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Midterm polls bare campaign lessons

By Charmaine A. Tadalan
Reporter

THE RECENT MIDTERM elections showed the ineffectiveness of negative campaigning and the limits of social media drives, observers said in separate interviews late last week.

“The President is so popular, they (opposition) could have tried to come up with a campaign with a messaging that focused on programs and policies that is more objective… instead of just criticizing the anti-drug war, the foreign policy on the West Philippine Sea,” Ateneo School of Government professor Edmund S. Tayao said by phone on Thursday.

“They could have offered alternatives without naming names and without besmirching the image of the President.”

President Rodrigo R. Duterte has sustained “very good” public satisfaction ratings even amid controversies.

National Citizen’s Movement for Free Elections Secretary General Eric Jude O. Alvia shared this view, saying that criticisms against Mr. Duterte worked against opposition candidates. He also noted the strategy resulted in candidates failing to highlight their proposed platforms. “’Yung campaign nila masyadong natulak towards negative campaigning, anything against the administration, bumalandra sa kanila (Their campaign that focused too much on anything negative against the administration backfired),” Mr. Alvia said in a phone interview on Thursday. “Nakalimutan nila ‘yung message nila na anong kakargahin nilang issue, platforms (They forgot to highlight their platforms); Parang lahat confrontational (they were largely confrontational).”

And while social media does help even the playing field somewhat for lesser-known candidates, this tool has its limits.

Mr. Tayao pointed out that social networking sites cannot be accessed in far-flung areas. “The reach of social media is still quite limited,” he noted. “So apart from NCR (National Capital Region or Metro Manila), perhaps the reliability of social media is true only for key cities like Davao, Cebu, CDO (Cagayan de Oro), Baguio and probably Laoag.”

Mr. Alvia said a social media campaign still needs a stable support base for starters, which can be developed only after some time. Among others, faced with a popular President, the opposition should have started working on the public during the Barangay elections last year if its candidates were to have a better chance in the May 13 elections. “They started out late to do that campaign. Dapat may base ka na, sa kanila, ngayon pa lang gumagawa ng base. To create that base into direct votes, into tangible votes, kulang ang panahon (they lacked time). At the rate they were doing it compared to the rate the admin bets were doing, talo sila (they were done).”

University of the Philippines political science professor Maria Ela L. Atienza said social media campaigns should be backed by personal interactions, noting that elections in the Philippines is personality-driven.

“One needs to campaign using different fronts. Social media can reach certain types of people, e.g. young people, professionals and OFWs (overseas Filipino workers),” Ms. Atienza said via e-mail on Thursday.

“However, a candidate really has to go out and interact with different sectors,” she added.

“In the Philippines, because electoral and party system laws do not encourage program-based political parties and campaigns, elections remain very expensive and personality-based,” she noted.

“Those who are perceived as closer to the people, or whom people identify with… have an advantage. While there are candidates who are qualified in terms of educational degrees and professions, their perceived personalities really matter.”

San Miguel power unit disputes gov’t claim of unpaid fees

SOUTH PREMIERE Power Corp. (SPPC) said it had paid the government P289.1 billion since 2010 in various fees as administrator of the Ilijan power plant in Batangas, as it disputed the P19.75 billion in supposed unpaid dues being claimed by the state energy privatization agency.

In a statement over the weekend, the unit of SMC Global Power Holdings Corp. said it honors and religiously pays its contractual obligations to the Power Sector Assets and Liabilities Management Corp. (PSALM) under the independent power producer administration (IPPA) agreement for the 1,200 megawatt (MW) facility.

“It is unfortunate that PSALM has to resort again to misinformation while the case is pending in court. While it is inappropriate for us to comment on the issue, we take this matter seriously and we cannot allow damaging statements like this to hurt our reputation and our stakeholders,” SPPC President Ramon S. Ang said.

The issue relates to a complaint earlier filed by SPPC against PSALM for willful breach of contract because of flawed interpretation of certain provisions on its power generation payments under the Ilijan IPPA agreement.

IPPAs are qualified private entities that manage the output from energy conversion and power purchase agreements that the National Power Corp. (Napocor) entered into with independent power producers.

They are appointed through public auctions conducted by PSALM.

SPPC said PSALM’s “questionable” interpretation resulted in the alleged shortfall in its payments. The company said its records show that the P289.1 billion or $6.19 billion paid as of end April 2019 to PSALM consists of P222.4 billion in energy fees and P66.66 billion in capacity fees.

It said by the time the agreement expires in 2022, it will have paid PSALM a total of P390.6 billion representing P293.01 billion in energy fees and P97.6 billion in capacity fees.

