Alerts

   Richard Lañeda, CFA

President Duterte has finally addressed the controversy regarding the Philippines Offshore Gaming Operators or POGOs. He has made a decision that the country needs POGOs and so will not ban its operations. We believe that the government sees the significant revenue contribution of POGOs. However, the president warned that they should pay the right taxes if they want to continue operations. Hence, the significant risk on the property sector has been lessened, creating an opportunity for investors to purchase shares of FLI and MEG at attractive levels brought by the recent sell-off as a result of the mentioned controversy.

   Frances Rolfa Nicolas

Sky Cable, the cable television and broadband unit of ABS, is targeting to grow its broadband subscriber count by up to 20% to 30% in the next twelve months with the launch of its new Sky Fiber super speed internet subscription plans. These include Plan 5 mbps available for Php999 per month, Plan 25 mbps for Php1,499 per month, Plan 50 mbps for Php1,999 per month, among others. The company also launched the Sky Fiber All-in Box, which combines fiber internet and high-definition television in one device, and allows customers to customize channels.

   George Ching

MPI disclosed that its subsidiary, MetroPac Water Investments Corporation (MPW), signed a joint venture agreement with the Dumaguete City Water District (DCWD) for the rehabilitation, operation, maintenance, and expansion of DCWD’s existing water distribution system and development of wastewater facilities. The joint venture covers a period of 25 years and is estimated to cost Php1.6Bil. DCWD currently supplies 38 MLD of potable water to more than 32,000 customers in Dumaguete City and portions of the municipalities of Valencia, Sibulan, and Bacong.

   Frances Rolfa Nicolas

CHP has disclosed that it has received approval of its Board of Directors to conduct a stock rights offering (SRO). SRO details like the offer price, entitlement ratio and the likes are yet to be finalized. Such corporate action could potentially dilute existing shareholders and put downward pressure on the share price in the near term. Note that even if CHP issued the stock rights at the current price, this will still lead to a massive dilution considering the amount being raised is huge relative to the company’s market capitalization. We currently have a HOLD rating with an FV estimate of Php2.1/sh.

   John Martin Luciano, CFA

Cal-Comp Technology Philippines has revived its plans to conduct an initial public offering (IPO) in order to raise fresh capital to finance its expansion. Cal-Comp Philippines is looking to sell 371,423,100 shares with an over allotment option of 55,731,500 shares for up to Php25/sh. The company is looking to raise Php10.7Bil, significantly higher than the Php6.8Bil IPO filed back in 2018.

   Frances Rolfa Nicolas

The Department of Trade and Industry (DTI) has imposed a definitive safeguard duty on imported cement over a 3-year period which will take effect 15 days after the DTI order has been published to 2 newspapers. The safeguard duty of Php10 per 40kg bag will be added in the 1st year, Php9/bag in the 2nd and Php8/bag in the 3rd year. Cement manufacturers will benefit from this as would effectively increase prices of the imported cement and in turn narrow down the price gap between the local and imported cement. This could also improve demand for locally produced cement as the safeguard duty make it less attractive for cement exported to trade with the Philippines.

   John Martin Luciano, CFA

Bank lending picked up in July with loans of universal and commercial banks growing faster at 11.1% y/y in July vs 10.5% y/y in June on the back of faster growth in credit to households. Indeed, loans for household consumption by 23.0% y/y in July from 15.3% y/y in June due to faster growth in motor vehicle and salary-based general-purpose consumption loans. Meanwhile, loans for production activities grew by 9.8% y/y percent in July, similar to the pace recorded in the previous month. This was driven by lending to the following sectors: real estate activities (+18.1% y/y); financial and insurance activities (+19.1% y/y); electricity, gas, steam, and air conditioning supply (+13.8% y/y); construction (+38.2% y/y); and wholesale & retail trade, repair of motor vehicles and motorcycle (+4.5% y/y)

   George Ching

Raising earnings and FV estimates, downgrading to HOLD. As a result of our higher nickel ASP assumption, we are increasing our 2019E earnings forecast for NIKL by 14.7% to Php3.85Bil, and our 2020E earnings forecast by 57% to Php5.5Bil. Meanwhile, we increased our FV estimate for NIKL by 16.2% to Php 3.81/sh, but downgrading our rating on NIKL from BUY to HOLD. 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 53.2% YTD, outperforming the PSEi’s 6.2% rise during the period. At its current price of Php4.11/sh, there is no more upside to our FV estimate.

   Andy dela Cruz

The Philippines PMI (purchasing managers’ index) clocked at 51.9 in August, indicating a modest improvement in the manufacturing sector of the country. Manufacturing improved at a modest rate amidst a slower growth in new orders and output. This was offset by greater hiring activity, leading to only a slight drop from the Philippines’ July PMI of 52.1.

   Adrian Alexander Yu

Transportation Assistant Secretary Giovanni Lopez said that SMC has complied with all government requirements for the new international airport project in Bulacan. Note that SMC will be building a US$15Bil world-class gateway in Bulacan, to be known as New Manila International Airport. The airport is expected to break ground within the year and is expected to be operational within four to six years upon start of construction.