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DM Wenceslao slumps in market debut

By Arra B. Francia, Reporter
PROPERTY developer and construction firm D.M. Wenceslao & Associates, Inc. raised P8.15 billion in the country’s first initial public offering (IPO) this year, but its shares closed below its offering price on its first day of trading.
Shares in DMW opened 20 centavos lower than its P12 IPO price to P11.80 each — its highest for the day — before hitting a low of P9.66 intraday.
The company managed to taper off losses by closing bell, but still ended 14.5% or P1.74 lower to P10.26 apiece. In contrast, the benchmark Philippine Stock Exchange (PSE) index jumped 1.8% or 127.11 points to 7,193.68.
DMW’s market capitalization stood at P40.75 billion after the fundraising activity.
Maybank Kim Eng Securities Pte. Ltd., which acted as one of the offer’s joint global coordinators and bookrunners, said 70% of the buyers were institutional investors, while the remaining 30% were retail.
“Transaction was anchored by institutional investors, and also including some corporate investors as well… It’s clear to say there was a very strong domestic institutional focus, there was traction from international investors, but majority of the demand was from domestic,” Maybank Rajiv Vijendran said during a briefing after DMW’s listing ceremony on Friday.
The company launched its IPO amid current volatility in the market, which entered bear territory after the benchmark PSE index fell more than 20% from its high of 9,078 in January.
“One of the reasons why we proceeded with the IPO is that we are confident about the growth trajectory of the company… When we decided to greenlight the project, the market was at 9,000. The growth prospects did not change, just market sentiment,” DMW Chief Executive Officer Delfin Angelo C. Wenceslao said in the same briefing.
Analysts noted that the property company, which is developing Aseana City in Pasay City, was affected by the overall bearish sentiment in the market.
“The negative and bearish market sentiment prevailed upon its listing thus the price was downed from its IPO, plus the tightening of global monetary policy,” Diversified Securities, Inc. Trader Aniceto K. Pangan said in a mobile text message.
Summit Securities, Inc. President Harry G. Liu noted the same, saying the market’s reception to the stock was lukewarm given the general slowdown in the market.
“It’s just acting according to the market sentiment, which is soft. I suppose that’s how DMW reacted… The company’s fundamentals will support itself at a certain price level,” Mr. Liu said in a phone interview.
Net proceeds of the offer reached P7.6 billion, 49% of which will be used to finance the nine projects DMW has lined up for its flagship development Aseana City over the next five years.
Around P2.9 billion has been allotted for the acquisition of land assets, while the remaining P1 billion will be used for infrastructure development.
Four of the projects are office and retail developments, intended to boost DMW’s recurring income in the future.
“Moving forward, you would probably see us maintain our recurring income at 50-60%,” Mr. Wenceslao said.
DMW currently has yet to develop 58 hectares of land within the 204-hectare Aseana City. Aside from Aseana, the company also has land in Cavite, Quezon City, and Makati City. Outside Metro Manila, the firm is conducting due diligence for a land reclamation project in Mandaue, Cebu.
Mr. Wenceslao noted the company’s current land bank will be enough for the next 15 years.
“Considering its positive fundamentals with a recurring revenue of 50%, I believe it’s a good growing company. It has an advantage in location as this (Aseana City) is considered the next central business district after BGC (Bonifacio Global City) with leasing as predominant in this place due to strong presence of outsourcing business,” Diversified Securities’ Mr. Pangan said.

