Gold puts up a fight as selloff slows near key $1,200 level

August 10, 2018 | 7:32 pm

Gold is showing resistance near $1,200 an ounce, suggesting prices are for now finding a floor near a one-year low.
Since last week, the metal’s declines have stalled as it gets closer to the price often touted as a key psychological level, trading no lower than $1,204.58. While a stronger dollar and U.S. economic growth are hurting bullion’s appeal, concerns that Turkey’s financial crisis could spread may be preventing a further selloff.
“We are seeing the metal put up a fight against the stronger dollar, with the contagion risk attracting some demand,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by email.
Gold is still heading for the longest run of weekly losses since 2016, and there are other signs investors are losing faith. Holdings in exchange-traded funds are at a six-month low and money managers have never been so bearish. On Friday, traders will be closely watching Turkish President Recep Tayyip Erdogan’s address to the nation and U.S. inflation data for the impact on gold.
Gold for immediate delivery fell 0.2 percent to $1,210.38 in London, and is down 0.4 percent this week. While the trend remains bearish, there’s a possibility of a technical rebound to $1,230 or $1,235 in the coming weeks, according to Carlo Alberto De Casa, chief analyst at brokerage ActivTrades.
“Erdogan is the biggest risk, with the lack of market assurance potentially sending the dollar even higher,” Hansen said. “It’s probably still too early to pop the champagne as the gold bears are still in control and have yet to be challenged.” — Bloomberg

DoJ formally accuses Peter Lim of conspiracy to commit illegal drug trading

August 10, 2018 | 7:26 pm

THE Department of Justice (DoJ) on Friday reversed its earlier ruling that cleared businessman Peter Go Lim of drug-related charges, formally accusing him with “conspiracy to commit illegal drug trading.”
In a press statement on Friday, the department reported that the prosecution panel found that “the legislative investigation of the Senate Committees on Justice and Public Order, together with Marcelo Adorco’s positive identification of Peter Go Lim as one of the Kerwin’s suppliers of dangerous drugs, is sufficient to establish probable cause to charge them with conspiracy to commit illegal drug trading.”
Earlier this year, DoJ initially cleared the drug charges against Mr. Lim due to lack of evidence before former Justice Secretary Vitaliano N. Aguirre ordered a reinvestigation.
The panel that found probable cause against Go is composed of Senior Assistant State Prosecutors Juan Pedro C. Navera, Anna Noreen T. Devanadera, and Prosecution Attorney Herbert Calvin D. Abugan.
The DoJ said that the prosecution panel “reiterates that conspiracy to commit illegal drug trading is a distinct offense under the Comprehensive Dangerous Drugs Act of 2002.”
Agreement to do drug trading is the “gravamen” (most serious part) of the offense, the panel added.
Last month, the same panel “also found probable cause to charge” Mr. Espinosa and Mr. Adorco for violating Section 26 (b) in relation to Section 5, Article II of the Comprehensive Dangerous Drugs Acts of 2002. Also involved were Peter Co, Lovely A. Impal and Ruel S. Malindagan.
Mr. Lim’s case was investigated separately after filing a motion for a separate preliminary investigation also last month. — Gillian M. Cortez

