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BPO firms drive demand for office space in Cebu

MORE business process outsourcing (BPO) firms and multinational corporations are locating in Metro Cebu, driving a projected 47% growth in office supply in the next three years, according to real estate consultancy Santos Knight Frank.

Globe Innove IT Plaza Cebu
Business process outsourcing firms are flocking to Metro Cebu. — IMMORTAL SANCTUS AT EN.WIKIPEDIA

In a statement, Santos Knight Frank said Metro Cebu will add as much as 350,000 square meters (sq.m.) in gross leasable area to its office stock from 2018 to 2020. This will bring the total office stock in the area close to one million sq.m. by 2020.
“The growth of Cebu’s property sector this year solidifies the metropolis’ position as the leading investment destination in the Philippines outside Metro Manila. With a strong economy, large pool of talent and new infrastructure in place, Cebu is well on its way to becoming a global city,” Santos Knight Frank Chief Executive Officer Rick Santos was quoted as saying in a statement.
The company attributed the growth mainly to the demand for office spaces from BPOs and multinational firms, which has in turn pushed lease rates higher in the first half of 2018. It noted that weighted average asking lease rates went up by two percent to P548.31 per sq.m. in the first six months of the year, compared to the second half of 2017.
As per the deals tracked by Santos Knight Frank, transacted rents posted a 9% increase ranging from P600 to P650 per sq.m. Office capital values also stood at P150,000 to P200,000 per sq.m.
Santos Knight Frank also noted the opening of the second terminal of the Mactan-Cebu International Airport last July has further enhanced international connectivity in the area.
“The launch of Mactan-Cebu International Airport’s Terminal 2 is a particularly exciting development. While a number of cross-border transactions have recently been closed in Cebu, in particular from China, South Korea and Japan, the improvements to the airport will further increase tourism, facilitate greater inflow of capital and help continue the metropolis’ growth momentum in the coming years,” Mr. Santos said.
Alongside the surge in office supply, the residential property market has also seen double-digit growth across different price points. The affordable sector grew 14.5% in the first half of 2018, midscale rose by 12%, while the high-end sector went up by 12%.
Santos Knight Frank said majority of buyers were investors seeking capital appreciation and leasing opportunities. Gaming companies are also seen to be driving demand, as the company noted that a large volume of availed inventory was purchased for the housing of Chinese gaming companies’ employees.
“Buyers from South Korea, Japan and China – three of the top sources of foreign arrivals in Cebu – are reported to purchase bulk condominium units,” the company said.
Given the development in Cebu, Santos Knight Frank expects other cities in the Visayas region to follow suit, betting on Iloilo and Bacolod, which it noted is now seeing increased commercial and development activities through Iloilo Business Park, Bacolod Capital Corporate Center, and Bacolod Central Mall. — Arra B. Francia

Patrick Stewart to reprise Star Trek role in new series

BRITISH ACTOR Patrick Stewart, seen here arriving for the Oscar Awards in Hollywood on March 4, delighted fans on Aug. 4 by boldly going back to his role as Jean-Luc Picard, which he said he will reprise in a new Star Trek series. — AFP

LOS ANGELES — Actor Patrick Stewart delighted fans Saturday by boldly going back to his role as Jean-Luc Picard, which he said he will reprise in a new Star Trek series. The British actor, 78, said he would return to the iconic role during a surprise appearance at the annual Star Trek convention in Las Vegas, said “it is an unexpected but delightful surprise to find myself excited and invigorated to be returning to Jean-Luc Picard and to explore new dimensions with him…. Seeking out a new life for him, when I thought that life was over.” The new series, which the CBS All Access streaming service will carry, is to center on Picard’s life post Star Trek: Next Generation. That series ran from 1987 to 1994 with 178 episodes, and spawned several films, the last in 2002. “I will always be very proud to have been a part of the Star Trek: The Next Generation, but when we wrapped that final movie in the spring of 2002, I truly felt my time with Star Trek had run its natural course,” Stewart said. “It has been humbling to hear stories about how The Next Generation brought people comfort, saw them through difficult periods in their lives or how the example of Jean-Luc inspired so many to follow in his footsteps, pursuing science, exploration and leadership,” he continued. “I feel I’m ready to return to him for the same reason — to research and experience what comforting and reforming light he might shine on these often dark times.” Star Trek, a multi-billion-dollar cultural phenomenon beloved by fans worldwide, turn 50 years old in 2016. Details on the new series, including title or release date, remain under wraps. — AFP

