SMFB’s P142-billion follow-on offering to depend on price

August 23, 2018 | 6:08 pm

Appetite for San Miguel Food and Beverage, Inc. (SMFB)’s P142-billion follow-on offering will depend on its pricing, as the company undertakes the largest fundraising activity in the country before the end of the year.
In a regulatory filing at the Securities and Exchange Commission, SMFB applied to sell up to 1.02 billion common shares, consisting of 887 million common shares with an over-allotment option of up to 133.05 million common shares, priced at up to P140 apiece. The shares to be offered are currently owned by parent, San Miguel Corp. (SMC).
The shares comprise 17.26% of the company’s issued and outstanding capital stock. The offering will allow SMFB to comply with the minimum public ownership rule of 10%, as its current public float stands at 4.12%.
Once it secures approval from the SEC and Philippine Stock Exchange, the listed food and beverage company looks to price the offering by Oct. 19. The offering is scheduled to run from Oct. 23 to 29. Crossing of the offer shares is slated for Nov. 6. — Arra B. Francia

PNOC-EC seeks suppliers of Euro 4 gas oil, diesel

August 23, 2018 | 6:07 pm

PNOC Exploration Corp. (PNOC-EC) plans to buy Euro 4 gas oil or diesel fuel from any point of origin of the seller in a move that has seen the state-led company setting a new deadline in its bid to import competitively priced petroleum products.
In its letter of intent posted on its website, the commercial arm of state company Philippine National Oil Co. (PNOC) set the deadline of submission for interested sellers at noon of Sept. 13, 2018.
The new deadline follows pronouncements from the Department of Energy (DoE) that it plans to import the petroleum products by end-June, which it moved to July until the new date set by PNOC-EC. The DoE secretary chairs the PNOC board.
PNOC-EC’s specification for the fuel is a sulfur content of 50 parts per million (PPM), or the standard for Euro 4. It said the port of loading is as designated by the seller, while the port of destination is any safe port in the Philippines that it would designate. Euro 4 is a globally accepted European emissions standard for vehicles.
The company set the quantity at 50,000 metric tons for the trial shipment. Subsequent shipments of up to four shipments per month and up to one year are to be mutually agreed by the seller and the buyer.
The payment term is through letter of credit, while the delivery term is within 15 days after signing of the contract. — Victor V. Saulon

DMCI Power sales up by 20% in second quarter

August 23, 2018 | 5:55 pm

Sales of DMCI Power Corp. (DPC) rose by a fifth in the second quarter of 2018, driven by the demand for electricity in Palawan, Mindoro, and Masbate.
The power unit of listed conglomerate DMCI Holdings, Inc. said consolidated sales reached 79.93 gigawatt hours (GWh) in the April to June period, 20% higher than the 66.57 GWh it sold in the same period a year ago.
This brought DPC’s sales volume in the first half to 142.91 GWh, 19% higher than the 120.42 GWh seen in the first semester of 2017. Bulk of sales came from Palawan, accounting for 43%, while Masbate had 37% and Mindoro had 20%.
“The dramatic growth was principally due to the National Power Corporation, local government units and electric cooperatives, and their collective effort to address line issues in the missionary areas,” DPC President Nestor D. Dadivas was quoted as saying in a statement. — Arra B. Francia