Smart taps Ericsson for 5G roll out in first half of 2019

August 10, 2018 | 7:21 pm

PLDT, Inc.’s wireless subsidiary Smart Communications, Inc. said its rollout of fifth generation (5G) technology is set for the first half of 2019 as it ties up with Ericsson.
In a statement released on Friday, the telco company said it had signed a Memorandum of Understanding (MoU) with Ericsson, which outlines that the 5G network will kick off its deployment in Luzon.
“The 3GPP (3^rd Generation Partnership Project)-compliant 5G Trial System that will be deployed in Smart includes Ericsson 5G RAN, Core and Transport solutions. The 5G pilot deployment will allow Smart to explore industry partnership engagements, collaborate with schools and universities, and further develop competence in 5G,” it said.
PLDT Chairman Manuel V. Pangilinan said in a press briefing on Thursday that the company had conducted a pilot test with Ericsson for the 5G network on Wednesday.
Prior to its deal with Ericsson, PLDT and Smart had signed an MoU with Huawei Technologies Ltd. last year “to identify and develop the areas of technological innovation needed to deliver 5G, which is expected to provide the foundation for the digital connected society.”
In June, the Pangilinan-led company said it had opened a 5G Technolab, a dedicated facility for research and development, standardization and testing of the technology.
Smart has so far prepared more than 2,000 of its sites for compatibility with the 5G network.
“To be able to deliver 5G services to its customers in the future, Smart is upgrading its network’s Core and Transport elements. This includes upgrading to fiber the backhaul connecting the network’s cell sites around the country and deploying 5G-ready equipment in the ongoing LTE roll-out,” PLDT and Smart Senior Vice-President for Network Planning and Engineering Mario G. Tamayo said in the statement.
Smart said it had started its efforts to bring 5G technology to the country several years ago.
In 2016, the company said it was able to achieve 5G-level speeds of 2.5 Gigabits per second (Gbps) over a live network during a demo test with technology partner Nokia. Since it has worked with Huawei, Smart has seen its 5G network reach over 14 Gbps.
Rival Globe Telecom, Inc. announced in June that it would be bringing the 5G technology to the country by second quarter of 2019. Also partnering with Huawei, its 5G network is expected to reach speeds of 50 megabits per second (Mbps) to 100 Mbps.
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

POEA given authority to approve recruitment agencies’ licenses

August 10, 2018 | 7:20 pm

THE Philippine Overseas Employment Administration (POEA) has been authorized to approve licenses of recruitment agencies that hire overseas Filipino workers (OFW), the Department of Labor and Employment (DoLE) said on Friday.
Under the department’s Administrative Order No. 443 Series of 2018, the POEA has also been given the power to “grant exemptions from the age requirement for overseas workers; and issue appropriate orders, decisions and resolutions,” a DoLE press statement said. It added that Labor Secretary Silvestre H. Bello “ordered POEA to reassume full authority on matters concerning overseas employment.”
As a result, recruitment and placement licenses applications will be filed and processed by the POEA according to existing rules and regulations.
Section 14 of Republic Act 10022 or “An Act Amending Republic Act No. 8042, Otherwise Known as the Migrant Workers and Overseas Filipinos Act Of 1995, As Amended, Further Improving the Standard of Protection and Promotion of the Welfare of Migrant Workers, Their Families and Overseas Filipinos in Distress” mandates that POEA has powers to act on overseas employment and recruitment matters.
Back in 2017, the labor secretary has assumed authority in the licensing of overseas recruitment agencies after he signed Administrative Order No. 241 which recalled Administrative Order No.144 Series of 1998. AO 144 stated that the POEA has power to act on overseas employment and recruitment matters.
The labor secretary signed AO 241 amid issues that POEA officials were involved in anomalous activities. — Gillian M. Cortez

Alliance Global profit up 17% in 1st half

August 10, 2018 | 7:20 pm

ALLIANCE Global Group, Inc. grew its attributable profit by 17% in the first half of 2018, driven by the double-digit growth across its property, liquor, and fastfood businesses, alongside the recovery in its gaming unit.
In a statement issued Friday, the holding firm of tycoon Andrew L. Tan reported a net income attributable to equity holders of the parent of P7.9 billion, versus the P6.9 billion it realized in the same period a year ago.
This was supported by a 9% increase in revenues to P73.2 billion for the first semester.
“All the group’s major subsidiaries delivered strong topline and bottomline results, reflecting the improving outlook in their respective business segments,” AGI Chief Executive Officer Kevin Andrew L. Tan said in a statement.
Megaworld Corp., AGI’s property unit, saw its attributable profit rise 13% to P7.3 billion in the first half. The residential and rental units pushed consolidated revenues 10% higher to P26.8 billion.
Megaworld also noted that its hotel business saw significant growth at 10% to P715 million for the period, following the addition of more hotel rooms under its portfolio.
Emperador, Inc. delivered an 18% uptick in attributable profit to P3.3 billion, helped by an 8% increase in consolidate revenues to P19.5 billion.
The whiskey business — which accounts for 27% of total profit — posted a 77% increase to P890 million, as sales from brands The Dalmore and Jura boosted revenues by 16% to P6.2 billion.
The whiskey business supported the slower growth of the brandy business, which grew by 4% in terms of revenues to P13.6 billion.
The attributable profit of Travellers International Hotel Group, Inc. (TIHGI) stood at P1.7 billion in the first half, recovering from the P375 million it generated in the same period a year ago. To recall, the company’s bottomline took a hit last year due to the shooting incident in Resorts World Manila that left 37 people dead.
Gaming revenues slipped 3% to P4.5 billion, although TIHGI said gross gaming revenues have seen improvements on a quarterly basis.
Meanwhile, Golden Arches Development Corp. booked a net income of P741 million, 26% higher year-on-year. The local franchisee of the McDonald’s brand benefited from the addition of 19 stores to its portfolio, ending June with 585 stores.
Sales revenues then expanded 11% to P13.5 billion, with same-store sales growth at 5.7%.
“We have consistently grown our reliable sources of income and have improved our operating leverage. All of these should support us as we navigate the challenging economic environment moving forward,” Mr. Tan said.
Shares in AGI gained 1.29% or 16 centavos to close at P12.58 each at the Philippine Stock Exchange on Friday. — Arra B. Francia