New draft rules propose auction of frequencies for 3rd telco player

THE Department of Information and Communications Technology (DICT) released on Friday another set of draft guidelines for the selection of the third major player in the telecommunications industry, this time proposing an auction of the frequency spectrums.
The latest draft joint memorandum circular reflects the preferred selection process of the Department of Finance (DoF), wherein the highest bidder for the five-year commitment period will be be selected as the new major player.
A minimum bid of P36.58 billion was set.
“Please note that the minimum bid amount is pegged from the Spectrum User Fees (SUFs) being paid by existing telecommunications companies and does not yet consider the inputs/recommendations of experts from International Telecommunication Union (ITU) and best practices from other countries, and hence, is in no way final,” the DICT said in an e-mailed statement.
“Further, while there is a minimum bid amount, in this mode of selection, there will be no cap on the bid amount as the participant who submits the highest bid shall be selected as the New Major Player,” it added.
The latest draft terms of reference, as well as an another version released earlier this week, will be discussed during a public consultation on July 6.
“Both will be subject to public discussion on July 6, Friday. But after one is selected, this will undergo the legal process for becoming the MC (memorandum circular) for the selection process,” DICT Acting Secretary Eliseo M. Rio, Jr. said in a mobile text message.
The DICT on Tuesday released a draft of the terms of reference, which used the Highest Committed Level of Service (HCLoS) as the basis for selecting the third telco player.
Based on the criteria for selection, a 40% weighting was assigned to the bidder’s ability to serve a percentage of the population, with another 40% of the score to be given to its capital expenditure commitments. It also assigned a 20% weighting to an applicant’s commitment to certain broadband speed levels.
The bidder’s capital spending plans, including operational expenses, are subject to a minimum of P40 billion.
Mr. Rio earlier opposed the DoF’s proposal to hold an auction for the frequencies, instead backing the use of the HCLoS as basis for selection instead.
“The DoF wants to auction the frequencies, and the third player will be the highest bidder. We think this is anti-competitive because the incumbent telcos never bought their frequencies from the government,” Mr. Rio earlier said. “It will put a big burden on a new player by (forcing it to) put up a huge amount up front that has nothing to do with putting up an infrastructure and improving telecommunications services.”
Both versions of the terms of reference require participants to have a Congressional telecommunications franchise that is not related to the two dominant players PLDT, Inc. and Globe Telecom, Inc., as well as a paid-up capital of at least P10 billion.
Participants should also have at least five years’ experience in the delivery and operations telecommunications services.
The third player must also be able to provide its services to at least 30% of the country’s population on its first year of operations, and must provide a minimum broadband speed of 10 Megabits per second (Mbps). After its first five years, it said the new major player must have covered at least 50% of the population.
The DICT is targeting to name the third telco player before the year ends.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

Trillanes seeks probe into anti-loitering operations

By Arjay L. Balinbin
OPPOSITION Senator Antonio “Sonny” F. Trillanes IV has filed a resolution seeking an investigation, in aid of legislation, into the alleged arrest of loiterers by the members of the Philippine National Police (PNP) following the order of President Rodrigo R. Duterte.
Senate Resolution No. 775, which was filed on June 28, directs the Senate committee on public order and dangerous drugs to probe police operations against “tambays” or loiterers.
The resolution aims to “review existing laws and local ordinances to ensure that no human rights violations were committed and that the PNP is acting within its mandate and the bonds of law.”
In his resolution, Mr. Trillanes stated that the drive against loiterers “poses a grave threat to basic human rights of Filipinos and violates due process of law.”
He added: “It also runs counter to the goal of the policy to make streets safer as it only promotes a culture of fear and injustice, especially among the poor.”
For his part, Senator Richard J. Gordon said in a press release on Friday that there is a need “to arm village officials in areas with high crime rates, rebellion or insurrection to help them protect themselves and their community.”
However, “the government should not give arms to those in the drug list or those who have criminal records,” he also said.
Last Thursday, Malacañang said it is ready to defend Mr. Duterte’s anti-loitering drive. “So we welcome the Congressional investigations, and we welcome also challenges before the Supreme Court. The President has said so,” Presidential Spokesperson Harry L. Roque, Jr. said in a press briefing at the Palace.
Mr. Roque also said Mr. Duterte’s administration does not intend to criminalize vagrancy. “We are not criminalizing vagrancy po. We are implementing the laws and ordinances and it is a form of higher police visibility intended to act as deterrent towards the commission of crimes,” he said.
Asked if the campaign is not in violation of Republic Act No. 10158, a law decriminalizing vagrancy, Mr. Roque replied: “Hindi po, hindi po (No, no). (The) decriminalization… is (only) a particular crime of vagrancy under the Revised Penal Code, and that’s without prejudice to other existing ordinances.”

