Alerts

   Adrian Alexander Yu

TEL made a 3% improvement on their 2018 full year revenues which ended in line with our estimate. This was attributable to the strong performance of the consumer individual, home and enterprise business but partly offset by the government’s regulations mandating lower interconnection fees. In addition, outlook has improved due to 1) The mobile business is gaining momentum; 2) With Voyager’s sale, this should help reduce TEL’s share of loss; 3) TEL sets a strong 2019 guidance. We are upgrading the company to a BUY rating with an FV estimate of Php1360. We believe that the concerns looming over the company are overblown. TEL expects that the number portability law will have greater impact on the post-paid, which only accounts for 4.1% of the total subscriber count, rather than the pre-paid subscribers whom have never been loyal to any carrier even without the law.

   Charles William Ang, CFA

MBT allocates Php4.0Bil for its planned capital expenditures in 2019. 50% of the amount is estimated to be allocated for information technology spending. Note that last year MBT spent a total of Php4.5Bil for capex, 73% of which or Php3.3Bil went to other expenditures including IT spending.

   Charles William Ang, CFA

PNB is offering Php5.0Bil two-year peso fixed rate bonds, with an option to upsize. This is to support its lending activities as well as diversify its funding sources. The bonds will be offered until April 30 and carry an interest rate of 6.3% per annum to be paid quarterly until 2021. This also represents the first tranche of the bank’s Php100Bil bond program approved by its board of directors in January

   Charles William Ang, CFA

PNB has disclosed its plan to conduct a stock right offering (SRO) to raise approximately Php12billion in capital with the purpose of strengthening its CET1 ratio and to sustain its asset growth. Details of the offering hasn’t been finalized yet. We currently have a BUY rating with an FV estimate of Php32. We believe that this could put pressure on the company’s share price in the short term despite the minimal dilution from the SRO. We see that this might trigger some profit taking as the stock price has already rallied significantly.

   Adrian Alexander Yu

TEL announced that it is tapping Cisco Systems, Inc. for the digital transformation of its IP transport infrastructure to support TEL’s preparation for 5G network. The two companies signed the multimillion-dollar contract on Thursday and the investment will cover the threeyear implementation of the first phase of the program. Following this deal, TEL said that it expects to enter one to two more deals for 5G within the year.

   George Ching

Based on various news sources, Sudan President Omar Hassan al-Bashir was removed from his position by the Military. Based on similar news sources, the military also dissolved the government and suspended the constitution. In January of this year, ICT was awarded a 20 year concession to operate the South Port Container Terminal (SPCT) at Port Sudan. ICT paid EUR410Mil for the concession. Based on ICT’s previous disclosure, the government of Sudan has agreed to return the EUR410Mil investment to ICT should the deal fail to push through. The EUR410Mil or ~ US$462Mil investment in the Sudan port represents 9% of ICT’s market capitalization and 9.8% of ICT’s total assets. Given that the military takeover, it remains to be seen whether ICT’s agreement (for the takeover of the port, and for the return of investment should the deal not push through) with the previous government will still hold. Our earnings and FV estimates for ICT is under review in light of the recent development.

   Ed Martinez

More news to follow.

   Frances Rolfa Nicolas

ICT is negotiating with banks for the possible acquisition of Hanjin Heavy Industries and Construction Philippines’ assets. The discussions include the payment of Hanjin loans and whether ICT will have a partner for the venture etc. However, the company noted that there are concerns over the length and width of the road as well as the safety of the community and commercial establishments near it.

   Frances Rolfa Nicolas

MWC and Prime Metroline Infrastructure Holdings, Inc. (PMIHI) are set to present its technical working group product for the Wawa bulk water project to the Metropolitan Waterworks and Sewerage System (MWSS) on April 16. Recall that the two parties signed a Memorandum of Understanding (MOU) for the development of the said project last March. The Wawa project is among the MWSS medium-term water sources for completion in 2025. A component of the project, the 80MLD Calawis-Wawa Dam being undertaken by MWC, is targeted to be finished by 2021. The approval of the MWSS will clear the plan’s submission to the National Economic and Development Authority (NEDA) for further approval.

   April Lynn L. Tan, CFA

Headline inflation fell for the 5th month in a row to 3.3% in March, lower than consensus forecast. This brought inflation at 3.8% for the first 3 months of the year. The slower growth was due to the further deceleration in the price increase of most items in the CPI basket except for Clothing, Footwear and Transport. Core inflation also fell to 3.5% in March from 3.9% in February. The continuous drop in both headline and core inflation supports our view that inflation has already peaked. This in turn should help keep interest rates stable and a possible reduction in bank’s reserve requirement.