Banks to outperform Asian lenders as interest margins widen

August 10, 2018 | 7:19 pm

By Melissa Luz T. Lopez, Senior Reporter
PHILIPPINE BANKS will continue to outperform their Asian peers given wider interest margins, with a more aggressive rate hike from the Bangko Sentral ng Pilipinas (BSP) to give lenders another boost.
Analysts at JPMorgan Chase & Co. said domestic players will remain stellar performers compared to other banks in the region, and has recommended taking positions on these banks.
“Philippine banks have outperformed Asia banks by 4% in last three months after underperforming by 23% year-to-date,” bank analysts Harsh Wardhan Modi, Daniel Andrew Tan and Jeanette Yutan said on Friday.
Local lenders are expected to maintain their luster as domestic interest rates climb further after the Bangko Sentral ng Pilipinas (BSP) raised key rates by 50 basis points (bp) this week, a stronger tightening move to temper price pressures.
“We see the outperformance widening after Thursday’s 50bps hike from BSP,” JPMorgan said. “Each 25bps adds 4-6bps to net interest margins and 2-3% to EPS (earnings per share) for large banks, based on our sensitivity. We recommend adding positions.”
The central bank fired off its strongest policy adjustment in a decade as inflation remains elevated, having hit a fresh high of 5.7% in July versus a 2-4% target for the full year. Prices of widely-used goods have surged by 4.5% for the first seven months, with hints that inflation could remain elevated even until 2019.
The latest policy tweaks has brought benchmark rates to a 3.5-4.5% range. JPMorgan said the higher rates have “begun to show up” in the margins imposed by banks, which would mean bigger yields even if loan growth could ease.
“We see the positive trend continuing given ample (rather than excessive) liquidity and more rational pricing behavior. On the other hand, the consistent increase in rates could lead to moderation of loan growth from 19.1% (June 2018) to mid-teens in 2H18, where it would be more sustainable,” the bank economists said.
Despite the rising interest rate regime, banks are unlikely to see loans turn sour amid ample money supply. However, the global bank flagged “potential risks” in the small business segment.
Still, JPMorgan said they remain upbeat on large Philippine banks as they turn more profitable.
Universal and commercial banks made a cumulative P77.364 billion net income as of end-June, according to latest central bank data. This is 7.7% higher than the P71.842 billion they booked during first six months of 2017.
Lenders who have reported their first-semester profits have said that double-digit lending growth continued to drive bigger incomes amid rising margins, although some said that weak trading gains as well as higher documentary stamp taxes fed into their earnings.

