Banks: UCPB sale may be put on hold. The Supreme Court issued a
temporary restraining order (TRO) on the implementation of Executive
Orders 179 and 180, both of which deal with the sale of the coconut levy
assets. Among these assets is the 73.9% stake of the government in
United Coconut Planters Bank (UCPB), targeted to be sold on 18 Sep.
According to a BusinessWorld report, the Privatization and Management
Office has yet to verify if the TRO covers the UCPB privatization, and
whether the bidding schedule has to be adjusted. A total of 12 banks
reportedly submitted their letters of intent for the government stake, for
which it is asking for a minimum price of PHP1/sh. It is also requiring
PHP15b in recapitalization through subscription of up to 37.2b primary
common shares at minimum subscription price of PHP1/sh.
Banks: Loan growth eased to 14.5% in May. Lending by universal and
commercial banks net of reverse repurchase placements expanded 14.5%
YoY in May, slower than 15.4% growth last month. Credit extended to
sectors for production decelerated to 14.1% YoY from 15.1% rise in April.
The slowdown was evident in most of the major sectors: electricity, gas
and water (12.9% from 16.3%), manufacturing (12.9% from 15.2%), trade
(12.9% from 14.4%), and financial intermediation. Real estate and
business services which comprise 17.8% of the total loan portfolio picked
up pace to 12.9%, a bit faster than 12.5% growth a month ago. Meanwhile,
loans for household consumption climbed 20.5%, slightly better than 20.1%
expansion last month. Auto loans continued to surge at 28.3% (from
28.1%) while credit card receivables rose 5.6% from 4.9% rise a month
ago. Other household loans which include personal and salary loans
continued to beat the other segments with growth of 62.1% (from 61.5%)
as it comes from a low base.
Banks: PBB acquires Insular Savers Bank. Philippine Business Bank
(PBB – HOLD) yesterday disclosed it acquired 100% of Insular Savers
Bank (ISB), a rural bank, for PHP518m. ISB was formed following Insular
Rural Bank’s acquisition of Filipino Savers Bank. ISB has a primary focus
on consumer and commercial loans with a network of eight branches in
areas such as Taguig, Rizal, Pampanga, Bulacan, and Laguna. Approvals
from relevant regulators have yet to be secured. PBB says the acquisition
is in line with its expansion plans and will help them reach out to SME
clientele. PBB plans to add 30 branches this year to its current network of 122 branches. We believe PBB can pay cash as it had PHP896m in cash and other cash items
as of 1Q15.
Utilities: FGEN talks with potential partners. First Gen Corp. (FGEN-BUY) is already in talks
with potential partners from Japan, Europe and the Philippines to help finance and operate the
following projects: three plants worth USD1.5b which will run on Malampaya gas and a
liquefied gas terminal worth USD1.2b. The 414MW San Gabriel plant, the first of three gasfired
generators that FGEN wants to add, is already funded and will be operational next year.
This will be followed by two plants with total capacity of 800MW, expected to be completed in
2018 and 2021, respectively. For the gas terminal, it is targeted to be up and running by 2021,
before the Malampaya gas field runs dry in 2024.
Utilities: Lower power demand by August. According to Energy Secretary Carlos Petilla,
threats of power interruptions will not stop for Luzon in July because of high demand and the
fact that several power plants are still scheduled for maintenance shutdowns. He noted the
July demand is estimated to hover at 8,400-8,500MW. He also added that by August there
would still be maintenance shutdowns of power plants, but the difference lies in the fact that
system demand will already be lower, estimated to be at 8,000-8,200MW.
Utilities: Meralco awards San Buenaventura EPC. Meralco (MER-HOLD) confirmed the
awarding of the engineering procurement and construction (EPC) contract of the 460MW San
Buenaventura coal-fired power facility project to the consortium of Japanese firm Mitsubishi
Heavy Industries and Korean firm Daelim Industrial Co Ltd. MER chairman Manuel V.
Pangilinan noted the awarding of the EPC is the biggest step which will finally propel the
project that is targeted to go on stream by 2018. The corporate vehicle for the San
Buenaventura project is majority owned by Meralco subsidiary Meralco PowerGen while the
balance is held by Thai firm EGCO.
Utilities: PEMC pushed to stand by its decision. Energy Secretary Carlos Petilla urged the
Philippine Electricity Market Corp. (PEMC) to stand by its decision to impose penalties against
power firms that violated the must-offer rule of the Wholesale Electricity Sport Market (WESM).
PEMC earlier imposed penalties against Therma Mobile Inc. (TMO), a unit of Aboitiz Power
(AP-HOLD), Power Sector Assets and Liabilities Management Corp (PSALM) and Panasia
Energy Inc (Panasia), after they were found to have breached the WESM rule in Nov-Dec
2013. Aside from PSALM, TMO and Panasia, the following are the other power producers that
violated the WESM rule but for whom penalties were not meted out: AP Renewables Inc, CIP II
Power Corp, Trans-Asia Power Generation Corp, Udenna Management and Resources Corp,
Strategic Power Development Corp and SEM-Calaca Power Corp.
Utilities: MWC amends agreement with Province of Laguna. Manila Water Philippine
Ventures Inc. (MWPV), a unit of Manila Water Co Inc, (MWC-HOLD) and the provincial
government of Laguna signed an amendment to their joint venture agreement that expands
Laguna AAAWater Corp’s (Laguna Water) concession area to cover all cities and
municipalities in the province of Laguna. It further includes the provision of wastewater services
and the establishment of an integrated sewage and septage system in the province. Laguna
Water, their joint venture company, likewise signed an amendment to its concession
agreement with the local government to reflect those changes.
Consumer: PGOLD eyeing another supermarket chain acquisition. In a clarification to a
Manila Bulletin news article, Puregold Price Club Inc (PGOLD – BUY) disclosed it is finalizing
another supermarket chain acquisition worth PHP800m-1.4b. The target company has eight
stores with annual revenues of about PHP4b and has presence in areas where PGOLD is not
heavily represented. In early Feb PGOLD acquired nine-store grocery chain NE Supermarkets
in Central Luzon for an undisclosed amount. Our forecasts do not yet factor in the looming
acquisition but we estimate it could raise PGOLD’s annual revenues by 4%.
Consumer: CNPF declares PHP0.20/sh cash dividend. Century Pacific Food Inc (CNPF –
Not rated) disclosed its board of directors approved yesterday the declaration of PHP0.20/sh
cash dividend, consisting of PHP0.10/sh regular and PHP0.10/sh special cash dividend. The
dividends are to be paid to stockholders of record as of 30 Jul and payable on 25 Aug. This
translates to a 1.1% yield and payout ratio of 26% based on last year’s earnings.
- Maybank ATR
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