It added that the amount it paid for capacity fees alone, which is equivalent to about $2 billion, is enough to pay for the 20-year-old power plant. It said a brand new plant with the same capacity could be built for so much less.

SPPC also reimburses PSALM regularly for fuel and variable operating and maintenance costs in the form of energy fees, the company added.

Hence, SPPC said, it is paying PSALM more than what it is paying the IPP counterparty for the Ilijan power plant.

PSALM is, in fact, net cash positive from its administration agreement with SPPC, it said, adding that as of end-April, the state agency gained P34.75 billion from its administration agreement with SPPC.

SPPC also responded to PSALM’s claims that the company should have sold its power generation to the Wholesale Electricity Spot Market (WESM) instead of distribution utility Manila Electric Co. (Meralco) as the arrangement would have optimized revenues from the high market prices in November and December 2013.

It said PSALM’s view is not only in hindsight but also “very short sighted.” It said prices in those months in 2013 at P15.56 per kilowatt-hour (/kWh) “was a fluke” and was in fact declared by Energy Regulatory Commission (ERC) null and void in its order of March 2014.

SPPC said WESM prices are volatile since they are dictated by supply and demand. It said that, at a time when supply exceeds demand, prices hover at about P2-2.50/kWh, which could have meant huge losses for PSALM and SPPC.

“It is not even enough to pay for fuel costs,” it said.

It cited ERC’s Dec. 17, 2012 decision in Case No. 2012-034RC on the application for approval of the Meralco-SPPC power supply agreement (PSA) in relation to the Ilijan power plant, which states among others that Ilijan is a baseload plant, hence, a bilateral contract provides price stability to protect consumers.

The decision also states that proposed rates are lower than what SPPC is entitled to and lower than Napocor rates, thus beneficial to consumers.

It also says that the rates allow SPPC only recovery of its monthly payments to PSALM plus an equity return of 16.44% post tax, in accordance with ERC’s doctrine on return of equity of power generators.

SPPC said on a monthly basis, it pays PSALM the amounts required by the administration agreement as detailed, authorized and mandated by the ERC decision.

The case filed by SPPC also sought to stop PSALM from illegally terminating SPPC’s Ilijan IPPA and treating the latter as an administrator in default.

The company said that, on Sept. 15, 2016, the court issued an order granting a preliminary injunction that enjoins PSALM from proceeding with the termination of the IPPA agreement with SPPC while the main case is pending. — Victor V. Saulon

Domestic Market Capitalization of select Stock Exchanges in Asia Pacific

Domestic Market Capitalization of select Stock Exchanges in Asia Pacific

The Lexus of minivans

By Manny N. de los Reyes

I’VE BEEN to just about every major motor show in every corner of the globe. I’m used to seeing sleek new models being unveiled. I’m used to seeing racecars and supercars that look incredibly fast (and often are). I’m used to seeing concept cars that are so outlandish that they often don’t even see the light of day.

What I’m not used to seeing, however, is a corporate booth being mobbed by legions of media members jostling to take a better look or to take photos of…. a minivan.

Yes, a minivan. You read that right. But this is no glorified people-carrier or mom mobile.

It is, to put it succinctly, the Lexus of minivans. That’s also putting it literally.

And that’s because Lexus has finally seen fit to make a minivan — one that is poised to redefine the genre the way the seminal Lexus LS 400 redefined luxury sedans way back in 1989.

And it is this very Lexus, debuting with the name LM, that stopped me in my tracks while I wandered the halls of the Shanghai Motor Show. “LM” stands for Luxury Mover, and it emphasizes Lexus’ commitment to delivering amazing experiences, and reveals their vision for a new luxury mobile lifestyle.

The spacious yet sophisticated Luxury Mover, soon to be available in China and select Asian markets, responds to the increased demand for products tailored to local and individual tastes.

The unique flexibility and spaciousness inherent to the luxury MPV category has helped its evolution into an unrivaled form of luxury transport in Asia, driving stable segment growth over the past five years. The Lexus LM aims to create a luxury rear seat experience unlike any other to help cater to the growing demands for chauffeured vehicles from Asia’s luxury consumers.

The Lexus LM seeks to meet the needs of the modern, driven, always on-the-go professionals who view their luxury vehicle as more than mere transportation. Compared to traditional luxury vehicles, Lexus envisions a luxury environment creating a personal space that helps occupants perform better in business and also maximizes time when on the move. The height and width of the LM allows its four-seat configuration to offer a crafted mobile space equally adept at supporting business ambitions with a private space that has been optimized for both work and relaxation.