Nikon takes on Sony with mirrorless camera

August 23, 2018 | 5:33 pm

Nikon Corp. unveiled its first full-frame mirrorless cameras, seeking to make up lost ground against Sony Corp. in the professional photography market.
The new Nikon Z7 and Z6 devices will feature new lenses and lens mount, and will be lighter than the current pro-grade cameras, the company said.
The 440,000 yen ($4,000) Z7, which will have a 45.7 megapixel sensor, will go on sale in late September, followed by the Z6, which will have 24.5 megapixels, cost 270,000 yen and go on sale in November. “We will deliver new value to the mirrorless market,” Nikon President Kazuo Ushida said at a media conference in Tokyo on Thursday.
With Nikon’s entry into the market, Sony will no longer have the only high-grade mirrorless cameras that excel at capturing sharp images of fast-moving objects. Canon Inc. has also said that it’s considering its own model, setting the stage for a battle for pro photography and amateur buyers. Although smartphones have decimated digital-camera sales, the three Japanese companies benefit from the branding and sales boost that comes with being the main suppliers of high-end cameras and lenses for news and sports events.
“Mirrorless is no longer a niche product,” said Stephen Baker, a consumer-technology analyst at researcher NPD. “It offers advantages in size and weight and battery that make mirrorless a very competitive premium technology.”
While Nikon and Canon dominated the pro market for decades, first with film and then with digital single-lens reflex (DSLR) cameras, it’s becoming clearer that devices without the mirror-and-prism system are superior. Thanks to advanced image sensors and sophisticated software, mirrorless systems can grab light faster and stay in focus, making it easier to capture crisp images of fast-moving objects.
“We will aim for the No. 1 spot in the mirrorless market,” said Nobuyoshi Gokyu, Nikon’s executive in charge of product planning.
Mirrorless cameras have been around for more than a decade, but Sony’s efforts in recent years to embed them with the larger full-frame image sensors — the chips that convert light particles into digital bits — have put them on par with SLRs in terms of picture quality. The design also makes cameras lighter, smaller and quieter — important attributes for pro shooters.
The new mirrorless designs have been a rare bright spot for the $11 billion industry, where digital camera shipments have plummeted 80 percent in the past decade, as more people use smartphones to take pictures. Mirrorless cameras now account for about a third of the the sector’s revenue, up from 9 percent in 2012, according to industry body CIPA.
“Mirrorless quality and capability have made it, in many ways and for many of the remaining prosumer type buyers, a very reasonable alternative to DSLR,” said NPD’s Baker.
Nikon and Canon actually already offer mirrorless cameras, but they are aimed at consumers and amateur photographers. Nikon had delayed a push into the full-frame mirrorless cameras on concerns that it would cannibalize its existing SLR lineup, according to NPD. As a result, Nikon’s share of the combined SLR and mirrorless camera has fallen to about a quarter, which is about half its position a decade ago, according to company estimates.
Cameras and lenses now account for 41 percent of Nikon’s operating profit, down from 62 percent a decade ago. The Tokyo-based company has turned to precision-measurement tools and medical cameras, although shares are still trading at less than half of their peak in late 2007.
Industry insiders are expecting Nikon’s main rival Canon to unveil its own full-frame mirrorless camera soon, setting the stage for a three-way battle in the professional photography market. Other camera makers are also stepping up investment, with Fujifilm Holdings Corp. announcing last month it will boost lens production by 70 percent in 2020 due to growing demand for mirrorless cameras. — Bloomberg

Dry run for Boracay re-opening set for Oct. 15; only 1,000 rooms allowed for occupancy

August 23, 2018 | 5:27 pm

The Department of Environment and Natural Resources (DENR) said that it will be conducting a dry run on Boracay a week before the island formally opens on Oct . 26.
Environment Secretary Roy A. Cimatu in a press briefing on Thursday, Aug. 23, said that some 1,000 rooms will be opened on the first day of the dry run, which will begin on Oct. 15. Another 1,000 will be added by the second day until the island’s operations reach “full blast” by Oct. 26.
The dry run will also be open to tourists. Mr. Cimatu however said that this would depend on the Department of Tourism as it would decide, which hotels will be allowed to have some of its rooms open for customers.
Despite this, the government will still limit the number of hotel rooms in the island, which will be based on the carrying capacity study which is set to be released by Saturday, Aug. 25.
The study will also be used as basis for the Boracay Interagency Taskforce to draft policies for the island. — Anna Gabriela A. Mogato

Deadline for submitting foreign borrowings plan set for next month — BSP

August 23, 2018 | 3:12 pm

The Bangko Sentral ng Pilipinas (BSP) has given the government as well as private firms until next month to submit their offshore borrowing plans for 2019.
In a public advisory, the BSP announced that all public and private entities must submit their foreign borrowings plan to the monetary authority until Sept. 30.

