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Pure Foods’ name change gets SEC green light

SAN MIGUEL Pure Foods Company, Inc. (SMPFC) said it has secured the Securities and Exchange Commission (SEC)’s approval to amend its name and primary purpose, among others, to reflect the consolidation of the San Miguel group’s traditional businesses.

In a disclosure to the stock exchange on Tuesday, SMPFC said the SEC has approved the change of its corporate name to San Miguel Food and Beverage, Inc. (SMFBI) on March 23.

The SEC approval includes the increase in the company’s capital stock to P12 billion, comprising of 11.6 billion common shares with a par value of P1 each and 40 million preferred shares with a par value of P10 each.

SMPFC’s shareholders had earlier approved the company’s intention to change its corporate name and primary purpose to include its engagement in the alcoholic and non-alcoholic beverage business. This followed San Miguel Corp. (SMC)’s plan to fold San Miguel Brewery, Inc. (SMBI) and Ginebra San Miguel, Inc. (GSM) into SMPFC.

SMC’s plan to merge its traditional businesses under one company was unveiled last November 2017, after announcing a P336.35-billion share swap deal that would eventually form SMFBI.

For the transaction, SMC will be subscribing to 4.242 billion common shares with a par value of P1 each in SMPFC. This will be taken from an increase in SMPFC’s authorized capital stock by P9.54 billion, divided into 9.54 billion common shares with a par value of P1 each.

In return, SMPFC will acquire P336.35 billion worth of SMC’s shares in GSM (equivalent to 216.97 million common shares) and in SMBI (equivalent to 7.859 billion common shares).

The resulting transaction will bring down SMFBI’s public float to 4.3%, way below the current floor of 15% for companies listed on the Philippine Stock Exchange. With this, SMPFC said it will conduct a follow-on offering worth between P100 billion to P150 billion within the second semester of 2018.

The planned share sale had earlier been set for the second quarter of this year, but a source familiar with the transaction noted that it will be delayed to give the market a chance to breathe.

SMPFC booked a consolidated net income of P6.9 billion in 2017, 16% higher year on year on the back of a 5% increase in revenues to P117 billion.

The firm has committed to spend P56 billion to P60 billion in capital expenditures in the next three years, in order to grow its revenue contribution in SMC to 21% by 2020.

Shares in SMPFC gained P8 or 1.36% to close at P598 each at the Philippine Stock Exchange on Tuesday. — Arra B. Francia

PayPal bullish on Philippines as freelancer market continues to grow

PAYPAL Holdings, Inc. is upbeat on the growth of its Philippine market given the optimism of Filipino freelancers in growing their business.

In a press briefing on Tuesday, PayPal Regional Head for Strategic Partnerships for Southeast Asia Abhinav Kumar said the company is getting “positive” signals from the Philippine market.

The payment system company conducted an survey of over 500 freelancers in the Philippines last October 2017. The results showed the Philippines is a “very optimistic freelancer market” as 86% of freelancers claiming they anticipate future growth in their businesses.

The survey also showed 23% of respondents said their business is growing steadily, while 46% said their business is stable.

Mr. Kumar said the nature of PayPal’s business, which allows online money transfers worldwide, makes it relevant to the freelancing segment.

“We believe that we are extremely relevant to this segment given our platform transcends boundaries and allows them to accept payments in multiple currencies… So I think everything at this point in time is quite positive,” Mr. Kumar said.

Mr. Kumar said PayPal is confident despite the rise of other payment system companies because the company considers cash as its main competitor.

“The biggest competition for us is still cash… The bigger opportunity that we have is to change the ecosystem through the digitization of cash… I think, the opportunity is large enough,” he said.

Filipino freelancers who participated in the PayPal survey were mostly involved in data entry/Internet research, virtual assistant, and customer service jobs.