The Lexus LM will be offered in two models (LM 350 and LM 300h) and two drive types (front-wheel drive and all-wheel drive). Availability will vary by market. The LM 350 uses a 3.5-liter DOHC petrol engine while the LM 300h employs a 2.5-liter four-cylinder engine in a hybrid system.

Based on the already luxurious Toyota Alphard, the LM’s exterior is defined by the Lexus spindle grille, and chrome accentuation of the side body. The center pillar is adorned with dual arrowhead chrome ornamentation that enhances the vehicle’s side-view and hints to its premium nature. The grille is chrome plated with flowing accents that help create the sense of dynamism necessary to distinguish this vehicle. Two exterior color options are available for the LM: Black and White Pearl Crystal Shine.

Unique headlamps integrate the distinctive arrowhead shape of Lexus daytime running lamps, and offer composite projection beams. In addition, the rear LED lamps inspired by the Lexus new design signature use a wide lens spanning the entire rear width of the LM.

Lexus helps define the MPV segment’s luxury class by offering a choice of optimized interior configurations. Expertly crafted details such as leather wrapped surfaces and stitched panels create an interior with a premium feel. Newly developed Gin-Sui-Boku (Silver Ink) ornamentation inspired by the art of ink wash painting adorns the interior giving it a distinctive appeal.

The Lexus LM is equipped with a Mark Levinson Premium Surround Sound System that delivers clear, live-sounding in-car audio entertainment. The use of acoustic glass helps achieve an extraordinary level of quietness that further elevates luxury.

FIRST-CLASS CABIN
The opulent four-seat configuration of the LM is suited to the chauffeured needs of the urban, business-focused professional as it provides a relaxing, private environment. The four-seat layout boasts two large, throne-style, high back supportive seats in the rear of the luxury mobile space. In this configuration, the LM aims to create a rear seat experience unrivaled among luxury vehicles. The reclining angle was carefully designed for optimum relaxation, and the position of the occupant’s face relative to the window. The seats rely on plush low-density urethane foam that offers ideal support with couch-like comfort. These seats are also cooled using suction ventilation that draws air through the seat surface to enhance comfort.

The rear cabin features a 26-inch screen, a 14-liter refrigerator, umbrella storage, and center console with touch control panel. The panel controls the seat position, relaxation function, climate control and audio for the rear private space. The refrigerator accommodates wine bottles and glasses.

The glass of the rear partition is adjustable to help regulate the privacy of the rear space. The 26-inch screen interfaces with computers, smartphones, and tablets, and plays Blu-ray DVDs.

AN AVAILABLE BUSINESS CLASS
The LM is also available in a seven-seat configuration. This layout offers two separate luxury bucket seats for the first two rows and a third rear row of three seats across, finished in leather. The seats of the center row are distinguished by larger, more supportive armrests. This seven-seat configuration of the LM is ideally suited for business professionals who also intend to use the vehicle for family duty transportation.

GT Capital seeking partners to develop property in Cavite

By Arra B. Francia
Senior Reporter

GT Capital Holdings, Inc. is looking for local or foreign partners to help develop portions of the P20 billion worth of land it received after its divestment from Property Company of Friends, Inc. (Pro-Friends), a top official said last week.

GT Capital President Carmelo Maria Luza Bautista said they are developing a master plan for 600 hectares out of the 702 hectares in selected assets from Pro-Friends, which cover parts of Imus, General Trias, and Bacoor in Cavite.

“Once the master plan is developed or is better defined, the intention is to look for local or foreign joint venture partners to facilitate it so we can monetize the asset, given the overall size of the project,” Mr. Bautista said during a briefing in Taguig City last week.

Mr. Bautista said they can tap both local and foreign partners for the project given its size.

“If you can identify another Isetan Mitsukoshi equivalent for masterplanned communities, then that will be the case,” Mr. Bautista said, referring to subsidiary Federal Land, Inc.’s partner in developing its residential and retail complex project in Bonifacio Global City.

“We also have very good partnerships with local conglomerates and we are open to some of them,” he added.

GT Capital returned its 51% stake in Pro-Friends in exchange for the 702-hectare land earlier this month, explaining that rising property prices no longer make their land bank suitable for affordable housing projects. It noted that land values of other property players in the area range from P17,000 to P52,000 per square meter.

The transaction is still awaiting approval from the Philippine Competition Commission.

Once approved, the company plans to develop the Cavite portion into a mix of mid-rise residential properties and commercial projects that will target the mid-income segment.

“Ongoing infrastructure projects may translate to higher land prices in the medium-term,” the company said.

These infrastructure projects include the Manila-Cavite Expressway (CAVITEx) and the CAVITEx C-5 South Link that will both be finished by 2021, as well as the Cavite-Laguna Expressway that will be completed in 2022.