JG Summit profits drop in Q2

August 10, 2018 | 7:19 pm

JG SUMMIT Holdings, Inc.’s attributable profit dropped by a third in the second quarter of 2018, as the weaker peso, higher fuel prices, as well as rising prices of raw materials for its food, airline, and chemical units tempered the double-digit increase in revenues.
In a regulatory filing, the listed conglomerate said net income attributable to equity holders of the parent went down to P5.02 billion in the April to June period, against the P7.13 billion it generated in the same period a year ago.
In contrast, revenues climbed 11.4% to P74.6 billion, thanks to the performance of Universal Robina Corp. (URC)’s branded consumer foods and agro-industrial units, the growth in Robinsons Land Corp. (RLC), and higher average selling prices of products under JG Petrochemcial Group.
“While we continue to face the challenges arising from inflation and the weaker currency further exacerbated by tougher competitive dynamics, we are delighted to see improvements in our 2Q18 results,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei was quoted as saying in a statement.
“We believe that we can navigate this environment with the fundamentals of each of our businesses intact and issues are more cyclical than structural,” Mr. Gokongwei added.
On a six-month basis, JG Summit’s attributable profit went down 32.8% to P9.84 billion, while revenues rose 8% to P145.3 billion.
For the food and beverage unit, URC reported a 23.1% decline in attributable profit to P4.81 billion during the first half. This was due to higher costs of raw materials and foreign exchange gains.
URC’s consolidates sales of goods and services amounted to P64.37 billion by end-June, 5.9% higher year-on-year.
Meanwhile, RLC’s attributable profit went up by 14% to P3.33 billion for the period, driven by higher sales of residential properties, leases of commercial spaces, and more malls operated from January to June. Revenues from the property business rose by 19% to P13.1 billion
Cebu Air, Inc., which operates low budget carrier Cebu Pacific, saw a 23.6% drop in earnings to P3.31 billion, despite a 6.1% uptick in revenues to P37.83 billion. The airline recorded a 6.3% increase in passenger revenues to P28.3 billion for the period, alongside a 28.1% increase in cargo revenues to P2.65 billion.
Operating expenses of Cebu Pacific however grew 14% to P33.06 billion, due to the rise in fuel prices during the year. The airline also recorded net foreign exchange losses of P1.58 billion as a result of the weaker peso. Cebu Pacific currently has long term dollar-denominated debt used to fund its aircraft acquisitions.
Earnings of the petrochemical business meanwhile slumped by 50.2% to P1.6 billion, amid an 8.9% climb in revenues to P21.18 billion.
JG Summit’s banking unit, Robinsons Bank Corp., delivered a 31.1% profit increase to P211.43 million, as banking revenues likewise went up 32.2% to P2.73 billion.
Shares in JG Summit picked up 0.69% or 40 centavos to close at P58.50 each at the stock exchange on Friday. — Arra B. Francia

PAL losses contract 16.79% in Q2

August 10, 2018 | 7:19 pm

THE listed operator of Philippine Airlines (PAL) saw a 16.79% cut in its losses in the second quarter driven by higher passenger volumes and other revenues.
PAL Holdings, Inc. saw its net attributable loss down to P290.817 million from last year’s P349.5 million despite recording higher expenses.
Its total revenue reached P38.34 billion, up 13.9% from the P33.66 billion it posted last year. It said in a regulatory filing that the growth is “primarily due to the increase in passengers and cargoes carried as a result of the increase in number of flights operated as well as improvement in yields.”
The flag carrier’s total expenses grew to P38.67 billion from last year’s P33.21, surging 16.4% because of the additional flights PAL opened.
“The increase was primarily due to higher flying operations, aircraft and traffic servicing, reservations and sales, passenger service and maintenance expenses,” it said.
The rising price of fuel continues to affect the company’s business, hitting it with a 32.8% increase — P3.2 billion — in flying operations expenses. It said that the per-barrel price of fuel surged to $93.92 this year from $73.89 last year.
PAL President Jaime J. Bautista previously told reporters the airlines consumes up to 11 million barrels of fuel every year.
PAL saw its net attributable loss from January to June go up 7.19% to P1.398 billion from last year’s P1.304 billion due to higher losses in the first quarter.
Mr. Bautista told reporters in June that the company is hopeful to end the year with a “modest profit,” as it seeks to impose a fuel surcharge, having made an application at the Civil Aeronautics Board (CAB).
He also said last month that the market is growing, keeping the company hopeful that it would achieve this goal by the end of the year.
PAL reported a net loss of P7.3 billion in 2017 due to higher expenses brought by rising fuel prices and aircraft and passenger expenses. It sank further in the first quarter of 2018, to P1.1 billion from P954 million year on year.
The CAB said in July that it is working on a “surcharge matrix” which will guide airlines in adjusting their prices based on the cost of fuel. PAL and Cebu Pacific have both applied for fuel surcharges with the CAB due to rising fuel expenses. — Denise A. Valdez

