Banks: Strong lending growth sustained at 19.4% in February.
Lending activities of universal and commercial banks expanded 19.4% YoY to PHP3.8t in February, faster than 17.1% growth in January. In absolute amounts, loans grew by PHP618b YoY. Borrowings from the production sector rose 17.8% with robust growth evident in most sectors. Real estate and business services accounted for 18.5% of lending and went up 20.2%, quicker than 17.3% a month ago.
Electricity, gas and water also grew faster at 34.8% from 29.6% last month, while manufacturing slowed down to 11.3% from 12.7%. Other major sectors also exhibited double-digit growths: Construction (41.6%), trade (18.9%), and financial intermediation (14.5%). Lending to transport, storage and communications which makes up 6.3% of loans cut its five-month losing streak and grew 2.4%. On the consumer front, loans jumped 9.2% from 8.9% rise a month ago. Credit card receivables slowed down to 5.3% from 5.9%, while auto loans inched up by 12.1% from 11.6% last month. Others which include personal and salary loans, expanded 21.1%, faster than from 16.4% a month ago. The central bank expects that with the 1 ppt increase in reserve requirement, bank lending growth should move toward its long-run trend.
Utilities: AP submits highest bid for Naga power plant.
Aboitiz Power Corp (AP – HOLD) disclosed its wholly-owned subsidiary Therma Power Visayas Inc (TPVI) submitted the highest bid for the privatization of the 153.1-MW Naga power plant complex in Naga City, Cebu. Further, Business World reported that there were only two companies who submitted their bids, with TPVI’s PHP1.09b besting SPC Power Corp’s (SPC – Not rated) PHP859m bid. Ayala Corp’s (AC – BUY) AC Energy and Trans-Asia Oil and Energy Development Corp (TA – BUY) who previously hinted interests by attending last month’s pre-bid conference and completing the initial documentary requirements did not sumbit their bids. Official declaration of the winning bidder is still subject to confirmation and verification process. However, SPC has the right to match the bid of TPVI pursuant to its agreement with the National Power Corp and Power Sector Assets and Liabilities Management Corp.
Consumer: Additional details on the URC-Calbee JV.
Universal Robina Corp (URC – BUY) disclosed yesterday the formation of a 50-50 joint venture with Calbee Inc for the manufacture of Calbee snack products in the Philippines with expected start of business in 2015. Initial paid-in capital of the JV company would be approximately PHP654m while target annual net sales is at PHP2b by 2020. The agreement is still subject to the board
approvals of both companies and approval of the terms of related-party agreements.
Cement: LRI posts 30% earnings growth in 2013.
Lafarge Republic Inc (LRI – BUY) disclosed 2013 net income of PHP3.7b, up 30% YoY but slightly lower than our PHP3.9b estimate. Implied 4Q13 profits declined 18% to PHP695m. 2013 net sales grew 16% to PHP23b, slightly below our PHP24.5b forecast and implying 4Q13 revenues were flattish at PHP5.3b. Topline growth was driven by increased demand from both private and public sectors. The company also indicated higher cost of sales due to increased power costs, raw materials and logistics expenses but these were partially offset by the utilization of local coal and other alternative fuel and continuing operational efficiencies. We will be issuing a more detailed report on LRI pending the release of the 2013 financial statements.
Mining: AT looking at 42% growth in 2014 copper production.
In a disclosure to the Philippine Stock Exchange, Atlas Consolidated Mining and Development Corp (AT – BUY) confirmed a Philippine Daily Inquirer article stating that the company expects to grow its copper concentrate production this year by up to 42% to 130m lbs, in line with our 131.8m lbs forecast. This will be supported by the expansion of the average daily milling capacity of
AT’s flagship project Carmen Copper Corp to 60,000 tonnes per day which was achieved in late March and is expected to stabilize this month.
-Maybank ATR
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