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Cebu’s Rico’s Lechon makes its way to Metro Manila

WE’RE GOING to be the bearer of good news for your stomach and your soul, and bad news for your arteries and heart: Rico’s Lechon is now open in Manila.
The Cebu favorite was founded in 1995, and shot to cult fame when former president and now Manila mayor Joseph Estrada ordered a roasted pig from Rico’s. Rico’s was acquired earlier this year by Meat Concepts Corp., the company behind brands Ogawa Traditional Japanese Restaurant, KPub BBQ, Thai BBQ, Oppa Chicken, Modern China, and Tony Roma’s. The first branch in Manila is located in the BGC’s The Fort Strip, close to these outlets by Meat Concepts Corp. Other branches will open soon in Tiendesitas, Glorietta, Ayala Malls Cloverleaf, and UP Town Center.
BusinessWorld attended a preview at the restaurant earlier this week. Friends from Cebu and the Visayas took bites from the sinigang (sour soup) and bam-i (stir-fried noodles) and pronounced it “pwede na” (good enough), while the regular lechon, which of course was the reason why we were there, got the same rating.
The Spicy lechon variant, however, was a revelation. This is the stuff that lechon legends are made of. Shining with fat, covered in chili and spices, it teases and tantalizes the tongue ever so gently, massaging it to get a response, but will slide easily down the throat and land blissfully in your stomach. BusinessWorld found strands of leaves in it, first thought to be lemongrass, but Meat Concepts’ CEO George Pua corrected us and said it was onion leeks. Pressed further to reveal the secret of Rico’s Lechon, he laughed and said, “That’s why it’s called a secret!”
Be forewarned though: bringing in pigs and ingredients from Cebu was quite a hassle, so most of the ingredients are sourced from Luzon. Mr. Pua reiterates that no change would be noticeable in the taste (though Cebu-bred palates might say otherwise). “As long as it’s native, it doesn’t matter,” he said about the pigs, roasted on-site in BGC. “Basically, it’s the marination that will [make] a big difference.”
While Cebu is known for many things, getting Cebu lechon is treated like a quest for many tourists. Mr. Pua talks about the oft-repeated saying that Luzon lechon needs a sauce to give it a boost, while Cebu’s can stand up by itself. “It’s as natural as you can get,” he said. This apparently, says a lot about Cebuanos too. “They’re very proud of Cebu,” he says, which is probably why they wouldn’t need a sauce to cover up the taste of their pigs.
This is the first Filipino concept under the umbrella of Meat Concepts, and Mr. Pua says that the acquisition was natural as they don’t have a Filipino restaurant yet. But the scent of lechon wakes up something inside of Mr. Pua.
“When I was a teenager, we lived in Baclaran. Everytime I opened my window, I saw lechon. I craved for lechon.” — JLG