PayPal conducted similar surveys in 21 other countries. — Patrizia Paola C. Marcelo

Celebrating Easter Sunday (03/28/18)

Easter at Westgate

OVER at Westgate Alabang on Easter Sunday, children ages four to 11 years old can get the chance to greet the Easter Bunny’s furry and feathery friends at the petting zoo at Easterville. They can also see them perform tricks and routines at the animal and bird shows. For a dash of theatrics, gather the kids to watch the magic and puppet shows. In between the shows, kids can visit the face painting booth and unleash their inner fairy or superhero before smiling for the camera at the event’s photo booth. Aside from a cotton candy to satisfy their sweet tooth, games, activities, and more surprises also await. To join the Easter celebrations, make a P1,000-single receipt purchase or two accumulated receipts from any Westgate Center establishment March 19 to 31 (10 a.m. to 9 p.m.) and April 1 (9 a.m. to 5 p.m.) for one Easterville pass. Customers may register and claim the pass from 4:30 p.m. to 5 p.m. upon presenting the receipt at the registration booth at the Activity Park, Westgate Center on April 1. Westgate Center is a development project of Filinvest Alabang, Inc. in Filinvest City, Alabang, Muntinlupa City.

Easter at the Ortigas Malls

HOP RIGHT into a fun-filled summer on April 1 with Ortigas Malls’ Easter Eggstravaganza. Unleash one’s creativity at the Easter Craft Station at the Estancia Bridgeway, or become the canvas at the Face Painting sessions at both Greenhills and Tiendesitas. Navigate through the Easter Maze at Greenhills with the entire family at Greenhills V-Mall. Meet some cute and furry friends at Tiendesitas Level 1 Building B to be able to join the Rabbit Feeding activities. And — for the young and young at heart — go join the Easter Egg Hunt at the Ortigas Malls: Greenhills, Tiendesitas, Estancia, and Circulo Verde.

Easter Sunday at Conrad Manila

THE Conrad Manila invites families to hop on over this Easter and indulge in mouth-watering temptations and “egg-citing.” Kids and kids-at-heart will be spoilt for choice at Brasserie on 3, where Executive Chef Daniel Patterson rolls out a spread featuring sustainable and organic summer ingredients. Taking center stage is a vibrant Easter-themed dessert station boasting of homemade ice cream in different flavors, candy floss, and other confections. After a filling Sunday brunch, the children are whisked away to a rousing adventure where they may enjoy face painting, egg decorating, bunny ear ring toss, and an Easter egg hunt, among other activities. The Easter-rific Sunday Brunch is priced at P3,000 net per person inclusive of one complimentary kid’s pass for the egg hunt, with children ages six-12 at P1,500 net, and those five and under free of charge. Meanwhile, Bru Coffee Bar has a decadent and playful display of rich chocolate confections and signature pastries. Guests are treated to grab-and-go treats and desserts to enjoy or give as the ideal Easter Basket indulgence. For inquiries or reservations, visit www.conradmanila.com, e-mail conradmanila@conradhotels.com or call 833-9999.

The Pen’s Secret Easter Garden

THE Moët & Chandon will flow for three straight hours at The Peninsula Manila’s Easter Sunday Champagne Brunch at Escolta. On April 1, from noon to 3 p.m., a Seafood & Raw Bar will highlight poached shrimp, oysters with traditional condiments, crabs and slipper lobsters; while freshly baked breads will complement cured meats, smoked salmon, terrines and pâtés, Mediterranean spreads, charcuterie and jams. Guests can enjoy custom-made omelets filled with their choice of ham, mushrooms, cheddar cheese and more, or hot-off-the-grill waffles and pancakes. A carving station will feature slow-roasted prime rib and herb-crusted red snapper. Fruit, bakery and salad offerings include an Asian beef salad with ginger dressing, Oreo-strawberry-Tanduay religieuse, and much more. The buffet costs P4,300 for adults with free-flowing Champagne; P3,100 for adults; and P1,500 for children ages six to 12. One child under six will receive one invitation and one activity passport to The Peninsula Secret Easter Garden. Invitations are restricted to one invitation per table. Secret Easter Garden activities include Easter egg hunts, Lego toys, Easter crafts making, canvas and egg painting, Easter egg and bunny doll making, and games. One can also book the Pen Days of Easter Weekend Escapade package (March 31 to April 2) and enjoy a special breakfast buffet in Escolta, receive one invitation to The Peninsula Secret Easter Garden, an Easter welcome amenity, and much more. The package rates start at P8,500 net for a Superior Room. For inquiries and information on The Pen’s dining promotions and room packages, call 887-2888, extension 6694 (Restaurant Reservations) or 6630 (Room Reservations), e-mail diningpmn@peninsula.com or reservationpmn@peninsula.com or visit peninsula.com.