Robredo to appeal decision that penalizes her for violating sub judice rule

VICE PRESIDENT Maria Leonor “Leni” G. Robredo on Friday said she plans to challenge the Presidential Electoral Tribunal’s (PET) decision to slap P50,000 fines against her party and counsel as well as those of former Senator Ferdinand “Bongbong” R. Marcos’s for violating the court’s sub judice rule.
Standing by her decision to counter Mr. Marcos’s claims in public regarding their ongoing election recount, Ms. Robredo plans to submit to the PET a Motion for Reconsideration, saying in a speech in Basilan, “kapag may kasinungalingan na sinasabi, ang pakiramdam namin kailangan naming i-correct (if there are lies being spread, we feel it is right for us to correct them.)”
She, however, clarified she would “(susunod) naman sa orders ng PET (follow the orders of the PET.)”
Mr. Marcos, likewise, said he and his camp would abide with the PET’s orders.
The PET had ordered Ms. Robredo and Mr. Marcos to explain why should not be cited in contempt for violating the court’s gag order when they disclosed information about the recount to the public.
Both maintain their innocence, with Ms. Robredo saying she was only defending herself from Mr. Marcos’s lies.
The manual poll recount between the two started on April 2 and stemmed from a complaint by Mr. Marcos which accused Ms. Robredo of committing electoral fraud to win the vice presidency in the 2016 national elections.
“Irregularities” have been observed by both camps, chief being the wet ballots and missing audit logs Mr. Marcos claimed were encountered during the initial days of the recount. — Dane Angelo M. Enerio

Ombudsman suspends DENR exec for abandoned Canadian trash

THE Office of the Ombudsman has suspended Department of Environment and Natural Resources (DENR) Undersecretary Juan Miguel Cuna in connection with the abandoned shipment of garbage imported from Canada to the Philippines in 2013, according to a statement released on Friday.
According to the Ombudsman, Mr. Cuna was, “found guilty of Simple Misconduct and ordered suspended without pay for three months,” with DENR Secretary Roy A. Cimatu directed to implement the suspension order.
The Ombudsman added Mr. Cuna faces violations of Republic Act (RA) No. 3019 or the Anti-Graft and Corrupt Practices Act for allegedly “mishandling” the shipment of trash.
It was discovered in its investigation that Canadian-based exporter Chronic Inc. shipped the container vans filled with plastic scrap materials “without securing import entries for its shipment that arrived in July 2013 and August 2013.” There were 50 containers in total that were not claimed by Chronic.
Upon closer look, Ombudsman investigators found that Mr. Cuna, then Director of the DENR’s Environmental Management Bureau (EMB), “issued a Registry Certificate for the Importation of Recyclable Materials Containing Hazardous Substances dated 19 June 2013 despite the lack of details in the Importer’s Registry Sheet.”
“Respondent Cuna acted with gross inexcusable negligence when he issued a Registry Certificate in favor of Chronic Plastics despite the insufficient details in its Importer Registry Sheet,” the Ombudsman said.
It explained, “[w]ithout the necessary information, the EMB cannot sufficiently make a determination that Chronic Plastics is capable of recycling materials to be imported. However, despite this, respondent Cuna still approved Chronic Plastic’s application of registration.”
Mr. Cuna also allegedly issued six Importation Clearances to Chronic Plastics “despite an existing Notice of Violation dated 05 September 2013 for importing heterogenous and assorted plastic materials in violation of DENR Administrative Order No. 1994-28.”
According to the Ombudsman, “it is the mission of the EMB to protect, restore and enhance environmental quality towards good public health, environmental integrity and economic viability. It is also mandated to strictly implement environmental laws and restrict or prohibit the importation, manufacture, processing, sale, distribution, use and disposal of chemical substances and mixtures that present unreasonable risk and/or injury to health or the public.”
Canadian Prime Minister Justin J.P. Trudeau has expressed willingness to resolve the issue with the Philippine government but has yet to order the trash to be returned. — Dane Angelo M. Enerio