Meanwhile, Mr. Bautista said the remaining parcels of land in Metro Manila can be developed into high-rise condominiums by Federal Land. These are located in Shaw Boulevard, Santolan, and along Daang Hari road.

GT Capital’s net income attributable to the parent dropped by eight percent to P3.42 billion in the first quarter of 2019, even as revenues added three percent to P47.02 billion. The conglomerate was weighed down by lower sales from its auto and property business units.

The Ultimate Sport Truck South African Adventure

Words and photos by Kevin C. Limjoco

IT WAS another round of guiltless pleasure all over again! This time Ford Philippines sent me to cover the landmark celebration of the Ranger Raptor super truck being built in Silverton, Pretoria, South Africa. I, along with journalists from Thailand, Vietnam, Australia, and South Africa, were the first wave of motor journalists to test the factory’s finished production super bakkies (I prefer how the South Africans refer to pickup trucks). The Silverton plant currently produces the Ranger pickup for export to 148 markets in Africa, the Middle East and Europe.

We first flew in to Johannesburg to settle in and immerse ourselves in the local culture as best we could, given the time constraints. We went to the Lion and Safari Park in Broederstroom for a couple of entertaining and informative hours with the wildlife, then carried on to the Harties Aerial Cableway, which extends to the top of the Magaliesberg mountain range and offers a spectacular panoramic view of the Hartbeespoort Dam and the surrounding area.

The next day we flew out of Johannesburg and headed northwest to Upington, Northern Cape, on the banks of the Orange River, known for fine wines from the Orange River Cellars and the Kalahari Basin. After we landed and had our briefing, we jumped on our dedicated Ford Ranger Raptors and drove north on the R360 for the Goera Pan, an ancient salt bed which is surrounded by characteristic Northern Cape Kalahari rolling red dune landscapes, situated on route to the Kgalagadi Transfrontier Park and a gateway to Namibia and Botswana. It was here, after driving on the well-paved tarmac of the R360, that we all got to explore the incredible abilities of the Ford Ranger Raptor.

For a quick recap, the Ford Ranger Raptor uses bespoke long-travel FOX Racing suspension, has a 150 mm wider track, 168 mm wider body, bespoke BFGoodrich All-Terrain KO2 tires (a paragon for all-terrain capability), and over 350 unique components compared to the standard Ranger. It can wade water to the new class-best of 850 mm depth, while being the fastest, nimblest, quickest, and most comfortable super truck ever.

At the Goera Pan, we all got to drive, for as long as we desired, primarily three exercises: a rally stage, a sand stage, and a slalom stage. The only physical differences applied to the vehicles were adjusted tire pressures, the lowest setting for sand, mid-setting for the rally, and the closest to stock pressures for the slalom stage. The other adjustments made to suit each exercise were from the steering wheel 6-mode intelligent terrain control, 4-Low and 4-High knob, and rear differential lock button. The rally stage course was an 8-minute route that had the most variable terrain that began on the salt-bed flats that led to the semi-desert hills then back down again. We ran it on “Baja” mode for optimal high-speed off-road performance. The most challenging stage was on the deep sand dunes where we all maxed out our off-road skills climbing and plowing through the course. The last stage was the least laborious and the most juvenile as we just enjoyed four-wheel drifting through dual concentric courses.

There was one last exercise after the whole day in the beating sun, a 7-kilometer alternative route near a cattle range that had multiple consecutive high-speed jumps where we would literally jump and soar at speeds over 150 km/h! On my last jump at close to 160 km/h I saw a large and unfazed South African Oryx at the crest. The huge buck must have confused the convoy of jumping bakkies as a herd of mechanical fools!

We drove the living hell out of the Ranger Raptor over some of the most challenging terrain without breaking a sweat. It’s so capable that it makes even inexperienced drivers perform like professionals. The Raptor is the very top triathlete in the trucking class. Its monumental ability to maintain speed as it jumps, crawls, wades through rivers — all in even the most unforgiving terrain — is truly astonishing. It is the very best balanced and most exploitable super truck ever produced. This last South African experience simply reinforced it!

DM Consunji secures P4B worth of new contracts

CONSTRUCTION firm DM Consunji, Inc. secured almost P4 billion worth of new contracts in the first quarter of 2019, coming from a mix of infrastructure and building projects.

DM Consunji said its newly signed projects include the track works and electromechanical system (EMS) for the Light Rail Transit (LRT) Line 2 East extension, which is being undertaken alongside consortium partner Marubeni Corp.

The LRT-2 East extension is scheduled to be completed within 18 months.

