Market Talk (AP, SMC, APX)

Economy: Policy rate stays at 4%. The monetary board of the central banks yesterday maintained the key policy rate at 4% for overnight borrowing (reverse repurchase) and 6% for overnight lending (repurchase). SDA rate was also unchanged at 2.5%. Reserve requirement ratios were held steady as well at 20%. The decision was based on indications of continued subdued inflation. The central bank also noted that domestic demand remains stable, supported by private household and capital spending as well as strong business confidence. They also see ample liquidity and planned higher public spending will support economic growth in the coming months. 

Utilities: PHP12.5b Manolo Fortich commences construction. Aboitiz Power Corp.'s (AP-HOLD) unit, Hedcor Bukidnon Inc., just kicked off the construction of the 68.8MW Manolo Fortich hydro facility project worth PHP12.5b in Bukidnon. As laid down by the company, the project was designed to be two cascading plants: the first phase will be of 43.4MW capacity; while the second phase will have 25.4MW capacity. The two phases of the Manolo Fortich hydropower facility are targeted to be on stream by 2017 to 2018. 

Utilities: SCPC seeks ERC approval for PSA. San Miguel Corp's (SMCNot Rated) energy arm, SMC Consolidated Power Corp. (SCPC), and Tarlac Electric II Cooperative (Tarelco II) have asked the Energy Regulatory Commission to approve their 10-year power supply agreement in which SCPC will supply Tarelco II with 15,000 kW of capacity from the 2×150MW coal-fired power plant in Limay, Bataan. The power plant is still under construction and the target commercial operations date is in August 2016. The SCPC’s baseload rate that will be charged to Tarelco amounts to PHP4.6/kWh. 

Mining: APX acquires Itogon mine. Apex Mining Co Inc (APX – Not rated) disclosed it has signed an agreement to acquire 24.5b shares of Itogon Suyoc Resources Inc (ISRI) representing 98% ownership interest in the company. The acquisition will expand APX’s mining business as it takes over ISRI’s mining claims and mill and production facilities in Sangilo, Itogon, Benguet. APX will infuse at least PHP238m in new equity in ISRI to pay down debts and reopen its mining operation in Itogon. 

- Maybank ATR