Yields on term deposits drop as demand shifts to shorter tenors

By Melissa Luz T. Lopez, Senior Reporter
DEMAND for term deposits shifted towards shorter tenors yesterday, driving yields slightly lower ahead of monetary policy decisions in the United States and in the Philippines.
Banks wanted to place P120.679 billion in term deposits this week, lower than the P124.499 billion in bids received a week ago.
Still, the amount settled above the P100 billion which the Bangko Sentral ng Pilipinas (BSP) wanted to auction off.
Nearly half of the tenders went into the week-long papers, marking a shift in preference ahead of the release of key economic data and central bank decisions due early August.
Offers for the seven-day deposits surged to P51.935 billion on Wednesday, rising from last week’s P47.436 billion to surpass the central bank’s P40-billion offering. This pushed the average yield to 3.7405% compared to 3.7494% fetched during the July 25 exercise.
On the other hand, bids for the 14-day tenor slipped to P49.801 billion from the P54.352 billion received a week ago. Still, demand was overwhelming as banks wanted to park more funds beyond the P40-billion auction amount.
This brought margins lower to average 3.9016% this week versus a 3.9084% rate seen previously. Banks wanted returns within the 3.8-3.925% range, well below the four percent ceiling.
In contrast, banks veered away from the 28-day deposits and betted only P18.943 billion, down from P22.711 billion a week ago and below the P20 billion which the BSP wanted to sell. This gave them scope to demand for bigger returns, with the average yield rising to 3.9605% from 3.9471% a week ago.
The term deposit facility (TDF) is currently the central bank’s main tool to capture excess money supply in the financial system. The BSP holds the weekly auctions to bring market and interbank rates within its desired spread, which currently ranges from 3-4%.
The BSP has been offering P100 billion for its weekly TDF auctions since June.
The US Federal Reserve is broadly expected to keep interest rates steady this week, while the BSP is seen to announce another rate hike during their Aug. 9 meeting. BSP Governor Nestor A. Espenilla, Jr. has said the central bank is eyeing a “strong follow-through” to successive rate hikes in May and June in an attempt to rein in inflation expectations.
The central bank is studying further “refinements” to the TDF auctions, which include the chance to reallocate volume offerings across tenors, conduct the auctions more than once a week, and shorten the lead time in announcing offer volumes.
“The continuous efforts of the BSP to refine its monetary operations are meant to enhance its capacity to guide short-term market interest rates to move closely with the BSP policy rate, and in the process, strengthen the transmission of changes in the monetary policy stance to the rest of the economy,” the BSP said in its quarterly report on inflation published last month.
The International Monetary Fund earlier said that the central bank’s use of the TDF has proven to be successful in shoring up excess liquidity following the reduction in the reserve requirement ratio (RRR) imposed on big banks.
The BSP has trimmed the reserve standard to 18% as of June, in keeping with Mr. Espenilla’s goal to bring the level to single-digit over the next six years and make it at par with neighboring economies. However, he said last week that the central bank will resume the “gradual” cuts next year as the regulator waits for inflation to return to the 2-4% target range.
Some market observers have quipped that the reserve cuts appeared to be sending mixed signals, as it the two cuts were followed by two rate hikes from the BSP. However, policy makers have said that the RRR adjustments are procedural and should not be taken as a change in policy stance.

Facebook uncovers ongoing evidence of US midterm elections interference

FACEBOOK, Inc. has uncovered an ongoing effort to influence US political opinions on its social networks, showing how attempts to meddle in civic life ahead of midterm elections are becoming more sophisticated even as the company takes steps to thwart them.
Facebook logo
Facebook said it notified the US government and deleted dozens of accounts and pages from people using false identities, who were coordinating events and stirring up political unrest. The campaign is similar to the one Russia-linked groups ran around the 2016 presidential elections, though the company doesn’t know who’s behind it this time. One thing is clear, Facebook said: the responsible parties were determined to not get caught.
“Whoever set up these accounts went to much greater lengths to obscure their true identities than the Russian-based Internet Research Agency has in the past,” Facebook said Tuesday in a blog post.
Facebook has promised to protect the US — and other countries — from the influence of organizations seeking to interfere in fair elections, after failing to disclose the Russia-backed effort until long after the 2016 race was decided. Lawmakers have put pressure on the company to become something of a private intelligence agency to ferret out fake accounts and false or misleading content. In response, Facebook has been hiring security analysts, coordinating with the governments on thousands of leads, and spending billions on systems to support the effort.
The new disclosure underscores the increasing difficulty of staying ahead of the latest strategies by political operatives trying to take advantage of Facebook’s algorithm, which helps popular and incendiary ideas to go viral. The accounts Facebook discussed on Tuesday already coordinated about 30 real-world events over the past year. The longer it takes Facebook to determine the difference between a person’s real ideas and a fake identity’s influence strategy, the harder it will be to ensure an informed democracy ahead of elections. At stake in this year’s midterms are several contentious races that could flip the US Congress to Democratic control.
“Security is an arms race,” Sheryl Sandberg, Facebook’s chief operating officer, said in a briefing with reporters. “We are glad we were able to find this. We always know our adversaries are going to get better and we are going to have to get better.”
Facebook said that starting last week, it identified eight pages and 17 profiles on its main social network, and seven accounts on photo-sharing app Instagram, that violated its rules. It shared the findings with US law enforcement, Congress and other technology companies. The Menlo Park, California-based company said it was letting the public know ahead of a real protest the fake accounts had helped coordinate in the nation’s capital for next week.
“At this point in our investigation, we do not have enough technical evidence to state definitively who is behind this,” Nathaniel Gleicher, Facebook’s head of cybersecurity policy, said on the call. “These accounts have engaged in some similar activity and in some cases have connected with known IRA accounts.” He said the full extent of this effort may not yet be known. “We’re following up on thousands of leads.”
The US intelligence community has occasionally suggested social-media sites are better positioned to catch evidence of meddling on their platforms, while the companies have pushed back that it’s law enforcement that has the requisite expertise. Still, Facebook has invested in thousands of employees, some with security clearance or law enforcement backgrounds, who can help the company spot unusual behavior from its user base.
Facebook has said that increased spending in safety and security would result in narrower profit margins in the coming years. That’s one reason Facebook’s shares tumbled 19% the day after its second-quarter earnings report last week. The company also posted slower-than-expected revenue gains and lackluster user growth. That report came against the backdrop of persistent questions about Facebook’s content and data-protection policies. — Bloomberg