“Hopefully, the LRT-2 EMS contract is just the start of more infrastructure projects for DM Consunji. We want to focus on helping the government implement its Build, Build, Build program,” DM Consunji President and Chief Executive Officer Jorge A. Consunji said in a statement.

The company also bagged the contract to build the Presidential Security Group Station Hospital, and the University of the Philippines College of Medicine Sciences Building.

DM Consunji’s order book stood at P25.8 billion by the end of the first quarter, eight percent lower from the same period a year ago.

Existing projects include the Metro Manila Skyway Stage 3 (SS3), the SS3 Nagtahan Ramp, LRT Line 2 East Extension Project’s viaduct and stations, Tarlac-Pangasinan-La Union Expressway, and the Cavite-Laguna Expressway.

“The projects for completion is Skyway, but it won’t be completely finished yet. We will be able to finish a down ramp and up ramp by June in the Philippine Columbian (Association) area. At least those two will relieve traffic,” DM Consunji Business Strategy and Development Senior Vice President Rebecca E. Civil told reporters in Makati last week.

Ms. Civil, however, noted that the entire Skyway project won’t be completed until 2020.

DM Consunji grew its bottom line by 12% in the first quarter of 2019, on the back of a 24% uptick in revenues to P4.2 billion.

The company attributed the positive performance to a 74% surge in infrastructure project revenues to P1.5 billion. This offset the 36% decline to P1.1 billion in revenues from building contracts as most of its projects are already near completion.

Revenues from energy projects soared 202% to P602 million, while plants and utilities projects generated P404 million, 29% higher year on year. DM Consunji’s ready-mix business and other project support activities, meanwhile, jumped by 122% to P540 million.

DM Consunji is the construction arm of listed infrastructure and engineering conglomerate DMCI Holdings, Inc., which also has core investments in coal mining, water, off-grid power generation, and property development. — Arra B. Francia

Cayenne Coupé — an athletic sports car

WITH THE world premiere of the Cayenne Coupé, Porsche is extending the third generation of its successful SUV range. The vehicle impresses with its particularly dynamic contours and new technical details, which give it a very athletic appearance.

The highlights of the new Cayenne model include sharper contours with a totally unique rear end, an adaptive rear spoiler, a rear bench with the characteristics of two individual seats, and two roof concepts: a panoramic, fixed glass roof fitted as standard, and an optional carbon roof.

The significantly steeper roof line falling to the rear makes this vehicle appear even more dynamic and visually positions it as the sportiest-looking model in the segment.

The Cayenne Coupé will be available with two different engine variants at launch: a 6-cylinder 340ps turbo engine, sprinting from 0-100 km/h in six seconds, as well as a 4.0-liter 550ps twin-turbo V8 in the flagship Cayenne Turbo Coupé model, which accelerates from zero to 100 km/h in just 3.9 seconds.

The Cayenne — a worldwide success story

Since the introduction of the first Cayenne in 2002, this model has been very popular with customers around the globe. More than 864,200 vehicles have been delivered to date, which amounts to 50,000 cars per year on average. With around 71,500 vehicles delivered worldwide in 2018, the model was only beaten to the top spot by its smaller sibling, the Macan. The majority of vehicles were delivered to customers in China and Europe.

Detlev von Platen, Member of the Executive Board for Sales and Marketing at Porsche AG, describes the expectations for the Cayenne Coupé in different regions, the vehicle’s customer profiles and the growing model range in an interview:

Which regions and buyer groups is the Cayenne Coupé targeting?

The Cayenne Coupé is a world conqueror. It is equally attractive to all regions. It appeals to customers who are particularly interested in the sporty genes of the Cayenne. These may be existing or new Porsche customers — with great loyalty to the brand and an expressive lifestyle. The SUV Coupé market isn’t new, but we are giving the car a character that is all its own through our typical Porsche design DNA. Of course, the sporty body shape is a particularly good match for the Porsche brand.

Seen worldwide, who are Porsche’s customers?

Our customers have a very individual and differentiated lifestyle. There is no standard Porsche customer. For this reason, it is one of our maxims to consider each customer individually. At the same time, there are properties that all our customers share. These include their striving towards performance, personal development and the extraordinary, as well as the success they have with this attitude — a certain drive to get ahead. In many cases, our customers have driven models from other premium brands because they expect more from their vehicle. Anyone who then experiences the driving pleasure in an entry-level Porsche model will see that there is a much sportier way and realize that they want to evolve — to a Turbo or GT model. In this process, personal progress is much more important than external image.

The Cayenne Coupé demonstrates that the Porsche model range is becoming increasingly more versatile. Is this a trend towards diversification?