Man who pretended to be IC commissioner charged with estafa

August 23, 2018 | 2:23 pm

The Insurance Commission (IC) said an individual who was claiming to be Insurance Commissioner Dennis B. Funa was charged with estafa.
In a statement sent to reporters on Thursday, Aug. 23, the IC said a victim filed a case before the Makati City Prosecutor’s Office against a certain Jordan Alao Villanueva for defrauding him P700,000.
The case stemmed from a complaint filed by the victim who received a call from Mr. Villanueva claiming to be Mr. Funa.
According to the complainant, Mr. Villanueva was able to convince him that he was the commissioner due to Mr. Villanueva’s “intimate knowledge of the insurance agency.”
The accused extorted a total of P700,000, which was deposited in a bank account under his name sometime in August 2017, the victim added.
The complainant later found out from Mr. Funa that the number as well as the bank account do not belong to the commissioner. — Karl Angelo N. Vidal

Asian markets down as China, US hold talks but impose tariffs

August 23, 2018 | 2:17 pm

Hong Kong — Asia’s major markets were mostly down Thursday as China and the US exchanged fresh tit-for-tat tariffs on billions of dollars of goods while the two sides held talks on their long-running trade dispute.
Washington imposed levies on $16 billion of imports, sparking an immediate retaliation in kind from Beijing, which said it “firmly opposes the tariffs and has no choice but to continue to make the necessary counter-attacks”.
It also said the US was “clearly suspected” of violating World Trade Organization rules and would file a lawsuit with the group.
The measures are the second after the world’s top two economies swapped tariffs on $34 billion of goods in July.
They come as officials from each side hold their first talks since June aimed at easing a row that has dragged on equities for months. However, observers are cautious about what progress they will make initially.
Most stock markets were down in Asia.
While Tokyo edged up 0.2 percent in the afternoon, at the break Hong Kong was 0.7 percent down and Shanghai lost 0.3 percent. Seoul slipped 0.1 percent but Singapore surged 1.5 percent, after a one-day holiday.
Sydney fell 0.2 percent — and the local dollar shed 0.8 percent — as Australia’s Prime Minister Malcolm Turnbull fights for his political life following a leadership challenge.
The S&P/ASX 200 was also being dragged by a near five percent plunge in Qantas as a jump in the airline’s profits was offset by its worries about rising fuel costs.
Dollar picks up
Investors are keeping tabs on developments in Washington after Trump’s former personal adviser admitted a series of charges including illegal use of election funds, while his ex-campaign manager was convicted on several counts including bank and tax fraud.
On currency markets the dollar sprang back to life against the yen, pound and euro after this week’s travails, with Federal Reserve minutes signalling it is ready to lift rates again as the economy continues to improve.
“Many participants suggested that if incoming data continued to support their current economic outlook, it would likely soon be appropriate to take another step,” the minutes said.
The greenback had taken a hit this week from Donald Trump’s comments criticizing the central bank’s rate increases and accusing it of not backing his economic plan.
However, the Fed’s policy committee pointed to “ongoing trade disagreements and proposed trade measures as an important source of uncertainty and risks”.
In addition, most members said “an escalation in international trade disputes was a potentially consequential downside risk for real activity”.
Attention now turns to this week’s annual central bankers’ symposium at Jackson Hole in Wyoming, with investors hoping for some idea about governors’ plans in light of the China-US trade row. — AFP

National government fiscal performance (July 2018)

August 23, 2018 | 12:32 am

THE GOVERNMENT’s fiscal deficit grew in July and in the first seven months, as spending increased faster than revenues, the Bureau of the Treasury (BTr) said on Wednesday. Read the full story.

