August 14, 2017
Morning Huddle
Daily Summary
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US Tracker
US stocks closed flat with the focus still on threats from N.Korea.
DOW 21,858.32 +14.31 +0.07%
EPHE 35.39 +0.17 +0.48%
PHI 33.46 +0.45 +1.36%
Peso 50.98
TEL Par 1,706 vs 1,740 TEL
Economic News
BSP reassures market of strength of Peso. After breaching 51PHP/USD last Friday, BSP Governor Espenilla says the BSP is ready to use its "huge pile of foreign currency reserves" to stabilize the peso in case of excessive volatility.
Industry News
PH records first avian flu outbreak. Around 37,000 fowls have died of the Avian Influenza Type A Subtype H5 in San Luis, Pampanga. Pampanga Gov. Lilia Pineda has declared a state of calamity in the province. A 1km radius quarantine area within San Luis town will be implemented, while another 7km radius controlled area has been declared. According to Sec. Pinol, ~400,000 chickens would be slaughtered but upon actual inspection, 200,000 birds will be culled within the next 3 days to control the virus. Fowls and eggs from the controlled area are not allowed to be brought out.
Comment:
Given PF’s climate control technology and strict sanitary inspection for poultry farms, PF confirmed that no poultry farms were affected by the avian flu in Pampanga.
Corporate News
AC 1H17 rose 9% to PhP15.1bn, ahead of consensus at 58% of PhP26.1bn, led by ALI and AC Energy. In 2Q17, net income inched up 2% to PhP8.1bn. BPI was down 8% due to the absence of one-off gains, GLO fell 9.8% on equity losses and spectrum amortization of VTI assets, while MWC inched up 2.3% on higher billed volume. ALI rose 18%, led by property development and commercial leasing, while AC Energy surged 64% on a favorable wind regime, improved efficiencies of coal plants, and earnings from solar plant. AC likewise said it is looking at more unsolicited proposals, same with the C3 elevated expressway project with SM. Last 882.
JGS 1H17 core income after tax was flat at PhP15.9bn, in-line with PhP29.96bn consensus estimate (53%). For 2Q, core income -0.2% to PhP7.76bn.1H’s soft earnings was primarily due to lower net income of CEB as a result of the rise in fuel prices and hedging losses incurred for the period. The 9% and 13.7% decline in net income of RLC and URC, also contributed to the consolidated net income decline.
1H17 net income segment performance:
- CEB (-43.6% to PhP4.3bn): Higher aviation fuel expense
- RLC (-9% to PhP2.92bn): Decline in residential revenue
- URC (-13.7% to PhP6.4): Decline in volumes in BCF Philippines and additional investments in Vietnam
- Robinsons Bank (+20.3% to PhP161.33mn): Higher interest income, commission income and trading gains
- JGS Petrochem (+31.5% to PhP3.20bn): Increase in the volume of polymers
LTG posted a flat net income of PhP4.53bn last 1H17, below 2017 consensus estimate of PhP10.2bn. In 2Q17, profit declined 2.1% PhP1.7bn. Contributions from the liquor and banking units were disappointing due to lower ethanol volume and disappointing non-interest income, respectively.
1H17 net income segment performance:
- Tobacco (+28% to PhP1.86bn): Higher selling prices
- Liquor (-13.7% to PhP105.0mn): Lower ethanol volume and higher alcohol costs
- Bank (-38% to PhP2.75bn): Non-interest income plunged 46.7% to PhP3.4bn
- Beverage (-44% to PhP401.0mn): Higher opex
- Property (+31% to PhP174mn): Higher lease rates at its BPO office buildings
In a press release, RWM disclosed gross gaming revenues in 1H17 reached PhP9.2bn, down 26.4% YoY as its casino had been non-operational for 27 days due to the shooting incident last June 2. Non-gaming revenues inched up 3.9% to PhP2bn. EBITDA amounted to PhP2.2bn, a decline of 37.1% YoY. Detailed financials have yet to be disclosed but we think the plunge in net earnings follows that of EBITDA. Last 3.40.
DMC secures PhP11.7bn worth of contracts in 1H17. This is 2.6x more than the value of contracts during the same period last year. Total order book, however, is slightly down by 4% YoY at PhP26.8bn. Some of DMC's largest projects include CALAX (18km), Sec.1&2 of Skyway 3, ALI's Citygate, and Ortigas & Co.'s The Royalton and Imperium luxury condominiums. DMC says construction projects are so far still being driven by the private sector with only slightly growth from government infra projects. Last 15.68.
Toyota Philippines, a subsidiary of GTCAP, said it is likely to surpass its sales target of 175,000 units this year, or 10% growth. In 1H17, Toyota has sold 85,728 vehicles, translating to 18% growth YoY. Last 1,145.
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