Our holistic concept does not focus on the vehicle, but rather on the brand DNA. This combination of sportiness and the demand for top quality is evident in all Porsche models and perfectly reflects our customers’ interests. All of our vehicles are sports cars, even the Panamera, Macan and Cayenne. They are the sportiest option in their respective segments — and they carry the genes of the Porsche 911. That’s why Porsche is clearly perceived as a sports car brand. And we are working hard to make sure nothing about that changes. At the same time, we are continuously expanding our product range so we can offer our customers all over the world what they want. For example, the model mix has shifted as a result of customer preferences in growth markets. Demand for sporty SUVs is very strong particularly in China, but two-door sports car sales are also on the rise.

Coupés are obviously a trend in the SUV segment. How do you create a passion in customers for Porsche as a brand?

Porsche stands for craftsmanship and meeting individual customer wishes with fascinating premium sports cars. And people are always at the heart of it all. A Porsche is always made by people: a great deal of craftsmanship, love and passion goes into every Porsche. At Porsche, we are also united by the drive to always fight for the best solution. That is how we create individual products that inspire through outstanding quality and driving pleasure. We want to appeal more strongly to new, younger target groups with the Cayenne Coupé. These groups value exclusivity and an expressive lifestyle, and have a very performance-oriented mentality.

Palay price rises 0.3% at farmgate amid drop in first quarter output

THE AVERAGE farmgate price of palay, or unmilled rice, rose 0.3% during the first week of May to P18.45 per kilogram (kg), the Philippine Statistics Authority (PSA) said.

The PSA said the average wholesale price of well-milled rice fell 0.4% to P39.55 per kg compared with the previous week. At retail, it also fell 0.5% week-on-week to P43.30.

The average price of regular-milled rice, fell both at wholesale and retail. The wholesale price fell 0.5% week-on-week to P36 per kg during the period. At retail, the price fell 0.5% to P38.97 per kg.

Meanwhile, the farmgate price of yellow corn grain during the same period increased 0.1% week-on-week to P14.22 per kg. Its average wholesale price was unchanged at P20.26 per kg and the retail price fell 0.1% to P24.89 per kg.

The average farmgate price of white corn grain rose 0.4% week-on-week to P16.10 per kg. The average wholesale price was unchanged at P22.68 per kg, and its average retail price was also stable at P29.12 per kg, remaining unchanged for four weeks straight.

The PSA noted that production of palay fell 0.4% year-on-year in the first quarter of 2019.

Based on the seasonally-adjusted rice production and prices for January to March 2019 released by the agency, palay output decreased to 4.69 million metric tons (MT) from 4.71 million MT recorded in the fourth quarter of 2018. On an annual comparison, it fell 4.6%.

“From 2011 to 2019, the highest deseasonalized palay output for the first quarter was in 2018 at 4,918 thousand metric tons and the lowest was in 2016 at 4,248 thousand metric tons,” PSA said in the report.

On the other hand, the deseasonalized farmgate price of palay also fell 5.3% quarter-on-quarter to P20.07 per kg. It was slightly higher than the P20.04 per kg recorded in the same period last year. — Vincent Mariel P. Galang

Shopping straight from the runway

THE MODELS walk down the runway in their summertime, corporate, and casual looks. As a model comes out in a striking outfit, you think to yourself, “I like that one.” At the same time, you stay glued to your phone reading the details of each eye-catching item. When the fashion show ends, you are among the 12,000 viewers who have just “added to cart” the latest items on sale from the show.

On May 17, e-commerce site Lazada launched the first “See-Now-Buy-Now” fashion show in the Philippines at the Atrium of Eastwood mall in Quezon City.

A “see-now-buy-now” fashion show allows the attendees of the live show and remote customers viewing it on their phones to shop for the products as they are featured on the runway from the Lazada app. As the models walk down the runway, a link in the shape of a rectangle appears at the bottom of the phone with the clothes’ brand and photo. Viewers may click on it and it proceeds to a new page with the product details. It also allows the viewer to instantly add the item to their online shopping cart. It also allows viewers to interact with the show hosts and win prizes and vouchers while tuning in live.

SHOPPERTAINMENT
The event is among several Lazada projects to spearhead Shoppertainment (shopping and entertainment) innovations in Southeast Asia and runs across its five other markets: Vietnam, Indonesia, Malaysia, Singapore, and Thailand.

“In this kind of event, this resonates with the demographics we really want to talk to,” Jason Huan Lazada Philippines Chief Marketing Officer told the press after the launch.

“The benefits of watching it on the app is you can collect vouchers that the brands and sellers in Lazada actually pushes out. And you can shop immediately for the items that you see [which you] are attracted to,” he said, noting that Lazada is the first e-commerce platform to offer the concept in Asia.