Philippine National Bank posts higher first-half profit as core businesses grow

PHILIPPINE National Bank (PNB) saw its net profit climb in the first half of the year on the back of growth in its total operating income.
In a regulatory filing on Monday, the Tan-led bank said its consolidated net income stood at P5.4 billion in the six months ended June, double the P2.7 billion it booked in the same period last year.
The bank said the 50% growth in total operating income “provided the momentum for the strong performance” as its core earnings and non-recurring revenues increased.
The bank’s net interest income stood at P13.1 billion in the first semester, up 27% from the year-ago level of P10.3 billion. PNB said this was driven by “higher loan volumes and net interest margins.”
PNB’s total loans expanded 16% year-on-year to P529.6 billion.
Its non-performing loans (NPL) ratio was at 0.30%, while NPL coverage stood at 132%.
Total deposits meanwhile grew 8% to P672.2 billion.
Likewise, the lender’s net profit on service fees and commissions totalled P1.68 billion, higher by 57% or P61 million from the P1.07 billion booked in the same period last year.
The lender said this was boosted by higher credit, deposit and bancassurance fees, which offset lower underwriting and investment banking revenues due to “lackluster activities in the capital markets during the period.”
Trading and foreign exchange gains were down to P795 million due to a continuous rise in interest rates.
The lender meanwhile logged higher net gains on disposal of foreclosed properties at P4.4 billion in the first half of the year.
Operating expenses, on the other hand, climbed 18% excluding provisions for impairment credit losses supported by strong revenue growth translating to higher business taxes and other business-related expenses.
Meanwhile, PNB set aside P1.2 billion for provisions for impairment and credit losses in the period to maintain loan portfolio quality and in compliance with new accounting standards.
Overall, the lender’s total consolidated assets stood at P876.2 billion at end-June, up 6% from the previous year. Total equity also grew 9.1% or P10.4 billion to P124.3 billion from last year’s P113.9 billion.
PNB shares closed at P45.40 apiece on Monday, down by 10 centavos or 0.22% from the previous session. — K.A.N. Vidal

Hilton’s new luxury hotel brand is a ghost of Blackstone’s past

HILTON Worldwide Holdings Inc. is getting ready to start a new luxury brand, and its name is one recycled from the past.
Hilton hasn’t formally announced the new brand yet, but provided a hint in a July 31 press release heralding the addition of three new high-end hotels in Dubai. One of the properties is a former St. Regis now known as the Habtoor Palace Hotel. The property will belong to LXR Hotels & Resorts, an “upcoming luxury collection brand from Hilton,” according to the statement.
The LXR name will probably be obscure to hotel guests, but may ring a bell for students of private equity investments in the hospitality industry. Back in 2005, Blackstone Group LP launched LXR Luxury Resorts, using the brand to reposition 14 high-end hotels the firm acquired when it bought out Wyndham International Inc.
After Blackstone acquired Hilton in 2007, many LXR properties were reflagged under Hilton brands, including El Conquistador Resort in Puerto Rico and Casa Marina Key West, which became Waldorf Astoria resorts. Blackstone took Hilton public in 2013, and sold its remaining stake in the company earlier this year.
A Hilton spokesman confirmed that the company expects to launch LXR later this year.
Chief Executive Officer Chris Nassetta has touted the company’s plans to add brands in 2018, including a “hostel on steroids,” and a new brand that is slightly more upscale than the Hilton flagship. LXR appears to be a soft brand, meaning that the properties would maintain their individual identities while enjoying the services of a major hotel company. — Bloomberg