Immigration bureau bolsters Mactan-Cebu team ahead of new terminal’s opening

THE Bureau of Immigration (BI) has deployed a dozen more officers to the Mactan-Cebu International Airport (MCIA) ahead of the opening of its new passenger terminal on July 1.
BI Commissioner Jaime H. Morente in the statement pointed out the officers were assigned “to conduct immigration inspection for arriving and departing international travelers.”
MCIA’s new Terminal 2 is expected to increase the passenger capacity of the international airport to more than 12.5 million passengers a year.
“The BI fully supports the vigorous efforts of (President Rodrigo R. Duterte) to market the Philippines as a prime tourist destination, thus our commitment to render quality service to the traveling public in our international ports,” he said.
He added: “We shall be fielding more personnel to MCIA in the coming months as we continue to hire new immigration officers who will agument our manpower not only in Mactan but in other international ports as well.”
BI Acting Deputy Commissioner Marc Red Fariñas in the same statement pointed out Mr. Morente “had been heeding requests for additional personnel in view of the increasing volume of international flights and passengers at the said airport which began early this year.”
According to him, “we had only about 60 BI perssonel assigned as the MCIA in 2017 and that number has now ballooned to more than a hundred.”
There are now 112 immigration personnel in the airport, he said. — Dane Angelo M. Enerio

Mistaken suspect in Nueva Ecija priest’s slay released

Nueva Ecija priest Richmond Nilo

THE Cabanatuan City Regional Trial Court Branch 27 on Thursday ordered the withdrawal of the criminal case against a suspect in the killing of Nueva Ecija priest Richmond Nilo last June 10, saying he was mistakenly identified and arrested by authorities.
Presiding Judge Angelo C. Perez, in his order dated June 28 and released to media on Friday, ordered the Philippine National Police (PNP) of Cabanatuan City to release Adell Roll M. Matias, who was earlier suspected of killing Mr. Nilo.
Mr. Matias was arrested on June 15 for allegedly killing Mr. Nilo after being identified by witnesses.
According to an affidavit submitted by Mr. Matias to the court on Friday, state investigators discovered a certain Omar L. Mallari was actually behind the killing.
He clarified he would not file a complaint against the authorities who apprehended him.
Mr. Nilo was shot by two unidentified gunmen on his way to hear mass at a in church Zaragoza. He was the third priest to be killed in a similar manner in half a year.
Authorities have yet to pinpoint a motive for his death. — Dane Angelo M. Enerio

LTFRB accredits new TNC E-Pick Me Up

THE Land Transportation Franchising and Regulatory Board (LTFRB) confirmed that it accredited a new transport network company (TNC) on Thursday.
Inter-Agency Council for Traffic (I-ACT) spokesperson Aileen Lourdes A. Lizada told reporters in a Viber message on Friday that the new TNC is E-Pick Me Up, Inc.
The office of LTFRB Chairman Martin B. Delgra III verified the information to BusinessWorld.
Earlier this month, Ms. Lizada said the LTFRB was considering stopping the accreditation of new TNCs following the approval of a new department order (DO) putting the LTFRB in charge of the transport denomination.
But on Friday, she told reporters that “The action document is being finalized.” She added that the said document will have to spell out the terms of the moratorium.
For his part, Mr. Delgra said there is “no decision on the matter” as yet. “Right now (there) are pending applications for accreditation,” he said.
The LTFRB said E-Pick Me Up will initially operate in Metro Manila only. Eventually, the company hopes to expand its operations to the greater Metro Manila area and nearby provinces.
In early June, the LTFRB Pre-Accreditation Committee recommended E-Pick Me Up for accreditation by the board.
There are now eight TNCs that have been approved by the LTFRB to operate in the country. Aside from E-Pick Me Up, the others are Grab, Hype, Hirna, Owto, Go Lag, Micab and U-Hop. — Denise A. Valdez