Spending surge boosts budget gap

August 23, 2018 | 12:32 am

By Elijah Joseph C. Tubayan
Reporter
THE GOVERNMENT’s fiscal deficit grew in July and in the first seven months, as spending increased faster than revenues, the Bureau of the Treasury (BTr) said on Wednesday.
The government posted an P86.4-billion fiscal deficit last month, 71% more than the P50.5 billion recorded in July last year.
Overall revenues grew 24% year-on-year to P241.7 billion from P194.6 billion.
Of this amount, tax revenues accounted for P217.8 billion, a 25% increase from last year’s P174.7 billion.
The Bureau of Internal Revenue (BIR) collected P164 billion last month, 19% more than P138.1 billion a year ago, while the Bureau of Customs (BoC) raked in P52.1 billion, 49% more than the year-ago P35 billion.
In its statement, the Treasury attributed the collection boost to “strong enforcement and revenue enhancement measures, coupled with the weaker peso and higher oil price.”
Other offices’ tax take totaled some P1.7 billion, six percent more than the P1.6 billion collected the past year.
Non-tax revenues accounted for nearly a tenth of overall revenues at P23.9 billion, which grew 20% from P20 billion in July 2017.
The BTr’s collections amounted to P11.8 billion, up 39% from P8.5 billion while other offices’ revenues were P12.2 billion, up six percent from P11.5 billion. The Treasury said this was due to “higher remittance of dividends on shares of stocks held by the government and NG (national government) share in PAGCOR (Philippine Amusement and Gaming Corp.) income and MIAA (Manila International Airport Authority) profits.”
STATE SPENDING SURGES
Government spending jumped 34% to P328.1 billion in July — “the highest nominal (monthly) spending for the year” — from P245.1 billion a year ago.
Of that amount, interest payments (IP) accounted for P44.8 billion — 13.7% of total spending in July — steady from P44.6 billion the past year. “The lower domestic IP on account of debt that matured last year was offset by the increase in foreign payments from new bonds issued in Feb 2018 and in part due to the depreciation of the peso,” the Treasury explained.
Other disbursements — which include infrastructure and other capital outlays — surged 41% to P283.3 billion in July from P200.5 billion a year ago.
YEAR-TO-DATE
For the January-July period, the government posted a P279.4-billion deficit, 36% bigger than the P205 billion recorded in 2017’s first seven months.
Revenues grew 21% to P1.652 trillion as of July from P1.372 trillion in 2017’s comparative seven months.
Tax collections contributed P1.473 trillion to the total, 18% more than the year-ago P1.244 trillion.
The BIR collected P1.129 trillion, 14% more than the year-ago P986.1 billion, while the BoC raked in P331.5 billion, reflecting a 35% surge from P245.3 billion in the same comparative seven-month period.
Other offices collected some P12.5 billion in tax revenues, edging up two percent from P12.2 billion.
Non-tax revenues surged 41% to P179.8 billion in the first seven months of the year from P127.4 billion in 2017’s comparable period.
The Treasury contributed P77.9 billion of that amount, 27% more than P61.2 billion the past year, while other offices raked in P101.9 billion, 54% up from P66.2 billion a year ago.
State spending in the same comparative seven-month periods grew 23% to P1.932 trillion from P1.576 trillion.
Interest payments accounted for about a tenth of the overall expenditures at P210.4 billion as of July, seven percent more than the year-ago P196.2 billion.
Other disbursements contributed P1.721 trillion, jumping 25% from P1.38 trillion last year.
Sought for comment, UnionBank of the Philippines Chief Economist Ruben Carlo O. Asuncion noted in an e-mail: “In general, these are all so far at comfortable levels, as the government continues to spend and tax to help the economy grow better and higher in the longer-run. Continued higher collections will bode well in the short- to medium-terms.’
“Both BIR and BoC should continue to deliver and push smashing collection goals. This direction of higher collection for the revenue collecting government agencies should be sustained at all cost, and a strong revenue collection growth should always be positive for the growing economy.”

Banks’ bad debts grow slightly as of end-June

August 23, 2018 | 12:31 am

BAD DEBTS held by big banks increased slightly as of end-June, even as they accounted for a smaller share of total loans amid a growing portfolio, according to latest available central bank data.
Non-performing loans (NPLs) held by universal and commercial banks totalled P110.606 billion as of June, 9.5% more than the P101.006 billion in problem debts incurred the past year.
NPLs refer to loans left unpaid at least 30 days past due date. These are considered risky assets given a slim chance that borrowers concerned will settle their debt, resulting in turn in losses for the lender.
Despite this, the increase of soured debts was actually slower than the 17.5% increase in total lending, as banks handed out a cumulative P8.331 trillion in credit to their clients. This compares to a P7.09-trillion loan book in 2017’s first semester, according to data from the Bangko Sentral ng Pilipinas (BSP).
Compared to total loans, the share of NPLs dipped to 1.33%, smaller than the 1.34% ratio recorded in May and the 1.42% share in June 2017. This meant that the stash of problem debts became more manageable for lenders.
The banks also beefed up defenses against possible credit losses amid brisk lending. They set aside P158.846 billion to cover for potential loan losses, 14% more than the P139.28 billion allotted for this purpose a year ago.
This is more than enough to cover NPLs, meaning banks concerned will remain on solid footing even if these problem loans are written off.
Non-performing assets held by banks steadied at P76.217 billion. This includes the value of real property and other items seized from clients for failing to pay their debt.
Banks also remained fairly liquid as deposits surged 11% to P11.019 trillion, enough to cover total loans.
The BSP monitors NPL ratios of banks and other financial firms in order to monitor asset quality and preserve the soundness of the financial system.
RELIEF
In a related development, the central bank also announced regulatory relief for banks and financial firms affected by typhoon Josie. The typhoon struck parts of the country in July, aggravating monsoon rains.
In a statement, the BSP said it has approved the grant of regulatory and rediscounting relief to banks based in towns in Ilocos, the Cordillera Administrative Region, Cagayan Valley, Central Luzon, Calabarzon, Mimaropa and Western Visayas.
For Metro Manila, banks located in Malabon, Marikina, Parañaque, Pasig, Quezon City and Valenzuela will also be given the option to avail themselves of relief measures as they recover from the typhoon’s wrath.
Thrift, rural and cooperative banks are allowed to exclude outstanding loans from borrowers in the covered areas in computing their past due ratios, provided that such borrowings are restructured or given relief.
The BSP will not penalize banks in the covered provinces even if their reserves fall short of requirement.
Those under rehabilitation may pause in settling their monthly dues with the BSP.
No fines will be imposed on such banks for delayed submission of regulatory reports to the BSP.
All banks located in the affected areas may likewise extend financial aid to their officers and employees, even beyond the set of fringe benefits approved by the BSP for each firm.
The central bank extends relief to banks and quasi-banks following natural calamities and disasters which disrupt their day-to-day operations.
The BSP announced a set of relief measures for banks in war-torn Marawi City back in January. — Melissa Luz T. Lopez