Coca-Cola mulls directly sourcing sugar from farmers

A WORKER inspects bottled Coca-Cola beverages at a plant in Bacolod City. — AFP

AGRICULTURE Secretary Emmanuel F. Piñol said on Monday Coca-Cola FEMSA Philippines, Inc. is looking into directly sourcing its sugar supply from sugarcane farmers.
“They discussed about directly engaging farmers to produce sugar for them, instead of relying on the traders. They were looking at Bukidnon and North Cotabato as the possible areas,” Mr. Piñol told reporters. “What they want to happen is they want to seal deals with the farmers in those district who don’t want to be controlled.”
In a statement, Coca-Cola FEMSA Philippines said it continues to work closely with the Sugar Regulatory Administration and its partners to ensure the return of the Coke Original Taste in stores.
“We are optimistic that the supply of our Coke Original Taste in restaurants and in stores will continue to stabilize in the next few weeks,” the company said.
Coca-Cola FEMSA Philippines earlier complained about the unreliable supply of local sugar, which affected its production of Coca-Cola Original Taste.
Meanwhile, the Department of Agriculture (DA) is considering reviewing the issuance of sugar importation permits.
Mr. Piñol said the current process — wherein in the permits are coursed through the planters associations and traders — is too long and brings additional costs.
“We import because there is a shortage or there is a spike in the price of sugar. The process however — the system does not guarantee a lower price for sugar,” he added.
“If our target is to bring in sugar to stabilize the price, then that is not the way to go. If you’re an institutional user of sugar like [Coca-Cola FEMSA Philippines] then you’ll obviously complain.”
Mr. Piñol said Coca-Cola executives told him they are willing to pay royalties to farmers in exchange for the license to import.
“I was thinking of using that to assist sugarcane planters all over the country. Like [for] mechanization,” he added. “So why not use that to buy them (sugarcane farmers) harvesters and tractors so that we can make sure that they really benefit instead of giving them cash.” — Anna Gabriela A. Mogato

Murakami delights fans with radio show debut

TOKYO — Bestselling author Haruki Murakami, who rarely appears in public, delighted fans on Sunday as he made his radio debut with a one-off music show. Many fans expressed excitement on social media as they heard the show by the Japanese novelist, 69, perennially touted as a contender for the Nobel literature prize. “It’s the first time I listened to his voice. I’m surprised that his way of talking and his voice are young!!” said one Twitter user. “Appreciate I can listen to his voice!! So excited I have tears!!,” tweeted another. The reclusive writer, an avid music fan, introduced songs by US and British musicians. Murakami became a global sensation with the publication of Norwegian Wood in 1987 and has written several other best-sellers including 1Q84 and Kafka on the Shore. In 2007, he published a non-fiction work, What I Talk About When I Talk About Running. He has said he uses several iPods to listen to music while running. Music, he told the radio show, had helped him to write. “I didn’t learn writing techniques from someone’s literature. I learnt about rhythms, harmony and improvisations from music,” he said. Even so, he said, he “prefers to die quietly” — when the co-host of the show relayed a listener’s question about what music he wants at his funeral. The writer, who spends much of his time in the United States, has a cult following for his sometimes surreal works peppered with references to pop culture, which have been translated into some 40 languages. — AFP

Standard Chartered sees BSP hiking rates by 25bps this week

By Melissa Luz T. Lopez, Senior Reporter
THE CENTRAL BANK may find room to raise rates by just 25 basis points (bp) this week, a bank analyst said, provided it comes with a hawkish statement from policy makers in order to temper further price pressures.
The Bangko Sentral ng Pilipinas (BSP) will reassess monetary conditions on Thursday and decide on benchmark rates. A BusinessWorld poll among economists saw seven betting on a 25-bp hike, while six are expecting the Monetary Board to turn aggressive and announce a 50-bp increase.
Several analysts expect a 50-bp rate hike as the realization of BSP Governor Nestor A. Espenilla, Jr.’s hints of a “strong policy response” as inflation surged to a nine-year high in June at 5.2%, with signs that prices spikes are becoming more widespread.
For his part, Standard Chartered Bank economist Chidu Narayanan said there is scope for a third 25-bp rate increase this week, which will match the BSP’s moves in May and June.
“BSP has stated its concern about inflation expectations, but a hawkish rhetoric is sufficient to reduce expectations, even with only a 25 bps rate hike,” Mr. Narayanan said via e-mail.
Benchmark rates currently range between 3-4%. The last time the BSP raised rates by 50 bps in one go was in July 2008, when inflation surged to a 17-year high at 12.2% against a 3-5% target that year.
Still, Mr. Narayanan did not dismiss a 50-bp rate adjustment for the upcoming meeting and said it could be “close call” on Thursday afternoon.
“Inflation is high and likely to remain so, supporting the case for a 50 bps hike (as the market is expecting),” the bank analyst said. “However, BSP is not worried about inflation, which it expects to fall to an average of 3.3% year-on-year in 2019 — this would make a 50 bps rate hike disingenuous.”
The final print for July inflation — which will be announced by the Philippine Statistics Authority today — will play a huge part in the BSP’s decision. Mr. Narayanan expects prices to have climbed faster at 5.6% last month, hitting a fresh high and remaining beyond the central bank’s 2-4% target.
“Accelerating inflation will likely prompt a hawkish rate hike from the central bank at its 9 August meeting; this would be the third straight hike,” the economist said, noting that the pace will quicken further this month before eventually easing back to target.
“Medium-term risks to inflation lie to the upside, in our view, on higher oil prices, a weaker currency or higher-than-expected infrastructure investment.”
On the other hand, Mr. Narayanan said the Philippine economy likely grew by 6.7% during the second quarter, which if realized will soften from the 6.8% pace clocked in during the first three months of the year.
A surge in infrastructure investments, coupled with robust household spending and strong factory output growth likely sustained the “strong, broad-based” domestic expansion, although short of the government’s 7-8% growth goal.