China’s risky debt heads overseas as financial deleveraging rolls on

THE GLOBAL hunt for yield might not be as frenzied as it once was now that interest rates are rising, but for those looking for premiums in dollars, a slew of Chinese borrowers will be happy to oblige this year.

China’s commitment to reining in domestic financial leverage — showcased by the appointment of de-risking champion Guo Shuqing to a top role at the central bank — is making things tougher for high-yield borrowers. So they’re increasingly turning to dollar-bond issuance offshore.

“There will definitely be more supply of high-yield bonds overseas,” said Gordon Ip, Hong Kong-based chief investment officer for fixed income at Value Partners, who manages a China-focused junk-bond fund that beat 98% of peers the past three years. While Ip says bigger supply means prices will probably weaken this year, returns should still be “decent,” and he’s considering adding to his holdings of Chinese junk notes.

High-yield Chinese borrowers — many of which are cash-strapped property developers — issued $2.8 billion of notes in the two weeks through March 23, the biggest fortnight since a new-year rush of sales in January, according to data compiled by Bloomberg. Such securities may grow to account for 40% of Chinese corporate debt sales in dollars this year, up from less than one third in early 2017, according to Moody’s Investors Service.

Behind the rush overseas: a major crackdown on financial leverage at home, in an initiative that took on new urgency with President Xi Jinping chairing a Politburo meeting on the issue last spring. Guo Shuqing, who stepped up scrutiny of leveraged investments after taking the helm of the China Banking Regulatory Commission (CBRC) last year, now also oversees insurers and has become Communist Party boss at the People’s Bank of China (PBoC).

“Guo was firm as the head of the CBRC in clamping down on shadow banking activities. His appointment may thus be viewed as a hawkish turn,” Goldman Sachs Group Inc. economists wrote in a note to clients. The crackdown on shadow banking doesn’t necessarily mean Guo will be hawkish on broad monetary policy, though such restrictions do tend to tighten financial conditions, they wrote.

The push makes it all the tougher to map out refinancing plans for a record of $20 billion high-yield debt coming due in 2018. The initiative drove up the yield on three-year AA- rated corporate bonds, which are seen as non-investment grade by onshore standards, to a 2 1/2-year high of 6.82% in January, according to ChinaBond data.

“Curbs on shadow banking may be contributing to higher yields in the onshore bond markets — such as by reducing demand for onshore bonds from wealth management products — and therefore encouraging more issuance offshore,” said Sandra Chow, Singapore-based senior analyst at research group CreditSights. She said a boost in Chinese issuance presents one of the key risks to the Asian dollar bond market this year.

The dollar debt market itself has shown some wobbles. What’s also helped make issuing abroad more attractive is stability in the yuan, which in 2017 halted a three-year slump against the dollar. That makes it easier to service debt payments, though any surge in dollar sales that put pressure on the currency could in turn put officials on the alert. Newly installed PBoC Governor Yi Gang pledged over the weekend to open China’s capital account in an “orderly” manner.

Defaults could also trigger scrutiny.

“If a corporate did face a default, that would create significant reputational risk, which in turn could limit the cross-border funding channel for many Chinese corporates,” said Matt Jamieson, senior director and head of Asia Pacific research at Fitch Ratings in Sydney. “In that event, we will certainly see the government intervening to place higher restrictions on offshore issuance.” — Bloomberg

How PSEi member stocks performed — March 27, 2018

Here’s a quick glance at how PSEi stocks fared on Tuesday, March 27, 2018.