CNPF books 9% increase in earnings

CENTURY PACIFIC Food, Inc. (CNPF) delivered a 9% increase in earnings for the second quarter of 2018, driven by the double-digit growth in branded revenues amid higher costs of raw materials.
In a regulatory filing, the listed canned goods manufacturer said its net profit reached P838.9 million in the April to June period of 2018, higher than the P767.5 million posted in the same period a year ago. Revenues for the quarter went up by 19% to P10.2 billion.
This pushed the company’s top-line performance 20% higher in the first six months of 2018 to P19.3 billion. Net income accordingly rose 7% to P1.57 billion.
The company noted a double-digit growth across branded marine, meat and milk products for an overall 25% in branded sales to P14.4 billion. Products under CNPF’s portfolio include Century Tuna, Argentina, Swift, 555, Angel, and Birch Tree, among others.
Meanwhile, its original equipment manufacturer (OEM) export business booked a 9% uptick to P4.9 billion in the first half. The company exports canned tuna products to North America, Europe, Asia, Australia, and the Middle East.
“We saw branded sales surge during the first half, as we hit records in terms of volumes sold and distribution outlets reached. We believe local macroeconomic factors have favored demand for our products, which have wide appeal and reach a broad consumer base,” CNPF Chief Finance Officer Oscar A. Pobre said in a statement.
Despite the strong performance during the period, the company said it remains on watch for rising input costs that may weigh down full-year earnings results. Mr. Pobre said they continue to see rising prices of certain raw materials and items like packaging, freight, and other expenses.
For instance, cost of sales consisting of raw materials, packaging costs, manufacturing costs, and direct labor costs surged by 21% to P14.22 billion. The increase was mostly seen in the prices of tuna, meat and packaging.
“We are hopeful that the robust sales numbers will continue, but expect more muted year-on-year increases from here as we face higher revenue comparable periods moving forward. We are also watchful as competition intensifies, though remain positive that our market leadership and growth prospects in emerging categories will help mitigate the effects,” Mr. Pobre said.
CNPF earlier said it expects net income to grow in the mid-single digits and revenues to grow in the teens for 2018.
The firm is investing up to P1.8 billion this year to expand its capacity, which includes a new tuna facility in General Santos City expected to be completed by the third quarter of 2019.
Shares in CNPF dropped two centavos or 0.13% to close at P15.48 each at the stock exchange on Wednesday. — Arra B. Francia

Britain’s storm in a tea cup settled: The milk goes in last!