ABS-CBN income slumps in Q2

ABS-CBN Corp. reported a 61% drop in net income attributable to equity holders of the parent company during the second quarter, dragged by higher production costs.
In a regulatory filing, ABS-CBN said its attributable net income fell to P397.35 million during the April to June period, from P1.03 billion during the same period a year ago.
This brought the six-month attributable income to P849.88 million, 41% lower than the P1.45 billion posted a year ago.
Second quarter revenues inched up 1.6% to P9.925 billion, bringing the first half total to P18.936 billion — 2% lower than a year ago.
Advertising revenues went up 4% to P5.23 billion in the April to June period. For the first half, advertising revenues fell 3% to P9.57 billion, while consumer sales dipped 1% to P9.35 billion.
“Advertising revenues decreased by P302 million or 3.1% lower, attributable to fewer advertising placements from first half of 2018. Consumer sales decreased by P106 million mainly resulting from lower theatrical receipts from Global and ABS-CBN Films and lower revenue from Sky Cable’s cable business,” ABS-CBN said.
Expenses increased by 4% during the first half to P18.494 billion from last year’s P17.783 billion. This was mainly due to a 9% rise in production costs to P6.45 billion.
“The increase (in production cost) was due the growth in depreciation and amortization expenses by P10 million and P90 million, respectively, year-on year. The Company’s facilities-related expenses and employee related costs grew also by P271 million or 15% increase year-on-year,” the Lopez-led media giant said.
By business segment, ABS-CBN reported its media networks and studio entertainment business saw a 33% drop in net income to P1.01 billion during the first half, as operating revenues slipped by 3% to P13.45 billion.
On the other hand, the cable, satellite and broadband business under Sky Cable slumped to a net loss of P81 million, as operating revenues fell by 3.6% to P4.4 billion.
“The decrease in Sky’s performance was triggered by the decrease in cable subscriber count by 80,000. In total, subscriber count of Sky increased by 168,000, significantly attributable to direct-to-home subscribers,” the company said.
Shares in ABS-CBN added 15 centavos or 0.61% to P24.55 each on Monday. — D. A. Valdez

PHA taps Leechiu as marketing agent for West Palawan project

PREMIERE Horizon Alliance Corporation (PHA) has tapped real estate services firm Leechiu Property Consultants, Inc. (LPC) as the exclusive marketing agent for its West Palawan township project.
In a disclosure to the stock exchange on Monday, PHA said its tourism estate subsidiary West Palawan Premiere Development Corporation (WPP) signed a memorandum of agreement with LPC for the marketing of its 850-hectare master planned township in Puerto Princesa City.
“The agreement stipulates that LPC will assist WPP in identifying and selecting the ideal strategic partner for this new tourism hub with unspoiled beaches, a mere 30 minute ride from the Puerto Princesa international airport,” the company said.
WPP’s beachfront property in Nagtabon is being developed as an integrated tourism community. It is also expected to be the site of the first global hotel brand in Palawan.
“Horwath HTL, a global leader in tourism consulting has confirmed in a study conducted in the Nagtabon area, that global hotel brands are interested in seeking opportunities in Palawan and has specifically cited Nagtabon beach as an ideal location for a 5-star hotel brand,” PHA said.
At the same time, WPP also inked an agreement with MediPass, Inc. a Japanese marketing company, to be its exclusive marketing partner for the Nagtabon tourism development.
“Ongoing talks are being finalized as to the product that will be developed in the Nagtabon beach area that will cater to the Japanese market,” the company said.
PHA said WPP expects to generate over P500 million in revenue next year from lot sales and development. — CRAG