The changing face of Philippine trade in goods with the rest of the world

Peso expected to weaken vs dollar to ₱53 by Sept. — ANZ

By Melissa Luz T. Lopez
Senior Reporter

THE PESO could breach the P53 level against the dollar later this year given the central bank’s reluctance to raise policy rates, ANZ Research said.

ANZ sees the peso trading at P53 by September and P53.50 by year’s end.

“In the case of PHP, the deterioration in the external deficit and reluctance by the Bangko Sentral ng Pilipinas (BSP) to raise interest rates mean the peso will need to bear the burden of adjustment,” bank economist Sanjay Mathur said in its quarterly report published yesterday.

The peso closed at P52.30 yesterday, weaker than the P52.215 finish on Monday. The exchange rate averaged P51.1471 against the dollar in the first two months of the year, according to central bank data.

ANZ said a breach of the P54 level could come by late 2019.

The bank outlined the case for the peso’s depreciation by citing the BSP’s refusal to raise borrowing rates despite signs of rising inflation.

February inflation picked up to 3.9% from 3.4% in January under the rebased index using 2012 prices, according to the Philippine Statistics Authority. It was the highest level in over three years, which the BSP attributed to the “full pass-through cost” of additional levies under the Tax Reform for Acceleration and Inclusion law which took effect Jan. 1.

The Monetary Board kept benchmark rates unchanged during its March 22 review, noting that price pressures are temporary while domestic economic activity remains robust.

ANZ has withdrawn its forecast of two rate increases from the central bank within 2018, taking its cue from statements made by BSP officials that showed “no inclination” to tweak policy settings.

“Needless to say, the combination of high inflation and a weaker external position will be reflected in the performance of the PHP,” the bank said.

The current account deficit nearly doubled to $2.5 billion in 2017 from $1.2 billion a year earlier as import growth continued to outpace that of exports, according to the central bank.

The deficit has been cited as a major factor in the weakening of the peso, although central bank officials have said that the wider trade deficit simply reflects capital accumulation for the Philippines’ ambitious infrastructure spending plans.

Some analysts have said that the BSP risks falling behind as global yields move up, making the Philippines lose its competitiveness relative to regional peers.

BSP Governor Nestor A. Espenilla, Jr. said he does not see the need for fresh monetary stimulus as growth remains within potential. Faster and broader-based price movements, however, could finally trigger a rate hike.

Mr. Espenilla, however, said that the flexible exchange rate stand is an “appropriate response” to the emergence of a current deficit, as it helps keep the economy in balance. He added that the BSP conducts “tactical” interventions to temper any sharp swings of the currency during day-to-day trading.

The BSP’s last tightening move was in September 2014. However, procedural cuts to policy rates took effect in June 2016 during the shift to an interest rate corridor, resulting in a 2.5-3.5% spread.

ANZ sees the central bank remaining on hold until the end of 2019.

Congress expected to meet 2018 tax reform timetable

THE Department of Finance (DoF) is confident that Congress can meet the department’s timetable for approving four more tax reform packages within 2018, following the filing of the package reducing corporate tax rates last week.

“With the timely filing of the measure in the House, we are optimistic that this proposal, along with the remaining tax reform packages, will be approved by the Congress within the year,” Finance Secretary Carlos G. Dominguez III said in a statement yesterday.

The DoF plans to submit to the House of Representatives four more tax proposals this year, with a view to gaining its approval before the midterm elections in 2019.

These proposals include further increases to tobacco and alcohol taxes; reforms to the property tax and valuation system; restructuring taxes on capital and financial income; an overhaul of taxes in the mining sector; and higher tax rates on luxury goods such as jewelry and yachts.

House ways and means committee Chairman Representative Dakila Carlo E. Cua, along with Representatives Aurelio D. Gonzales, Jr., and Raneo E. Abu filed House Bill No. 7458 on March 21, before the session adjourned for a seven-week break.

The bill mainly proposed an annual 1% cut in corporate tax rates, from 30% to 20% starting 2019, while removing tax incentives in areas not included in the Strategic Investment Priorities Plan (SIPP).