Profits up for property firms Filinvest and Century

August 10, 2018 | 7:19 pm

FILINVEST Land, Inc. (FLI) and Century Properties Group, Inc. (CPG) both reported higher profits for the first six months of 2018, buoyed by the strength of their respective property businesses.
In a statement issued Friday, FLI said net income accelerated by 9% to P2.88 billion from January to June, as revenues improved by 6% to P10.65 billion.
The Gotianun-led firm observed a 28% increase in rental revenues to P2.6 billion for the period, following the completion of more office and retail buildings. Recurring income now accounts for 43% of the company’s total profit, in line with its goal for the unit to contribute a larger share to earnings in the coming years.
FLI currently has 27 office and retail developments spanning 595,000 square meters (sq.m.) in gross leasable area (GLA). The company looks to end the year with an additional GLA of 200,000 sq.m. With this, the firm said it is on track to meet its target of 1.5 million sq.m. in terms of GLA by 2022.
Meanwhile, the company launched P16 billion worth of residential projects during the first half, catering to the affordable and middle income markets with its Futura and Aspire brands.
“We are looking forward to the company’s further growth as we complete our investment property expansion plan. We expect profitability to increase as our newly opened office buildings and shopping malls stabilize, and additional office buildings become operational within the year. We forecast residential revenues to remain stable,” FLI President and Chief Executive Officer Josephine Gotianun-Yap said in a statement.
On the other hand, CPG’s net income went up 10% to P490 million during the first half, after revenues jumped 40% to P4.7 billion. The company attributed the increase to the sales of units in its residential condominium projects.
This includes sales of units in the Boracay Tower of Azure Urban Resort Residences in Parañaque City, the Iguazu tower of the Acqua Private Residences in Mandaluyong, and the Roxas West, Quirino West, and Quezon South Towers of The Residences in Quezon City. The buildings have a combined sales value of P15 billion from 3,500 units.
“We see this positive trend in our bottom line to continue. While we continue to recognize the revenue from the unit inventory of our condominium developments, we are also seeing a higher income stream from our new allied real estate segments,” CPG Chief Financial Officer and Head for Investor Relations Ponciano S. Carreon, Jr. said in a statement.
The Antonio-led firm also saw P500 million in revenue contribution from its Phirst Park Homes, its affordable housing segment. The company diversified into the affordable market in 2017 in a bid to take advantage of the lack of housing units in the country, translating to a housing backlog of six million homes.
“As the company’s diversification program starts to bear fruit, we will continue to work towards improving operational efficiencies to maximize growth opportunities and deliver more value to our shareholders in the near future,” Mr. Carreon said.
Shares in FLI gained 3.45% or five centavos to close at P1.50 each at the stock exchange on Friday, while shares in CPG rose 6.74% or three centavos to close at 47.5 centavos each. — Arra B. Francia

Semirara’s coal biz cushions effects of plant shutdowns

August 10, 2018 | 7:19 pm

SEMIRARA Mining and Power Corp. (SMPC)’s net income stood at P8.1 billion by end-June, 3% higher than what it generated a year ago, as its coal business cushioned the effects of the plant shutdowns of its power unit.
In a disclosure to the stock exchange on Friday, the Consunji-led firm said the coal business posted improved margins year-on-year due to a recovery in global coal prices last June.
Coal sales went up 9% to 6.9 million metric tons (MT), as demand from domestic customers increased by 11%, alongside the 6% increase from coal exports.
This led to a 35% jump in core profits for the coal business in the first half to P7.2 billion, compared to the P5.3 billion recorded in the same period in 2017.
Production, however, dropped by 2% year-on-year to 7.2 million MT. On a quarterly basis, production declined by around one million MT.
The power unit, SEM Calaca Power Corp. (SCPC), recorded a core profit of P373 million for the period, down 60% from the P1.15 billion it reported in the first half of 2017.
The power plant saw its gross generation go down by 5% to 1,311 gigawatt hours (GWH), as Unit 2’s maintenance shutdown in the first quarter continued until the first week of April. Unit 1 was also shut down briefly in March, but was able to run continuously in the second quarter.
With this, sales volume of SCPC slowed by 3% to 1,355 GWH. Prices however climbed by 10% for the period, allowing the firm to still book 6% higher revenues to P5.4 billiion.
Meanwhile, Southwest Luzon Power Generation Corp. (SLPGC) posted a 66% decline in core profit to P478 million.
SLPGC also logged a 46% decrease in gross generation to 442 GWH. Its Unit 2 encountered a transmission line fault during the first half, resulting in a brief outage. The company noted that it is now generating at full capacity of 150 megawatts.
“Net of eliminations, coal, SCPC and SLPGC contributed P5.59 billion, P1.72 billion, and P841 million, respectively, for the first half of the year,” the company said.
Shares in SMPC rose 0.47% or 15 centavos to close at P32 each at the stock exchange on Friday. — Arra B. Francia