Malaysia shelving $22-B China-backed projects

August 23, 2018 | 12:30 am

BEIJING — Malaysia will shelve three China-backed projects worth a total $22 billion until the debt-laden Southeast Asian nation can afford to pay for them, Prime Minister Mahathir Mohamad said Tuesday during a visit to Beijing.
The projects include a railway connecting Malaysia’s east coast to southern Thailand and Kuala Lumpur, and two gas pipelines.
“I explained to (the Chinese leaders) why we can’t have the ECRL (East Coast Rail Link),” Mr. Mahathir told Malaysian reporters at the end of his five-day visit, saying the project “will be deferred until such time when we can afford (it)”.
“It’s about borrowing too much money, which we cannot afford, we cannot repay, and also because we don’t need those projects for Malaysia at this moment… our problem now is how to solve our financial deficit.”
Mr. Mahathir is trying to reduce Malaysia’s national debt, which has ballooned to some $250 billion.
Chinese foreign ministry spokesman Lu Kang acknowledged that “any cooperation between the two countries will inevitably lead to problems of one kind or another.”
“We take a long-term view of the relationship between our two countries and will resolve the issue through dialogue and negotiation,” Mr. Lu told a regular press briefing.
After meeting Premier Li Keqiang on Monday, Mr. Mahathir said he believed China would help Malaysia resolve its fiscal problems.
The Malaysian leader also warned against “a new version of colonialism happening because poor countries are unable to compete with rich countries just in terms of open free trade”.
The $20-billion rail project was given to China’s largest engineering firm, the China Communications Construction Co., and mostly financed by a loan from the Export-Import Bank of China.
Malaysia’s finance ministry said in July that 88% of the cost of the two gas pipelines worth 9.4 billion ringgit ($2.32 billion) had been paid to their Chinese contractor despite only 13% of the work being completed.
One pipeline is in Malaysia’s Sabah state on Borneo island and the other runs from Malacca in peninsular Malaysia to the northern state of Kedah.
“We do not find the need for… (the pipeline projects),” Mr. Mahathir said. “It costs too much money. And we have to cancel or defer it to a later stage.”
In May, Mr. Mahathir shelved separate plans to build a high-speed railway between Singapore and Malaysia which had been agreed upon several years ago, saying it was too costly.
Despite the threat to revise China-linked contracts, Mr. Mahathir sought to strengthen business ties with Beijing during the trip.
China is the top trading partner of Malaysia, which is home to a substantial ethnic Chinese minority.
Relations were warm under the previous government of Prime Minister Najib Razak, and Chinese investment in the country surged as Beijing signed deals for major construction and other infrastructure projects.
The projects shelved by Mr. Mahathir are part of China’s ambitious Belt and Road initiative, an international trade infrastructure program aimed at reviving old Silk Road routes across the globe.
China’s financial largesse has raised concerns over the vulnerability of poorer nations to such massive debt.
Last year, Sri Lanka was forced to hand over majority control of its Hambantota port to China after failing to repay its loans. — AFP