LONDON — Although many cultural debates may be brewing in Britain, it appears that one age-old bone of contention has been settled: Should milk go in a cup of tea first or last?
Drinking tea is considered one of Britain’s favorite past-times, but its rituals have divided connoisseurs for centuries, and served as a social class marker.
The most contentious issue has been when to add milk, but a poll published Tuesday reveals that four times more Britons believe that it should be poured in at the end, rather than the beginning.
The YouGov Omnibus survey found that 79% favored adding milk last, with 20% disagreeing.
The split was even more marked across the generations, with 96% of 18-24 year-olds believing it should be added first, compared to 32% of over 65-year-olds.
The issue was tackled by author George Orwell in his 1946 essay “A Nice Cup of Tea,” where he wrote “indeed in every family in Britain there are probably two schools of thought on the subject.”
It was believed to have class connotations, with the aristocracy showing off their expensive china cups by adding boiling water first — a practice that would reputedly shatter cheaper vessels.
But the latest poll indicates no preference according to class, with the middle and working classes both equally likely to add their milk in first. — AFP

BDO Leasing posts income decline on higher costs

BDO LEASING and Finance, Inc. saw a decline in its net income in the first half of the year due to higher costs.
In a regulatory filing on Wednesday, the listed leasing and financing arm of Sy-led BDO Unibank, Inc. said it booked a net profit of P178 million in the January-June period, 36.9% lower than the P282 million tallied in the same period last year.
BDO Leasing attributed its lower profit to “higher funding and operating costs.”
Despite logging lower net income in the first semester of the year, the firm’s gross revenues climbed 4% year-on-year.
This was mainly driven by a P34-billion interest income from its lease and finance portfolio, augmented by service fees and other income.
However, BDO Leasing said this was tempered by higher financing charges and lower interest margins.
Higher documentary stamp tax on its commercial paper issue also helped temper its revenue growth.
The government doubled the rate of the documentary stamp tax under the Tax Reform on Acceleration and Inclusion law which was enacted this year.
Moving ahead, BDO Leasing said it will continue to leverage on the broad market reach of its parent company. It will also continue to strengthen its marketing efforts in emerging provincial areas to extend leasing and financing services to the growth sectors of the economy.
“Additionally, the company intends to expand and optimize its funding sources to match its asset growth and manage its funding costs,” the company added.
According to latest central bank data, BDO Leasing’s parent BDO is the country’s biggest bank in terms of assets, capital, deposits and loans.
BDO Leasing shares closed unchanged at P2.76 apiece on Wednesday. — K.A.N. Vidal

Solar Philippines offers lower price for electricity to Meralco

SOLAR PHILIPPINES Tarlac Corp. has offered to sell electricity to Manila Electric Co. (Meralco) at P2.34 per kilowatt-hour (kWh), challenging a previous offer from a competitor at P2.98 per kWh in a move that could become the latest benchmark in pricing solar energy.
“The first year is P2.34 [per kWh], and there’s an escalation and the levelized cost is still significantly below the original offer of P2.98,” Solar Philippines President Leandro L. Leviste told reporters.
“We submitted our offer many months ago and it had taken Meralco a long time to evaluate it. But now we’re hopeful that the proceedings will end soon since they have accepted it as the lowest price in the CSP (competitive selection process),” he said.
CSP is the government scheme aimed at lowering power costs by subjecting a power supply agreement to a price challenge. The original proponent is allowed to exercise a right to match the price offered by the challenger.
“Now [it’s] just subject to the original proponent’s exercise or non-exercise of the right to match,” said Mr. Leviste.
Meralco said in February that it had received an offer for an additional capacity of 50-megawatts (MW) from Pilipinas Newton Energy Corp. at P2.98 per kWh, the lowest offer it had received at that time.
Meralco’s first solar power supply agreement is with Solar Philippines at P5.39 per kWh. It was followed by a deal with PowerSource First Bulacan Solar, Inc. at P4.69 per kWh, and another contract with Solar Philippines at P2.99 per kWh.
“It was supposed to pass already but I believe there was an extension for them to have more time to decide. So it depends on Meralco when they will end the period during which the original proponent can decide,” Mr. Leviste said.
He said the Solar Philippines unit that offered the price challenge is the same one that offered the P2.99 per kWh to Meralco. The energy will be sourced from the company’s Tarlac solar farm, which is to be expanded from the existing 150-MW capacity.
“We are still finalizing [the expansion] based on technical studies of NGCP (National Grid Corporation of the Philippines) on the maximum allowable capacity for our Tarlac solar power plant eventually,” he said.
“Currently, our plan is to within the next few years expand it to a total 450 MW from the current 150 MW,” he said.
Mr. Leviste said the CSP was delayed because of a new regulation from the Department of Energy that called for new power supply agreements to be redone, this time with the distribution utility calling on power suppliers to submit their competitive bids.
He said Meralco had sought for clarification from the Energy department on whether the new rule covered the offer made to Meralco earlier this year.
“Overall, we just hope that this is yet another signal to the market that solar is the cheapest form of energy in the Philippines, and even with [battery] storage,” he said, adding that his offer could result in the country having one of Asia’s lowest cost of electricity. — Victor V. Saulon

