very strong support" from the retail market," BDO Capital & Investment Corp senior vice president Gabriel Lim told reporters on the sidelines of the company's listing ceremony.

BDO Capital is the sole issue manager and lead underwriter of the offering.

Phoenix Semiconductor decided not to exercise the overallotment option of 134.63 million shares because the base offer will be enough to cover financing for its expansion, Lim added.

"Because several local banks also began offering credit facilities to the company to finance the expansion program, the company felt it would be best to finance expansion program from equity and credit facilities offered by banks. It's a good signal because more banks were confident in the company," he said.

Net proceeds from the primary offer will be used to fund Phoenix Semiconductor's $170-million expansion program through the acquisition of machines, building improvement and the construction of a new facility within its 15-hectare area at the Clark Freeport Zone in Pampanga.

Phoenix Semiconductor chief finance officer Kim Dong Joo said the expansion program will enable the company to serve new clients with the manufacturer now in talks with a Japanese company and 2-3 American firms.

The company’s operation solely serves the requirements of Samsung Electronics Co Ltd and its customers.

Phoenix Semiconductor is considering a third phase of expansion of its manufacturing operations that may entail the production of non-memory products in three to five years, Kim said, noting that its manufacturing operations in the Philippines is 30 percent cheaper than China mainly because of labor costs.

Phoenix Semiconductor is a unit of STS Semiconductor & Telecommunications Co Ltd. STS is 28.10 percent owned by Seoul-based Bokwang Co Ltd, which has businesses in leisure, retail, advertising and culture, financial services and manufacturing.

- Interaksyon