August 8, 2017
Morning Huddle
Daily Summary
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US Tracker
US stocks closed lower on news of N. Korea successfully producing a nuclear warhead.
DOW 22,085.34 -33.08 -0.15%
EPHE 36.44 -0.04 -0.11%
PHI 32.97 +.05 +0.15%
Peso 50.44
TEL Par 1,663 vs 1,658 TEL
Economic News
IMF lowers Philippine FY17 GDP forecast to 6.6% from 6.8%, and FY18 to 6.8% from 6.9%. The IMF says this is due to the absence of election-related public spending last year. They also said the government should pursue the comprehensive tax reform program, provide insurance against the volatile international finance conditions, and protect the confidence and trust that the private sector both domestic and international have on the conduct of economic policies.
‘Milk tax’ to worsen undernutrition. The planned milk tax is included in House Bill 5636, the Tax Reform for Acceleration and Inclusion Act (TRAIN) bill. Proposed milk tax is likely to increase the prices of powdered milk in the country by a range of 11% - 26% while flavored milk, specifically chocolate flavored milk will see increased prices by a range of 11% - 34%. Brands under listed companies to be affected include Magnolia (PF) and Birch Tree (CNPF).
Corporate News
GTCAP acquires 20% stake (4mn shares) in Sumisho Motor Finance Corp (SMFC) for PhP379.92mn or PhP94.98/sh. This will allow GTCAP’s entry into motorcycle financing. Payment will be made on August 11, 2017. SMFC is a jv of PS Bank, PS Bank Retirement Fund, Sumitomo Corporation, and Sumitomo Corporation of the Philippines. As per its last SEC filing, SMFC’s FY15 net earnings more than doubled YoY to PhP50.5mn. Last 1,215.
PCOR 1H17 net income up to Php8.2bn (+56.0% YoY), above consensus full-year estimate of Php9.2bn (89.1%). The strong 1H17 was driven by improved refinery production yields and sustained sales volume of 52.9mn barrels (+0.5% YoY) coming from the strong performance in 2016. The press release did not provide any additional details regarding their 1H17 performance. Last 9.65.
ICT 1H17 net income up to US$103.6mn (+19.0% YoY), above consensus full-year estimate of US$177.1mn (58.7%). Strong volume growth (4.5mn TEU, +7.0% YoY), group-wide cost optimization initiatives and positive contribution of the Congo terminal contributed to the double-digit growth in 1H17. Last 105.2.
EAGLE's 1H17 net income of PhP2.22bn (+13% YoY) stands in line with our PhP4.35bn FY17 expectation (51%) and with the consensus forecast of PhP4.64bn (48%). Topline grew 12% to PhP7.48bn, driven by double-digit growth in selling volumes. This was offset by lower ave. selling prices (ASPs). EAGLE maintained that its Line 3 (2mn tons/year) would be complete by 1Q18, with an ITH from BoI effective in the same year. Current recommendation is a BUY with a TP of PhP17.15/sh. Last 15.00.
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