Del Monte suffers net loss thanks to plant closures

DEL MONTE Pacific Limited (DMPL) swung to a net loss for the fiscal year ending April 2018, dragged by the closure of two plants in the United States.
The listed canned fruit manufacturer said its net loss reached $28.2 million in the 12 months ending April, against a net profit of $24.4 million the year before. The performance for the year was weighed down by one-off expenses amounting to $74 million after the company closed down two plants in the US.
The closure of the plants was part of the company’s efforts achieve operational efficiencies among its plants and reduce costs from the US subsidiary, Del Monte Foods, Inc.
DMPL also wrote off deferred tax assets following a change in US tax rates.
Excluding one-off items, DMPL said it would have booked a net income of $12 million, still a 50% drop from the year before.
Meanwhile, the group’s sales slowed down by 2.5% to $2.2 billion for the fiscal year, with lower sales in the US dampening growth in Asia.
The Philippine unit, Del Monte Philippines, Inc. (DMPI), recorded $540.5 million or P27.6 billion in revenues for the period. This represents a 6.7% uptick in peso terms. Local sales accounted for two-thirds of DMPI’s sales, while the remaining portion comes from exports under the S&W brand and private label.
For the fourth quarter alone, DMPL’s net income surged 324% to $12.3 million, from the $2.9 million reported the year before. The increase was achieved after the company’s purchase of DMFI’s loans at a discount in the secondary market. Without this, the firm would have recorded a loss of $2.1 million due to lower export sales and reduced prices.
Sales for the fourth quarter were also lower by 8.5% to $499 million, due to lower sales in the US alongside the lower, cyclical pineapple juice concentrate prices in international markets and decreased exports of processed pineapple.
“The Group has been shifting to more branded consumer beverage given the volatile nature of industrial and commodity PJC,” the company said.
As part of efforts to strengthen its balance sheet and reduce leverage, the company raised $300 million from two tranches of preferred shares in April and December 2017. The funds raised were used to repay debt.
The company also purchased $124.9 million out of the total $260 million in second lien loans of DMFI at a discount in the secondary market this week. The purchase of the loans will allow it to save $8-10 million in interest payments for fiscal year 2019, as it is the group’s highest interest-bearing loan with a current rate of 9.5% per annum.
Moving forward, DMPL said it expects to be profitable in the next fiscal year given the programs in place to improve its operational efficiencies.
“With the divestiture of Sager Creek and closure of plants in USA, this will lead to improvement in margins starting FY2019 as well as stronger cash flow through lower inventories. The Group continues to review its manufacturing and distribution footprint in the US to improve operational efficiency and further reduce costs,” the company said.
Shares in DMPL dropped 38 centavos or 4.75% to close at P7.62 each at the stock exchange on Friday. — Arra B. Francia

DoJ’s Guevarra assigns new head prosecutor

SENIOR Deputy State Prosecutor Richard Anthony D. Fadullon has been assigned to fill in the shoes of former Acting Prosecutor General Jorge G. Catalan, following the latter’s voluntary exit from his post.
In his Department Order No. 384 released on Friday, Department of Justice Secretary Menardo I. Guevarra designated Mr. Fadullon as the new officer-in-charge of the DoJ’s National Prosecution Service (NPS) starting on Saturday “until a new Prosecutor General is appointed by the President.”
Mr. Guevarra told BusinessWorld on Thursday that Mr. Catalan voluntarily requested to be relieved from his post to focus on his responsibilities as Makati City Prosecutor. He was designated the Presecutor General on June 9 last year by Mr. Guevarra’s predecessor, Vitaliano N. Aguirre II.
Sought for comment, Mr. Fadullon told reporters, “[m]oving forward, there are a lot of concerns that we have to look into and address as far as the National Prosecution Service is concerned. Among them are the spate of killings of prosecutors that have remained unsolved.”
“In the meantime, we will focus all efforts towards professionalizing the NPS and increasing the efficiency of our (prosecutors). Hopefully this will renew the trust of the people in the NPS (and) the DoJ,” he added.
Mr. Catalan welcomed the appointment of his peer, telling BusinessWorld in a text message: “(Mr. Fadullon) deserves the post! Best choice sya as PG!”
Mr. Guevarra also said on Friday, “new key appointments at the DoJ will be announced in the next few days.” He declined to disclose more details when pressed further by reporters. — Dane Angelo M. Enerio