Did Bezos just tease plan for home robot?

DID Jeff Bezos’s kids really use blue painters’ tape to attach an Amazon.com, Inc. Echo speaker to a robot vacuum cleaner? Or was his Instagram post on Monday just a teaser for his company’s next device?
The Amazon chief executive officer and world’s wealthiest man took to the photo-sharing app to post the image along with the caption: “What?!!!! Found this in the living room when I got home. I have no idea. #LifeWithFourKids”
Bloomberg News in April reported on Amazon’s plans to release a mobile Echo robot for the home.
Investors analyze Bezos’ comments for any insights into the secretive technology company’s next big project. In an earnings release on Thursday, he stirred speculation that the e-commerce giant is working on another smartphone by saying, “We want customers to be able to use Alexa wherever they are.”
Or maybe Bezos’s kids were just messing around with the family Roomba.
Amazon didn’t immediately respond to a request for comment.
Amazon.com, Inc. reported better-than-expected earnings in the second quarter and forecast more of the same in the current period, igniting investor optimism about cloud computing, advertising and other businesses that are more profitable than its main online retail operation. — Bloomberg

Max’s Group merges two subsidiaries

MAX’S GROUP, Inc. (MGI) is merging two of its subsidiaries in line with its goal to maximize operational synergies across its businesses.
In a disclosure to the stock exchange on Wednesday, MGI said the Securities and Exchange Commission (SEC) has approved the merger of its wholly owned units, The Real American Doughnut Company, Inc. and Fresh Healthy Juice Boosters, Inc., with the former as the surviving entity.
“The resulting transaction is aligned with on-going reorganization initiatives to maximize operational synergies across the business and does not adversely impact existing shareholders,” the company said.
Last June, the listed casual dining restaurant operator also consolidated operations of its wholly owned subsidiaries Teriyaki Boy Group, Inc. (TBGI) and Yellow Cab Food Corp. TBGI was the surviving firm after the merger, which was also undertaken to improve operational efficiencies within the company.
MGI said it will be ramping up franchising efforts to fast-track its expansion to 1,000 stores until 2020, targeting to get a 65% to 35% mix of franchised versus company-owned stores. The company ended 2017 with a total of 673 stores located in the country, as well as overseas markets North America, the Middle East, and Asia.
It operates stores under various brands, namely Max’s Restaurant, Pancake House, Yellow Cab, Krispy Kreme, Jamba Juice, Teriyaki Boy, Dencio’s, Maple, Meranti, Kabisera, Le Coeur de France, Singkit, and Sizzlin’ Steak.
Shares in MGI closed 32 centavos or 2.49% lower to P12.54 apiece at the stock exchange on Wednesday. — Arra B. Francia

Warm weather drink

AFP

A BARTENDER holds a measuring cup while preparing a Spritz cocktail in a café in central Rome, on July 17, 2018. Aperol is a historical brand which has existed since 1919 and had a strong growth but only in some regions in Italy. The Spritz tradition comes from the occupation of Italy by Austrian soldiers, who, when a wine was not very good or hot, added sparkling mineral water to it. — AFP

