Alerts

   Justin Richmond Cheng, CFA

Philex plans to raise US$300Mil equity capital for Silangan Project. PX disclosed that it plans to raise US$300Mil in fresh equity capital from investors to fund the first phase of the Silangan Project. The company official said they are targeting to start the development of project late first half of 2020, once they obtain the fresh capital. The company is expecting the partial operations of the mine by July 2022.

   John Martin Luciano, CFA

Tax and Incentives Rationalization Act (CITIRA) on third and final reading on Friday. The approved bill aims to lower corporate income taxes from the current 30% to 20% by reducing it by 2% every other year. House Committee of Ways and Means Chair, Joey Salceda noted that businesses may apply to extend their incentives but the decision will be based upon their performance. Mr. Salceda added that the second tranche of the government’s tax reform program is expected to generate 1.5 million jobs while contributing an additional 1.1% to GDP in the first year of implementation and 3.6% annually from 2020-2030.

   John Martin Luciano, CFA

Oil prices rose more than 10% following an attack on Saudi Arabia’s oil facilities on Saturday. US West Texas Intermediate crude futures surged 11.7% to US$61.23/bbl, while Brent crude futures soared 13.3% to US$68.07/bbl. Drone strikes attacked an oil processing facility and the nearby Khurais oil field, knocking out 5.7Mil barrels of daily crude production or 50% of the kingdom’s oil output. That is also equivalent to 5% of the global oil supply. Meanwhile, US President Donald Trump tweeted that he was authorizing the release of oil from the Strategic Petroleum Reserve to keep the markets well-supplied.

   Frances Rolfa Nicolas

Factoring the adjustments above, our revenues forecasts increased by 1.6% in 2019, by 3.2% in 2020, and by 1.6% in 2021. In addition, we also adjusted our model in compliance with PFRS 16 (Leases). Note that ~1/3 of CEB’s fleet is under operating leases. This resulted to lower aircraft and engine lease expense partially offset by higher depreciation expense, and higher interest expense estimates. Accordingly, our earnings estimates increased by 24.1% to Php9.5Bil in 2019, by 19.2% to Php11.2Bil in 2020, and by 12.2% To Php12.5Bil in 2021. Consequently, we increase our FV estimate on CEB to Php126.4/sh. We continue to like CEB given the relatively lower jet fuel prices, and its fleet/capacity expansions. Moreover, upside potential to our new FV estimate remains significant at 34%. Hence, we reiterate our BUY rating on CEB.

   Richard Lañeda, CFA

CLI disclosed that it acquired the 4,328 sqm Abaca Resort Mactan in Cebu from The Abaca Group. The property developer plans to redevelop the nine-room Abaca Resort into a 100-room all-suite luxury development by 2023 as it plans to hire a foreign architect to design the project’s masterplan. Meanwhile, the company also signed a hotel management agreement with The Abaca Group to maintain the quality of operations in the resort.

   Consensus

Vehicle sales slipped 2.4% y/y in August to 29,599 units, the first time since January, due to the weak performance of the commercial vehicle segment and supply issues. CAMPI president Rommel Gutierrez further attributed the weakness to seasonality. Commercial car sales were down 3.8% y/y to 20,818 units. On the other hand, passenger car sales went up 1.2% y/y to to 8,781 units. Meanwhile, For the January to August period, car sales were still up 2.4% y/y to 235,544 units. For the eight-month period, Toyota Motor Philippines Corp. remained the top automotive company as it accounted for 42.73% market share

   Richard Lañeda, CFA

Filinvest Land Inc. (FLI) has begun the second phase of its Hampton Orchards project in Pampanga. The 18-hectare project will offer lots for sale ranging from 156 to 469 sqm each. The amenities in Hampton Orchards will include an amphitheater, pocket parks, outdoor parks in addition to pool decks and multi-purpose courts. Hampton Orchards is part of the Php30Bil worth of projects FLI is expected to launch this year, almost doubling the Php16Bil projects in 2018.

   Richard Lañeda, CFA

In a disclosure to the PSE, SMPH announced that it will be opening its newest mall in Olangapo City, the SM City Olongapo Central. The new mall will stand four stories tall with shopping, dining and entertainment options, and will add 72,000 sqm of gross floor area to the company’s mall portfolio. Note that SMPH is scheduled to open three more malls before the year ends, namely SM Center Dagupan, SM City Butuan, and SM Mindoro Citimall.

   Adrian Alexander Yu

Xurpas has decided to sell back its 51% ownership of Yondu Inc, a content developer of mobile value-added services and IT services to Globe Telecom, Inc for Php501 Million in cash. This will help the company fulfill debt obligations while the company is on-going restructuring efforts. Note that X’s financial performance will be materially affected as a significant portion of the company’s revenues is attributable to Yondu.

   Frances Rolfa Nicolas

PCOR said that it signed a memorandum of understanding with SMC Powergen Inc., for the sale of the power plant in Limay, Bataan. The power plant was originally owned by PCOR until it was acquired by SMC Powergen in September 2013, then reacquired by the former in December 2016. SMC Global Power will be conducting a preliminary review of the power plant and its operations to determine whether it is good for acquisition.