Alerts

   Frances Rolfa Nicolas

HLCM disclosed that it has completed new storage and loading facilities in its Bulacan plant. These facilities will improve the plant’s storage capacity and speed up packing and loading of products on trucks. Note that HLCM’s Bulacan plant primarily serves the NCR, and Central Luzon market where construction industries grew by double-digits last year according to government data.

   George Ching

Metro Pacific Tollways Corp. (MPTC) announced that it has acquired an additional 25% stake in PT Margautama Nusantara (MUN) for Php3.44Bil. After the acquisition of the additional stake, MPTC’s ownership in MUN will be 100%. MUN’s net income for 1H19 amounted to Php347Mil, representing 14.3% of MPTC’s earnings for the period. MPI said that MUN has a very positive earnings outlook given the latter’s expansion of its toll roads.

   George Ching

Maintaining HOLD rating. We have a HOLD rating on NIKL with a FV estimate of Php3.81/sh. While we believe that the long term outlook for nickel prices will remain positive due to rising EV battery demand and the looming Indonesian ore export ban, we believe that this has already been priced-in by the market. NIKL’s share price has risen by 94.5% YTD, outperforming the PSEi’s 5.4% rise during the period. At its current price of Php4.28/sh, there is no more upside to our FV estimate.

   John Martin Luciano, CFA

Chicken prices have risen following the outbreak of the African Swine Fever in the country. However, chicken raisers said they were wary of any attempts to ramp up production and imports as that may worsen oversupply should the disease be resolved soon. UBRA President Elias Jose M. Inciong further noted that chicken inventories remain high. According to the United Broilers and Raisers Association’s (UBRA) price monitoring, the average price of regular-sized chicken is now Php96/kg, up 5.5% from Php91/kg in the previous week. Likewise, prime-sized chicken fetched an average of Php93.69/kg, up 10.0% from P85.20/kg in the previous week.

   Adrian Alexander Yu

New telecom player, Dito Telecommunity disclosed that it expects to sign its first deal with a common tower provider this week. The company expects to sign a memorandum of understanding, but refused to disclosed with which company yet. Note that back in March, the company short listed 7-8 tower providers when it first called for common tower proposals. In previous weeks, Dito has signed a non disclosure agreement with Aboitiz InfraCapital Inc and are also working on a Memorandum of Understanding for a common tower agreement. Aside from Aboitiz InfraCapital, the joint venture of ISOC Infrastructure and etodco group Sdn Bhd has also disclosed talks with Dito for a potential common tower deal.

   Adrian Alexander Yu

Government spending continued to pick up in August, increasing by 13.6% y/y to Php263Bil. This is the fastest growth in the last six months with growth buoyed by higher subsidies to government-owned and –controlled corporations as well as local government allotments. Meanwhile, for the first eight months, spending inched up 0.94% y/y to Php2.2Tril. Note that this was down 0.11% for the first seven months of the year.

   Sheila Andanar-Maghari

Starting October 6, 2019 our new hotline number will be 8-6515-888. All COL Metro Manila numbers will be affected. For COL, just add 8 at the beginning of our landline numbers. This is in compliance with the directive of the National Telecommunications Commission

   George Ching

We have a HOLD rating on MER with a FV estimate of Php329/ sh. While we remain positive on MER’s long term outlook as it will be the main beneficiary of rising power demand in the country brought about by faster GDP growth, we believe that investor sentiment will remained subdued in the near term due to several headwinds, the biggest of which is the looming distribution tariff cut in the next regulatory period. The earnings outlook for MER’s power generation business also suffered a setback after the supreme court recently ruled that MER’s power projects will have to go through a competitive selection process in order to secure power supply contracts. MER’s valuation is also not attractive at this point, as the stock is trading at a premium to our FV estimate based on its current market price of Php371/sh.

   Adrian Alexander Yu

According to the BSP, the business outlook on the Philippine economy turned less optimistic for 3Q19 as overall confidence index (CI) dropped to 37.3% from 40.5% in 2Q19. Respondents attributed the lower optimism to: 1) seasonal factors like the slack in demand due to the rainy season, 2) decline in orders causing lower sales, 3) lack of raw material supply, and 4) perceived unfavourable effects of government policies, among others. Meanwhile, the business outlook for 4Q19 improved with CI rising to 56.1% from the 2Q19 survey figure of 47.6% for 3Q19. The more positive outlook for 4Q was due to expectations of 1) increased consumer demand given the holiday and harvest season, 2) increase in orders and projects, 3) more favourable macroeconomic conditions like lower inflation, stable exchange rate, and lower interest rates, and 4) higher government spending.

   Adrian Alexander Yu

Aramco said that it will bring back by end-September full crude output at Abqaiq and Khurais, the two oil facilities damaged by attacks last week. Recall that the attacks halved the output of the world’s top oil exporter by shutting down 5.7Mil barrels per day (bpd). At present, about 2.36Mil bpd have already been restored.