The bill diverged from the DoF’s proposal to Congress, submitted on Jan. 16, which proposed 1% cuts to the corporate tax rate up to 25%, on the condition that tax collection agencies raise the equivalent of 0.15% of gross domestic product (GDP), or P26 billion from the rationalization of tax incentives.

Mr. Cua said that the committee removed the condition attached to lowering the corporate tax rate to remove potential uncertainty for investors.

“The bill we filed aims to decisively lower the corporate income tax rate thereby boosting the competitiveness of the Philippines. It gives a definite timeline and schedule of reduction of the business tax rate,” the legislator said in a mobile phone message.

“This sends a strong signal to the world that the Philippines is and will continue to be a top investment destination,” he added.

The bill also caps tax holidays at five years, designating a Fiscal Incentives Review Board to administer all incentives, provides for a 50% tax allowance for qualified capital expenditures, along with varied rates of tax deductions for research and development, training, labor expenses, infrastructure development, and reinvestment. It also simplifies the administration of allowable deductions and tax payment processes.

The bill follows the Tax Reform for Acceleration and Inclusion law, or Republic Act 10963 enacted on Dec. 19, which cuts personal income, estate and donor tax rates, removes some value-added tax exemptions, increases taxes for automobiles, fuel, tobacco, minerals, and imposes a new tax on sugar-sweetened beverages and cosmetic procedures. — Elijah Joseph C. Tubayan

DoE devolves bureau functions to regions

THE Department of Energy (DoE) said it devolved the functions of the bureaus in the central office to its three field offices in Luzon, the Visayas and Mindanao.

It called the reorganization an “institutional strengthening” to decentralize the implementation of its policies, plans, programs and regulations.

The DoE’s Department Order No. DO2018-03-004 has listed seven general functions of the department’s bureaus and service units to be exercised by the three field offices in their respective jurisdictions, including the conduct of regional-based monitoring activities, evaluations, surveys, profiling, site visits or inspections, and spot checks.

The DoE said there is a need to devolve its functions to the field offices “to optimize its operations and in order to synchronize and to eliminate redundant functions.”

In its order, the DoE also devolved the specific functions of the following bureaus: Energy Resource Development Bureau, Energy Utilization Management Bureau, Electric Power Industry Management Bureau, Oil Industry Management Bureau, Energy Policy and Planning Bureau, and Renewable Energy Management Bureau.

For energy resource development, for instance, the field offices have been given the authority to accept, evaluate and act on applications involving small-scale coal mining permits, mine safety inspector and mine safety engineer permits; and to cancel or terminate such permits for cause.

The field offices are also to inspect, evaluate and monitor small-scale coal mining operations, as well as investigate and validate illegal coal mining activities.

They are also authorized to accept, evaluate and act on applications for the issuance of coal trader permits and coal end-user registrations, and monitor their reportorial compliance pursuant to existing DoE circulars.

The bureau covering electric power management has devolved to the field offices its specific functions, such as the monitoring of plants, site visits for new power plants or those undergoing construction or expansion.

In case of an emergency such as forced outage, calamity, fire and sudden breakdown, the field offices are also mandated to perform the functions of the Manila-based bureau.

The field offices are also authorized to conduct performance audits or the audit of the actual capacity of power generation plants, transmission and distribution facilities.

The DoE undersecretary or assistant secretary in charge of the field offices are to oversee “the efficiency and effectivity of the performance of the general and specific functions” enumerated in the department order.

Also this month, the DoE issued an order, DO2018-03-0003, that created a centralized review and evaluation committee for the integration of the current committees administering the review and evaluation of renewable energy, petroleum, downstream natural gas, and coal service contract applications, as well as the award, amendment and termination of contracts.

The centralized review and evaluation committee is to be headed by Undersecretary Donato D. Marcos as chairman, with Assistant Secretary Caron Aicitel E. Lascano as vice-chairman. The members of the committee are assistant secretaries Redentor E. Delola, Leonido C. Pulido III and Gerardo D. Erguiza, Jr. — Victor V. Saulon

DENR touts ‘green infrastructure’ to boost resiliency

THE Department of Environment and Natural Resources (DENR) said it is hoping for more investment in so-called “green infrastructure” and added that measures like tree-planting have the potential to improve the country’s water management issues.

