Market Talk (FLI, MER, GLO, PX)

Property: FLI FY2014 profit increases 14%; sets 2014 strategy. Filinvest Land Inc (FLI - BUY) announced FY2013 net profit grew 14% YoY to PHP4.0b, in line with our PHP3.98b forecast. Earnings growth was driven mainly by residential and leasing with 66% and 29% contributions in earnings respectively. Of the total revenue 69% came from the core residential affordable and middle-income segments with its 11%YoY increase in sales take-up. 2013 capex of PHP10.6b was mostly spent in real estate development (40%) and land acquisition (41%). Of the latter, PHP3.5b or 33% of capex was for land banking for recurring income. This is in line with the strategy to have strong visibility in office space in areas strategically located throughout Metro Manila and close to transport hubs, apart from growing its core residential businesses. Management highlighted 2014 capex will almost double to PHP20b mostly for recurring business while project launches will be PHP17.5b in 2014 with 22 projects. Maintain BUY and TP of PHP2.20.

Utilities: MER signs another interim power supply agreement. Manila Electric Co (MER – HOLD) disclosed it signed last 8 April an interim power supply agreement (IPSA) with PanAsia Energy, operator of the 620-MW Limay diesel-fired power plant, for the purchase of up to 270 MW. The IPSA is on a non-firm basis and covers the period April to June 2014. Effectivity of the agreement is subject to the final approval by the Energy Regulatory Commission. Recall that last 2 April, MER also announced it signed three IPSAs for a total capacity of up to 204 MW.

Telecom: GLO to issue up to PHP10b preferred shares. Globe Telecom Inc (GLO – HOLD) disclosed its board of directors approved the issuance, offer and listing of up to 20m non-voting preferred shares, worth up to PHP10b. Earlier, GLO had reclassified its unissued common and voting preferred shares into non-voting preferred shares. Terms of the preferred shares issuance were not yet provided.

Mining: PX, Benguet towns reach agreement on PHP200m fine settlement. In a disclosure to the Philippine Stock Exchange, Philex Mining Corp (PX – BUY) confirmed a Philippine Daily Inquirer article
stating the company has already reached some agreements in principle with two towns of Benguet province regarding the settlement of a PHP200m in tax debts dating back to 2002. This relates to the PHP1.3b accumulated business obligation of PX to Itogon town and neighboring Tuba town. Nonetheless according to the company, the parties are still in the midst of finalizing and refining the details of the agreement to facilitate earliest resolution of the matter. We estimate this would potentially cut by 6% our 2014F earnings of PHP3.2b.


-ATR Kim Eng