Murphy Brown to tackle sexual misconduct

ACTRESS Candice Bergen of the television show Murphy Brown speaks during the CBS segment of the Summer 2018 Summer Television Critics Association Press Tour at Beverly Hilton Hotel on Aug. 5 in Beverly Hills, California. — AFP

BEVERLY HILLS, Calif. — Emmy-winning comedy Murphy Brown will return to CBS television for the first time in 20 years with an episode that addresses the #MeToo movement of women breaking their silence about sexual harassment, the series’ creator said on Sunday. The new season starring Candice Bergen as a pioneering newswoman is scheduled to premiere on Sept. 27. Creator Diane English told reporters the fourth episode will be titled #MurphyToo. The episode was written months ago, English said, but her remarks came as CBS Corp. itself is investigating sexual harassment allegations. #MeToo sprouted on social media last year when women began sharing stories of sexual harassment and abuse amid widespread accusations against entertainers, businessmen and politicians. A July 27 New Yorker article detailed claims by six women who accused CBS Chief Executive Leslie Moonves of sexually harassing them in incidents between 1985 and 2006. Moonves has said he “may have made some women uncomfortable by making advances” decades ago, which he called mistakes that he regretted immensely, but that he understood “‘no’ means ‘no’’’ and had never used his position to harm anyone’s career. CBS hired two law firms to investigate the allegations and the network’s broader culture. The Murphy Brown cast and producers support the investigation fully, English said at a Television Critics Association meeting, adding that “none of us have had any negative experience in that regard at CBS.” She said #MeToo was “a powerful movement” and that they wanted to do it justice on the show. — Reuters

PBB books lower Q2 income

PHILIPPINE BUSINESS Bank (PBB) booked a lower net income in the second quarter due to trading losses.
In a disclosure to the local bourse on Monday, the Yao-led lender said its net income stood at P166.9 million in the three months ended June, down by 7.9% from the P181.3 million logged in the same period last year.
Still, in the first six months of the year, PBB’s net profit grew 2.3% to P348.1 million from the P340.3 million tallied in the comparable year-ago period.
“A significant portion came from the core business of interest income on loans and trading gains/losses from the sale of peso securities,” the bank said in its quarterly report.
PBB’s other income came in at P55.1 million in the quarter, dropping 52.9% from the P117 million booked a year earlier.
Broken down, the bank logged a P26.7-million trading loss in the second quarter, a reversal from the P18.8 million in gains booked in the same period last year.
Meanwhile, service charges, fees and commissions grew 19.9% year-on-year to P30.1 million.
Net interest income was at P918.3 million, up 27.2% from P722.2 million last year. This was mainly driven by income on loans and other receivables which stood at P1.24 billion, up from last year’s P830.9 million.
PBB’s total loans and receivables amounted to P77.5 billion as of end-June, up 31.9% year-on-year.
On the funding side, total deposits climbed 29% to P79.1 billion as low-cost funds grew 19% to P30.2 billion. Time deposits likewise rose 36.1% to P48.9 billion.
From 2011 until end-June, the bank has opened 87 additional branches.
Rolando R. Avante, PBB president and chief executive offer, said the bank will “tactically expand” its branch network in the country to reach more clients.
The bank’s net interest margin improved to 4.12% from the previous year’s 4.06%, while its non-performing loan ratio “remained lower than industry” at 2.43%.
Overall, PBB’s total assets stood at P92.9 billion in June, growing by 26.1% year-on-year. Total equity also climbed 4.9% year-on-year to P10.5 billion.
Mr. Avante said PBB will continue to exercise prudence even as industry competition remains challenging amid rising inflation and continuous loan demand.
PBB was the fourth-largest thrift bank in the country in asset terms as of end-March, according to the latest central bank data.
Shares in PBB went down by 10 centavos or 0.84% to close at P11.80 each on Monday. — KANV

How PSEi member stocks performed — August 6, 2018

Here’s a quick glance at how PSEi stocks fared on Monday, August 6, 2018.

 
Philippine Stock Exchange most active stocks by volume turnover — August 6, 2018

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