In a statement on Tuesday, Environment Secretary Roy A. Cimatu said green infrastructure is cost-effective and helps make communities more resilient.

“Countries highly vulnerable to natural disasters, like the Philippines, need to invest more in green infrastructure,” he added.

“Integrating green with grey or traditional infrastructure creates cost-effective, climate resilient communities.”

Mr. Cimatu also encouraged nature-based solutions such as tree planting, which will help resolve solid and water waste issues.

“Nature-based solutions have the potential to solve many water challenges. Nature can heal itself if abuses are mitigated before they become irreversible,” he added.

The DENR last week gave out awards to individuals, groups and programs that have developed nature-based solutions to address pollution.

Mr. Cimatu said that the awards were “timely,” given the environmental crisis in Boracay.

“Massive replanting will go far beyond creating new forests as carbon sinks to mitigate climate change; it will also create livelihood and reduce poverty, provide habitats for biodiversity, recharge watersheds, protect topsoil from erosion, and boost food security,” he added. — Anna Gabriela A. Mogato

PCCI backs phased closure of Boracay

THE Philippine Chamber of Commerce and Industry (PCCI) called on the government to address the concerns of business stakeholders before shutting down Boracay, and proposed a phased closure in order not to unduly disrupt the economy.

In a statement Tuesday, the industry association, which represents about 35,000 members, said the total closure will be “detrimental to the local economy of Boracay and the entire Philippine tourism industry.”

“PCCI appeals that those who are compliant should not be punished and suffer the same fate as those who have short-circuited the environmental laws,” the group added.

The shutdown of Boracay takes effect on April 26.

“While shutting down the island for at least six months appears to be the most practical option to urgently solve its current issues, we believe that it will create unnecessary disruption in many legitimate and law-abiding micro and small businesses and job losses for thousands of local residents of Boracay,” PCCI President Ma. Alegria Sibal-Limjoco said in the statement.

The group instead proposed that the government instead, close down the three major access points to Boracay, one at a time, “to gradually restore the island in phases.”

The island has three entry points: the Cagban jetty port; Punta Bunga near Shangri-La Resort at Punta Bunga; and the side of the island facing the Sibuyan Sea near Lapuz-Lapuz Beach.

“A three-phase closure of the island is the best win-win solution to minimize the impact to the economic well-being of the various stakeholders,” PCCI Director for Tourism Samie C. Lim said in the statement.

The group expressed confidence that President Rodrigo Duterte “will do what is right for the our country’s tourism industry.” — Janina C. Lim

Goldman Sachs says no need to fret yet about soft global growth

GOLDMAN Sachs Group, Inc. economists who are tracking weaker global growth this quarter say there’s no reason to fret that a deeper slowdown is coming.

While there has been some ebbing in the first three months of the year, world gross domestic product is still expanding slightly above Goldman Sachs’ full-year forecast of 4.1%, according to their research note published Monday.

The outlook is holding up despite tighter financial conditions and US President Donald Trump’s moves to impose tariffs on $50 billion worth of Chinese goods and imported steel and aluminum, Goldman Sachs chief economist Jan Hatzius co-wrote with colleagues. Also, weaker first-quarter growth estimates for the US and euro area reflect “seasonal and weather-related distortions,” they said.

“Assuming proportionate retaliation, the tariffs will boost inflation and weigh on growth both in the US and abroad, but our global economic model suggests that these effects will be too small to be distinguishable from the normal noise in the data,” the note stated.

Goldman’s economists indicated they’re sticking with their forecast for four Federal Reserve interest-rate hikes in 2018 and four more in 2019, a view that “remains clearly hawkish relative to market pricing, although the difference relative to the Fed’s view is now just one of timing.”

A tool Goldman Sachs uses to gauge global growth momentum has “slowed only marginally” since the end of 2017. — Bloomberg

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