Indie power producer GBP shifts to sustainable energy

REGIONAL independent power producer Global Business Power Corp. (GBP) is shifting to provide sustainable energy solutions in a move to adapt to the current landscape in the sector.
GBP President Jaime T. Azurin said in a statement on Friday that this is part of GBP’s goal of powering “the nation’s growth” while being more responsive to environmental protection.
“We are realigning our strategy with the evolving energy market as well as the growing need to protect and conserve our environment for future generations,” he said.
At a recent management convocation, Mr. Azurin highlighted the importance of ensuring affordable, reliable, and sustainable energy in reaching the United Nations Development Programme’s Sustainable Development Goals.
The annual convocation also served as a strategic planning session and performance assessment for the company’s executives.
“Generating power, however, creates pressures on the environment,” Mr. Azurin said, pointing to the need for GBP to have a balanced energy mix and to look into how the opportunities in renewable energy can fit in the company’s portfolio.
“We must optimize resources available to us whether they’re conventional or renewable,” he added.
Last month GBP launched its Institute for Energy in Iloilo to promote clean coal technology and energy efficiency. The institute is also intended to develop and train GBP’s employees.
GBP, an associate of Metro Pacific Investments Corp. (MPIC), currently operates 11 power generation facilities in Aklan, Cebu, Iloilo, and Mindoro.
Last year, the energy firm acquired a 50% stake in Alsons Thermal Energy Corp. (ATEC), an energy provider in Mindanao. ATEC holds Alsons Consolidated Resources Inc.’s base load coal-fired power plant assets.
MPIC is one of the three Philippines units of Hong Kong-based First Pacific Co., Ltd., the two other firms being Philex Mining Corp. and PLDT, Inc.
Hastings Holdings, Inc., a. unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it also controls. — Anna Gabriela A. Mogato

Liquidity growth picks up slightly

By Melissa Luz T. Lopez, Senior Reporter
MONEY SUPPLY grew faster in May even as growth in bank lending eased, the Bangko Sentral ng Pilipinas (BSP) announced Friday.
More money circulated in the Philippine economy as supply rose by 14.3% from a year ago, a tad faster than the 14.2% logged in April to log the quickest pace in two months.
Domestic liquidity or M3, which stands as the broadest measure of money in an economy, amounted to P11 trillion as of end-May. Month on month, money supply went up by 1.3%.
Funds from local sources grew by 16.8% last month, picking up from the 16.4% clocked in April amid a sustained rise in bank lending, the central bank said in a statement.
Net claims on the central government also surged by 17.3%, faster than the 13.1% increase the previous month as the government borrowed more money.
Meanwhile, net foreign assets (NFA) expressed in the peso posted faster growth as at 5.4% versus the 4.2% previously.
“Foreign exchange inflows coming mainly from overseas Filipinos’ remittances and business process outsourcing receipts drove the growth in the BSP’s NFA position,” the central bank said.
Foreign assets held by banks also grew due to higher loans and investments in debt papers.
The BSP said overall money supply growth stands “consistent” with inflation and economic activity, as it supports key production sectors.
CREDIT GROWTH EASES
Meanwhile, lending growth slowed in May to 19.4% coming from April’s 19.9%, the central bank said.
Factoring in the reverse repurchase agreements availed by banks, lending eased to 17.7% coming from 19.9% a month ago.
Bulk of the loans went to fund productive sectors to account for 88.5% of the total. These credit lines grew by 19.3% in May — slower than 19.6% previously — led by a 31.3% surge for financial and insurance activities.
Other sectors which took bigger loan lines include wholesale and retail trade, repair of motor vehicles and motorcycles (23.4%); manufacturing (17.7%); real estate activities (15.7%); and electricity, gas, steam and airconditioning supply (11.6%).
In contrast, borrowings for administrative and support services as well as agriculture dropped by 49.2% and 8.3%, respectively.
Retail lending also softened as household credit grew by 18.4%, slower than the 19% climb the previous month. This came on the back of motor vehicle loans and salary-based borrowings, versus a bigger credit card debts.
The BSP raised interest rates by 25 basis points their May policy meeting, but its effect will not be immediately reflected in market rates.
The central bank keeps track of liquidity and bank lending dynamics to ensure price and financial stability, at a time when some economists are flagging the potential overheating of the Philippine economy due to rapid credit growth.

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