According to the global study “Digital in 2018,” the Philippines took the top spot as the social media capital of the world with Filipinos spending an average of three hours and 57 minutes on social media daily in 2017.

Mr. Huan said that social media engagement makes the Philippines a unique market.

“I think the whole ecosystem here is really very supportive of online shopping as well. And the Filipino consumers are now very savvy on what they want, [are] very well read, they basically want the best for themselves,” he said.

The first fashion show was themed “Women’s Festival,” with over 100 participating fashion and beauty brands.

“The first push for us is women, because I think the empowerment topic is very big for us as a brand. And we will continue with the momentum,” Mr. Huan said of the theme. “We’re trying to draw more millennial females to shop with us.”

Live stream fashion shows which will be held in the succeeding months will carry various themes.

MORE PROMOS AND PRIZES
Since May 14, shoppers can get additional discounts and vouchers from brands like BUM, Wrangler, and Garnier by playing on the LazGame feature on the Lazada app. Shop and Match — the newly launched game — allows players to earn cupcake points and exchange them for vouchers.

With the convenience promoted by the innovation, Mr. Huan considers the act of impulse buying as a “healthy past time.”

“This is not for females only, because I do impulse buying myself. Sometimes it’s not about what you need, it’s about what you want. And if that little purchase makes you happy, it’s fine,” he said.

The Women’s Festival videos will remain on view at Lazada’s official Facebook page even after the festival ended on May 19. — Michelle Anne P. Soliman

Central bank moves, speculation over timing of REIT listing propel Ayala Land stock movements

By Mark T. Amoguis
Senior Researcher

AYALA LAND, Inc. (ALI) was one of the most actively traded stocks last week following the easing in monetary policy as well as traders speculating on the timing of the company’s plans to conduct a real estate investment trust (REIT) listing on the stock exchange this year.

A total of P2.577 billion worth of 54.539 million Ayala Land shares were traded during the May 14-17 period, data from the Philippine Stock Exchange (PSE) showed.

Shares in the real estate arm of the Ayala group closed P46.75 apiece last Friday, shedding 0.5% from the P47 finish on May 10.

Since the start of the year, ALI’s share price went up by 13.2%.

“For me, the main factor that affected [ALI’s] stock performance is the 25-bps (basis point) interest rate cut. This is a positive catalyst for the company and for the property sector in general as this would induce more consumer loans which would consequently flow to property investments,” Wendy Estacio, research head at Unicapital Securities, Inc., said in an e-mail interview.

In a phone interview, AP Securities, Inc. Research Analyst Rachelle C. Cruz said that the investors remained “positive” on ALI following its first-quarter earnings report.

She added that the reserve requirement ratio cut on the big banks “seems to be positive on the property developers like Ayala Land because reserve requirement cut will pave way for lower interest rates, which could increase the appetite of property buyers on the local side.”

“Fundamental-wise, Ayala Land is still okay,” AP Securities’ Ms. Cruz said.

In its third policy review this year on May 9, Bangko Sentral ng Pilipinas’ (BSP) Monetary Board slashed benchmark interest rates by 25 bps to a range of four percent to five percent amid easing inflation. This partially dialed back a cumulative 175-bps hike to benchmark rates last year as monetary authorities scrambled to put a lid on accelerating inflation.

A week later, BSP Governor Benjamin E. Diokno told reporters that the central bank plans to slash the big banks’ reserve requirement ratio (RRR) by 200 bps in three stages: 100 bps by May 31, 50 bps by June 28, and 50 bps by July 26. This would bring the RRR down to 16% from the current 18%.

Aside from the monetary policy easing, analysts said that investors may have also speculated on the timing of ALI to tap the REIT market that could turn out to be the country’s first.

Jeffrey Lucero, equity analyst at RCBC Securities, Inc., said that ALI’s plan to do a REIT offering may have continued to generate interest from investors.

“We generally see ‘REIT-ing’ as net asset value accretive, particularly with REIT’s tax benefits. The capital that will be raised… will also help fund [ALI’s] expansion plans,” he said in an e-mail.

For her part, AP Securities’ Ms. Cruz noted the current REIT’s implementing rules and regulations (IRR) that was released in 2010 following the REIT law’s passage the previous year as “very disadvantageous” to property developers like ALI.

Ms. Cruz said that developers are hesitant to tap the REIT market, citing one of the provisions such as the high minimum public float required by the existing IRR.

“So, if Ayala Land will push through with that without changes to REIT IRR, it could be a risk to them,” she said.

