Alerts

   George Ching

Over a televised interview last Friday, President Duterte threatened that the government will stop issuing construction permits to DMCI following damages reported in the Ecoland 4000 building in Davao City during the October 31, 2019 earthquake. The developer of Ecoland 4000 is DMC-Urban Property Developers, Inc.(DMC-UPDI), and is listed as an affiliate of DMC. While DMC does not own DMC-UPDI, the president statement against the issuance of permits may still affect DMC’s property development arm, DMCI Homes, as well as its construction business. DMC said over the weekend that it has reached a settlement with over 20% of the residents of Ecoland 4000 Condominium, but it remains to be seen when a settlement could be reached with the remaining tenants. We estimate that DMCI Homes represents 16.55% of DMC’s earnings and 11.2% of DMC’s NAV, while its construction business accounts for 8.8% of earnings and 13.8% of NAV.

   Richard Lañeda, CFA

President Duterte said he is unlikely to approve proposed Manila Bay reclamation projects given the scope of the projects in the pipeline. There are 25 projects proposing to reclaim almost 10,000 hectares along Manila Bay from Navotas City to Cavite. President Duterte added that the total size of the projects combined was big and he would not be ready to grant it as long as there is no guarantee that the environment will be protected and the health of the people would be safeguarded. However, we believe that the reaction of President Duterte was due to the immense size of the reclamation projects being proposed and his concerns on how it would impact the environment. The President did not say outright that no other projects will be approved. We do not think these statements by the President will affect SMPH’s reclamation projects. The Pasay reclamation (360 hectares) has already received the notice to proceed while the Paranaque reclamation (300 hectares) is just adjacent to the Pasay part and so we expect SMPH to also obtain the necessary environmental permits for the said project. We also note that SMPH’s financial capabilities would allow it to work with the best contractors and complete the said projects within its proposed timeline while following protocols that seek to protect the environment.

   George Ching

Over a televised interview last Friday, President Duterte threatened that the government will stop issuing construction permits to DMCI following damages reported in the Ecoland 4000 building in Davao City during the October 31, 2019 earthquake. The developer of Ecoland 4000 is DMC-Urban Property Developers, Inc.(DMC-UPDI), and is listed as an affiliate of DMC. While DMC does not own DMC-UPDI, the president statement against the issuance of permits may still affect DMC’s property development arm, DMCI Homes, as well as its construction business. DMC said over the weekend that it has reached a settlement with over 20% of the residents of Ecoland 4000 Condominium, but it remains to be seen when a settlement could be reached with the remaining tenants. We estimate that DMCI Homes represents 16.55% of DMC’s earnings and 11.2% of DMC’s NAV, while its construction business accounts for 8.8% of earnings and 13.8% of NAV.

   Frances Rolfa Nicolas

According to Moody’s Investors Service, refiners such as PCOR and SHLPH may continue to suffer from depressed refining margins this year. Moody’s Senior Vice President Vikas Halan said that they do not expect commodity consumption growth to pick up in 2020 given the subdued expectation of economic growth in the region. Recall that consumption of petroleum products and petrochemicals significantly declined in 2019 due to the trade dispute between the US and China. Moreover, refining margins are expected to remain weak as a result of the steep fall in fuel oil prices driven by the IMO 2020 regulation that restricts the usage of high sulfur fuel oil in maritime transportation.

   Frances Rolfa Nicolas

According to Moody’s Investors Service, refiners such as PCOR and SHLPH may continue to suffer from depressed refining margins this year. Moody’s Senior Vice President Vikas Halan said that they do not expect commodity consumption growth to pick up in 2020 given the subdued expectation of economic growth in the region. Recall that consumption of petroleum products and petrochemicals significantly declined in 2019 due to the trade dispute between the US and China. Moreover, refining margins are expected to remain weak as a result of the steep fall in fuel oil prices driven by the IMO 2020 regulation that restricts the usage of high sulfur fuel oil in maritime transportation.

   George Ching

Justice Secretary Menardo Guevarra said that the water concessionaires will be given the chance to discuss and renegotiate the new water concession agreements once finalized by the the DOJ and the OSG. Mr. Guevarra also said that the draft of the new contracts may be available after 6 months as they still need the inputs of the DOF on issues pertaining to economic and financial provisions.

   Frances Rolfa Nicolas

Justice Secretary Menardo Guevarra said that the water concessionaires will be given the chance to discuss and renegotiate the new water concession agreements once finalized by the the DOJ and the OSG. Mr. Guevarra also said that the draft of the new contracts may be available after 6 months as they still need the inputs of the DOF on issues pertaining to economic and financial provisions.

   Frances Rolfa Nicolas

PCOR denied accusations that it did not comply with its collective bargaining agreement (CBA) after members of the Bataan Refiners Union of the Philippines staged a protest due to alleged threats to employees and poor working conditions. The company remains open to discuss any issues with the union and hopes to settle them soon.

   Richard Lañeda, CFA

BLOOM disclosed that the Singapore High Court has dismissed its petition to set aside the enforcement of the partial award to companies whose management contract was terminated. BLOOM has until February 3, 2020 to appeal this decision to a higher court in Singapore. Recall that the tribunal found the termination of the management service contracts with GGAM to be wrongful with BLOOM being ordered to pay damages amounting to around US$300Mil. In response to this, BLOOM filed a case against GGAM with the Singapore High Court to set aside the arbitration award given that two members of GGAM failed to disclose their fraud cases before signing with BLOOM as operator. In addition, note that BLOOM’s counsel advised that the arbitration award is not selfexecuting and must go through an order of Philippine court to be enforceable and have legal effect of a judgment. (Source: BLOOM, Businessworld)

   Adrian Alexander Yu

The Department of Information and Communication Technology (DICT) announced that they will be issuing the new policy on the shared use of telecommunications towers by next week. With the objective of improving tower density, the revised common tower policy will allow more than one telco to use a single tower and increase the number of subscribers being served by each tower as the government targets to put up 3,000 common towers this year.