Wilcon stores sales build up its earnings

August 10, 2018 | 7:19 pm

EARNINGS of Wilcon Depot, Inc. went up by a fifth in the first six months of 2018, fueled by higher sales from existing stores alongside its expansion to new markets.
The listed firm said in a statement on Friday that net income jumped to P914 million in the first half, versus P763 million in the same period a year ago. Net sales logged an 18% increase to P10 billion.
The company attributed the increase to strong comparable sales, the development of new stores, and improving margins following its product mix strategy.
“Wilcon is looking at maintaining its 2018 net sales target growth rate of mid to high teens. While we have achieved our target for the first half, we have to continue to work hard in the second half to sustain our momentum,” Wilcon Chief Financial Officer Mark Andrew Belo was quoted as saying in a statement.
The performance of its depot-format stores accounted for 97% of Wilcon’s total sales at P9.7 billion, 18% higher year-on-year. The company opened three new depots in the second quarter alone, and saw better than expected growth from old depots.
The 3% balance of net sales came from Wilcon’s smaller format stores — called Home Essentials — provided P304 million from the period from January to June. While two new Home Essentials stores were put up in the first half, the segment’s 12% uptick can be attributed to old stores, which recorded same stores sales growth of 11.4%.
Wilcon is scheduled to open five more depots by the end of the year, in order to reach its 2018 target of 51 stores.
“As we are on track to achieve our sales growth target, we are likewise optimistic that we will achieve our mid-teens net income growth target,” Mr. Belo said.
Shares in Wilcon dropped two centavos or 0.17% to close at P11.54 each at the stock exchange on Friday. — Arra B. Francia

Rice stocks decline as of July 1

August 10, 2018 | 7:19 pm

RICE STOCKS as of the start of July were estimated at 1.99 million metric tons (MT), down year-on-year and month-on-month, data from the Philippine Statistics Authority (PSA) showed.
PSA’s Rice and Corn Stocks Inventory report released on Friday showed stocks as of July 1 were 15.21% lower from 2.35 million MT a year ago and 15.68% down from the previous month’s 2.36 million MT inventory.
Household stocks made up 49.85% of the total inventories, followed by warehouses with a 47.47% share. The National Food Authority (NFA) cornered the remaining 2.68%, with 48.78% of its stocks from rice imports.
The rice stocks as of July 1 are considered sufficient for about 62 days, a drop from last June 1 when stocks were deemed sufficient for nearly 74 days.
However, unlike last month when NFA’s stocks could barely last a day, the agency’s latest inventory is estimated to last for about a day on the back of the ongoing unloading of imported rice, which has been hampered by poor weather.
The NFA is mandated to maintain at least 15 days’ worth of buffer stock at any given time and at least 30 days’ worth of buffer stock for lean months, which starts every July.
All three sectors posted year-on-year drops, with the NFA recording the sharpest at 65.60%. The commercial sector’s stocks dropped 21.12%, while household inventories slid 0.24%.
Likewise, corn stocks as of July 1 stood at 480,860 MT, lower by 29.66% year-on-year and 18.78% month-on-month.
Corn inventory declined year-on-year in all three sectors. Household stocks slid 7.03%, while commercial and NFA stocks dropped 31.42% and 100%, respectively.
Month-on-month, the PSA reported a 22.88% drop in commercial warehouse corn stocks which offset the 29.25% increase in household stocks. — A.G.A. Mogato