Market Talk (SMPH, ALI, DMC, AEV, GLO, CNPF, APX,

Property: SMPH and ALI JV wins Cebu SRP Lot. SM Prime Holdings (SMPH-BUY) and Ayala Land, Inc. (ALI-BUY) has joined forces and won the bid for the 26-hectare Lot No. 8-B-1 at SRP (South Road Properties) in Cebu at the amount of PHP10.0b. Based on our initial estimates the cost per sqm is PHP38.5K, which we believe is in the highend of the current market price range of PHP30K-PHP40K per sqm in the said location. We believe this is positive moving forward as it illustrates that the two can coexist and collaborate. We think it has also to do with future possible projects like Lake Shore in Laguna and the Reclamation in Pasay and Paranque, which can be developed by both property companies. We maintain our BUY rating for both SMPH and ALI. 

Conglomerates: DMC issues official statement for Torre De Manila. DMCI Holdings Inc (DMC-Not Rated) issued a statement regarding the public uproar over its Torre De Manila project. DMC said that they complied with all the necessary permits for the project and that the permit issued to them was for a 49-storey condominium instead of 7-storeys according to rumors. They also believe that their project did not violate any heritage laws and that it does not obstruct the view of the Rizal monument as the project is 800 meters behind it. 

Conglomerates: AEV raises PHP615m from treasury sale. Aboitiz Equity Ventures Inc. (AEV-HOLD) has raised PHP614.8m from the sale of 10.6m shares at PHP58 apiece last June 30. The treasury shares are part of the AEV’s 50m treasury shares to be sold either in tranches or in a single block at prevailing market prices which its board approved in August 2014. According to its disclosure at the Philippine Stock Exchange (PSE) portal, the balance of treasury shares authorized to be sold currently stand at 17.61m shares. 

Telecoms: GLO receives green light from SEC. Globe Telecom Inc. (GLO-HOLD) disclosed yesterday in the Philippine Stock Exchange (PSE) the approval from Securities and Exchange Commission (SEC) of the incorporation of its wholly-owned holding company, Globe Capital Venture Holdings Inc., through which new and strategic businesses will be made and consolidated. The creation of this holding company aims to provide more focus on developing and growing said businesses. 

Utilities: Major gas well found. Philippine National Oil Company– Exploration Corp. (PNOC-EC) has discovered the country’s next major commercial natural gas supply at its Mangosteen project in Santiago City, Isabela. PNOC-EC records showed that the Mangosteen field, located 8km south of Santiago, Isabela, had a recoverable resource potential of 71b cubic feet of natural gas reserves that could contribute 60MW to the Luzon power grid for more than 15 years.

Utilities: DOE chief orders re-evaluation of Bat-Man. Department of Energy (DOE) secretary Carlos Petilla has ordered the re-evaulation of the 121km transmission pipeline which runs from Batangas-Manila (Bat-Man) due to the project lacking a middle offtaker. Philippine National Oil Company (PNOC), who proposed the Bat-Man, will seek a private partner to build the project through a bidding process. Foreign investors who were reported to have taken interest in the project were PTT Plc. of Thailand, Japan's Marubeni Corporation and Russian state-owned Gazprom. 

Utilities: Malaya Thermal contract up for bids. The Power Sector Assets and Liabilities Management Corp. (PSALM) will auction off the one-year operation and maintenance service contract (OMSC) for the 650MW Malaya thermal power plant this month. PSALM has allotted a PHP457.28m budget for the contract. Interested parties are required to pay a non-refundable fee of PHP50,000 for the bidding documents which were made available at PSALM’s office in Makati City. 

Oil: Euro 4 fuel, New emission standard begins. Administrative Order (AO) 2015-14, which requires the use of cleaner Euro 4 fuel and imposes stricter emission standards for all vehicles, was issued by the Department of Environment and Natural Resources (DENR) last March and took effect yesterday, July 1, 2015. As stipulated in the AO, all new vehicles to be used and introduced in the market by 2016 should comply with Euro 4 emission standards. The AO also requires that oil companies ensure the availability of Euro 4 fuels by July 1, 2015. 

Consumer: CNPF earmarks PHP820m capex for 2015. Century Pacific Food Inc (CNPF – Not rated) confirms a Philippine Star report stating the company has earmarked a total of PHP820m in capex this year, significantly higher than its PHP540m capital spending last year. About PHP450m is allocated for the construction of cold storage facilities in General Santos City, Mindanao while the balance of PHP370m shall be used for regular maintenance. CNPF aims to grow its revenues and profits between 10-15% annually over the next two to three years. 

Mining: APX doubles 2015 capex to PHP1.9b. Various news dailies report Apex Mining Co Inc (APX – Not rated) has doubled its capex to PHP1.9b this year from PHP914m in 2014. This is in line with the company’s goal of ramping up its gold production and other mine development projects in the coming years. A top official was quoted as saying bulk of this year’s capital spending is allotted for the acquisition of property and equipment for the exploration activities in APX’s Maco gold mine in Compostela Valley. The amount does not yet include expenses related to the recently acquired Itogon mine which requires about PHP150m to restart operations. 

Economy: Infra spending up 40% in April. Data from the Department of Budget and Management show infrastructure spending in April rose 40.3% YoY to PHP23.3b. This was mainly due to higher fund disbursements from the Department of Public Works and Highways amounting to PHP5.2b. For 4M14, infrastructure spending is still lower by 1.9% YoY to PHP91.9b. This is 21.3% of the PHP431.57b programmed for infrastructure expenditures for 2015. With the increase in April, the government believes the acceleration in spending will continue on to the next months. Likewise, the government held discussions to tackle the issues that hampered spending previously. The government plans to adopt measures to help achieve further improve spending and achieve the targets for the year. 

- Maybank ATR