PAGCOR profit surges on one-time gain

By Elijah Joseph C. Tubayan, Reporter
THE PHILIPPINE Amusement and Gaming Corporation (PAGCOR) saw its net income surge more than 10 times in the first six months of the year due to a one-time gain from the sale of its land in Entertainment City in June.
In the first semester, PAGCOR’s income surged over a tenfold to P35.79 billion from P3.06 billion in the same period a year ago and more than met its P1.39-billion target.
PAGCOR President and Chief Operating Operating Officer Alfredo C. Lim said this was due to its sale of the 16-hectare parcel of land in Entertainment City worth P37.3 billion to Bloomberry Resorts Corp. for resort expansion projects.
“Because of the sale of the property and the increase in revenue in our license fees and casino operations. We’re exceeding the target,” he told reporters in a mix of Filipino and English yesterday on the sidelines of the Bureau of Internal Revenue’s 114th Anniversary celebration at the Philippine International Convention Center in Manila.
“In [the] Bloomberry [deal], we made a lot of money there because we bought that for so much only and yet we were able to sell it at P37 billion, plus the expenses were shouldered by the buyer,” he added.
PAGCOR’s gross gaming revenues totalled P33.45 billion in the first half, up 18.3% from the P28.27 billion recorded in the same period in 2017 and 9.87% above the P30.44-billion target.
“We were able to create a niche of our own customers,” he said.
The casino operator said it remitted half of its gross gaming revenues or P15.86 billion to the Bureau of the Treasury.
Aside from its casinos, PAGCOR earns income from shares and license fees from licensed casinos and offshore gaming operations, as well as rental, entertainment, and interest income.
Meanwhile, Mr. Lim said he is pessimistic about the plan to privatize PAGCOR’s casinos.
“I think it’s not going to happen,” said Mr. Lim.
He said this is because its revenues from casinos are performing above target.
“To me, when it comes to privatization, I don’t think it will happen. Because first, our casinos are making money, why privatize?” Mr. Lim said, while noting there are still no directions from the Finance department on the plan.
Finance Secretary Carlos G. Dominguez III earlier said he wants PAGCOR casinos to be privatize to eliminate the conflict in its being a casino regulator and operator at the same time.

S&P sees retail sector helping banks’ growth

chart-gdp-economy
RETAIL LOANS are expected to boost local banks.

S&P GLOBAL Ratings sees opportunity for growth in the Philippine banking sector as lenders continue to expand their retail loan segments.
On Wednesday, the global debt watcher said it sees a lot of opportunities in the local banking industry in terms of lending diversification as the sector is still dependent on corporate loans.
“The main issue right not is that there’s a lot of concentration [in the corporate segment.] They have a lush conglomerate-focused loan books, Ivan Tan, S&P director for financial institution ratings, said in a webcast yesterday.
Mr. Tan added that the proportion of the lenders’ retail lending versus their total loan book is “extremely small.”
Despite this, the credit rater said local banks have recognized their small retail loan portfolios and in turn, are moving to ramp up their distribution network.
“The banks have recognized this for the last three to four years. They have been trying to diversify their retail and consumer loans as they ramp up their branch network,” Mr. Tan said.
Aside from branch expansion, better underwriting practices bolstered by the local credit bureau will also help banks balance their loan book to be more retail-focused.
“They also have a consumer credit bureau. That would facilitate the underwriting consumer loans.”
In May, the debt watcher upgraded its Banking Industry Country Risk Assessment score for the Philippine banking industry to “6” from the previous “7.”
It cited the state-led Credit Information Corp. (CIC) as the agency help the banks improve underwriting practices in the consumer loans segment.
“We definitely see a lot of opportunities in terms of rebalancing of loan portfolio from chunky corporate loans to a more balanced, retail-focused loan book,” Mr. Tan added.
In April, S&P revised upward its rating outlook for the Philippines to “positive,” hinting at a possible credit upgrade in the coming months.
The Philippines currently holds a “BBB” rating from S&P, a notch above minimum investment grade.
A higher credit rating improves the chances for a country to borrow funds from foreign sources at cheaper rates. — K.A.N. Vidal

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