ALI announced last April its plans into offering REIT — eyeing to raise P25-26 billion — after filing to rename One dela Rosa Development, Inc. into Ayala Land REIT, Inc. that will serve as the vehicle for the REIT listing. Once further clearances are secured from the Securities and Exchange Commission (SEC) and PSE, it will use Ayala Land’s office buildings located in the Makati Central Business District for the REIT.

Ayala Land plans to push through with the listing regardless of whether or not the SEC will revise the REIT IRR.

Passed into law in 2009, Republic Act (RA) No. 9856 — or the REIT Law — allows creating corporations that will pool investor funds and manage real estate assets.

Property companies were interested at first but expressed objections on stringent rules via REIT law’s IRR such as the 12% value-added tax slapped on the initial transfer of real properties into the REIT company as well as the high minimum public float requirement of 40% upon listing the company at the local bourse, then raising it to 67% within three years.

Since then, the SEC has favored a lower public float of 33%, while the 12% value-added tax on the transfer of real properties has been removed under RA 10963 or the Tax Reform for Acceleration and Inclusion law. However, the SEC has yet to release a revised IRR governing REITs as the Finance department wanted assurance that the funds generated via REITs will not be spent outside the country.

Earlier news reports noted the new REIT rules are targeted to be out within the first half this year.

Meanwhile, analysts were bullish that ALI will meet its P40-billion profit target by 2020 as they project above 10% growth this year. For the company to achieve this target, it needs to grow by at least 17% this year.

The company’s net income attributable to equity holders of the parent company rose 12.4% to P7.32 billion in the first quarter from P6.52 billion in the same period in 2018.

“Although [the first-quarter result] was slightly below our full-year forecast, we believe [Ayala Land] would be able to hit our net income target of P36.9 billion in 2019 (or an 11% growth from 2018), mainly driven by the residential and office segments. Also, it has P142-billion unbooked revenues that could further boost our forecasts,” Unicapital’s Ms. Estacio said.

RCBC Securities’ Mr. Lucero penciled in a 14% annual increase to Ayala Land’s core net income to P33.3 billion by yearend.

“Both the rental businesses and real estate sales will drive growth for the full year. While in the [first quarter], real estate sales wasn’t as stellar, I expect it to pick up in the coming quarters since the reason for the lower-than-expected real estate sales in the 1Q was only revenue recognition timing,” Mr. Lucero said.

For this week, Ms. Cruz of AP Securities expects Ayala Land to trade with a support price at P46 and resistance price at P48, while Unicapital’s Ms. Estacio pegs the company’s support and resistance prices at P46 and P47.70, respectively.

CVs drive Hyundai Q1 sales growth

By Kap Maceda Aguila

HYUNDAI Asia Resources, Inc. (HARI), the official distributor of Hyundai passenger cars and commercial vehicles (CVs) in the Philippines, reported a 12.5% sales uptick in the first quarter of 2019 compared to the same period last year. HARI moved 9,949 units in the period compared to 8,847 in the first quarter of 2018.

In a release, the company’s President and CEO Ma. Fe Perez-Agudo said: “HARI sustained its growth momentum in the first quarter driven by the successful introduction of fresh and innovative models such as the Reina at the start of the year and a more positive buying sentiment from consumers. We are well-poised to continue this upward trend over the next three quarters as we recently unveiled pioneering vehicles at the Manila International Auto Show (MIAS).”

Aside from the Reina, HARI also introduced this year the first full-size SUV of Hyundai, the Palisade. The company also unveiled the fully electric version of its Kona SUV. Both vehicles were launched at MIAS.

In March, HARI sold 3,412 units, marking a 6% increase over the same month last year. Its passenger car (PC) segment registered 5,405 in sales in the first quarter, dipping by 12.9%. Still, the company points out that “net of sales phased out in 2018, PC sales… increased by over 22%.”

The company expressed confidence that two nameplates, the Reina and the all-new Accent, will serve as “main volume drivers” for the PC segment. “Barely three months after its launch, the Reina has already contributed to nearly 16% of… first-quarter sales,” reported HARI.

A big driver of numbers for the company has largely been the light commercial vehicle (LCV) segment as sales have significantly increased by 70.5%, or 4,306 units in the first quarter of 2019 compared to 2,526 units sold during the same period in 2018. The Kona Crossover accounted for 24% of LCV sales, while the H-100 took 44% of the pie.

Finally, Hyundai trucks and buses grew by a huge 106% in Q1, and HARI intends to bank on this segment even more through the construction of seven additional dedicated CV dealerships across the country to augment the six already in operation. Following its exemplary sales performance in the segment, HARI was awarded by Hyundai Motor Company (HMC) as Top Regional Distributor of Commercial Vehicles for 2018 in the Asia Pacific, Russia, and Commonwealth of Independent States — beating 25 other countries.

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