Market Talk (NIKL, EW, AP, MER, TA)

Mining: NIKL posts 1H15 shipment volume increase of 25%. Nickel Asia Corp (NIKL – BUY) posted 1Q15 shipment volume of 9.68m WMT, a 25% increase YoY and 10% higher than guidance. Implied 2Q production of 6.17m WMT is higher by 15% YoY and 76% QoQ. Average price of USD23.10 per WMT is lower 29% QoQ and 44% YoY. The volume increase was carried by middle-grade saprolite and limonite across three of four mines, with Rio Tuba doubling shipment and Cagdianao tripling production volume. 

Mining: NIKL to guarantee up to PHP3b loans of power subsidiary. NIKL’s board of directors approved to guarantee the loan facilities of 55%- owned subsidiary Emerging Power Inc (EPI) for up to PHP3b over a maximum three-year period. EPI is a domestic company engaged in the renewable energy business and owns the Montelago geothermal project in Mindoro Oriental with resource of up to 30MW over a 25-year period. The loan facility will be used by EPI to finance the purchase of up to 99.99% ownership in Jobin-SQM Inc (JSI) and a 60% ownership in Biliran Geothermal Inc (BGI), and for the development of the initial generating facilities for both projects. JSI has 100MW solar and 50MW wind renewable energy service contracts in the Subic Bay Metropolitan Authority while BGI holds a geothermal contract in Biliran province which could potentially generate at least 100MW.

Banks: EW to put up its non-life insurance unit. East West Banking Corp (EW – BUY) is entering into non-life insurance brokerage via establishing a wholly-owned subsidiary East West Insurance Brokerage Inc. This is separate from its life insurance unit, EastWest Ageas Life, which is a joint venture with Ageas Insurance International of Belgium. The insurance businesses will add to EW’s financial products and help boost fee income. 

Utilities: AP intends to develop 5 big hydropowerplants. According to BusinessWorld, Aboitiz Power Corp's (AP-HOLD) subsidiary, Hedcor Inc, is planning to develop four to five hydropower plants with average capacities of 25MW and above to meet its target of 2b kWh annual generation by 2020. In a disclosure, AP clarified these projects are already in the pre-development phase. AP currently has 22 hydropower plants that are located in Benguet, Davao City, Davao del Sur, Ilocos Sur and Mountain Province. AP also has an ongoing construction of a 68MW hydropower project in Bukidnon which is composed of two units, 43MW Manolo Fortich 1 and 25MW Manolo Fortich 2, that will utilize hydropower resources from the Tagoloan River. 

Utilities: MER hopeful for an electric vehicle manufacturing plant. According to the Philippine Star, Manila Electric Co (MER-HOLD) is hopeful for the establishment of a manufacturing facility for electric vehicles (e-vehicles) in the country as it believes e-vehicles will be an increasing component of the overall transportation industry, initially in the smaller forms of public transport like tricycle and e-jeeps. But since manufacturing is not MER's core business, it will need a partner who knows the the trade. It will also have to initially consider the scale of local demand to determine when it would make concrete investments for a manufacturing facility. At the moment MER is doing its part in supporting the local e-vehicle industry by putting up e-vehicle charging stations in various areas. 

Utilities: TA spends PHP2b to boost energy portfolio. In a disclosure, Trans-Asia oil and Energy Development Corp. (TA-BUY) said it disbursed PHP1b from 14 Nov 2012 to 31 Mar 2015 for the development of its 54MW wind energy project in San Lorenzo, Guimaras in Iloilo and the second 135MW unit of the coal-fired power plant in Calaca, Batangas. The investment came from the PHP1.62b gross proceeds of its stock rights offering in 2012. TA also noted it spent PHP1.04b for its coal power projects and PHP105m for Maibarara Geothermal, Inc, which was funded from PHP1.16b gross proceeds of a stock rights offer in 2011. It also utilized PHP41.6m for the expansion of a 21MW bunker-fired power plant in Calamba, Laguna operated by its wholly owned CIP II Power Corp from 28 Nov 2007 to 31 Mar 2015.  

- Maybank ATR