How PSEi member stocks performed — October 3, 2017
Here’s a quick glance at how PSEi stocks fared on Tuesday, October 3, 2017.
Q3 ends with ‘subdued’ factory growth
By Elijah Joseph C. Tubayan
Reporter
THE PHILIPPINES last month managed to land second place in Southeast Asia behind Vietnam in terms of growth of manufacturing activity, but the improvement was its second weakest since its inclusion in January last year in the survey IHS Markit conducts for Nikkei, Inc.
The seasonally adjusted Nikkei Philippines Manufacturing Purchasing Managers’ Index (PMI) picked up to 50.8 in September from August’s record-low 50.6, ending the quarter on a “subdued” note.
“Subdued growth of the Philippines manufacturing economy persisted at the end of the third quarter, as output expansion slowed further,” the report read.
“Order book gains continued to underwhelm relative to the historical trend — even as exports returned to growth — which weighed on hiring.”
The manufacturing PMI consists of five sub-indices, with new orders having the biggest weight at 30%, followed by output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).
Readings above 50 denote expansion while those below that mark point to contraction.
Compared to its peers in the Association of Southeast Asian Nations (ASEAN), the Philippines jumped over Indonesia and Singapore to land second as the performance of those other two countries worsened from August. Indonesia and Singapore saw their readings slip to 50.4 and 48.6, respectively, from 50.7 and 51.0 in the past two months.
The headline Nikkei ASEAN Manufacturing Purchasing Managers’ Index itself eased to 50.3 in September from August’s 50.4.
“The Philippines’ manufacturing economy ended the third quarter on a weak note, with the PMI signalling a second consecutive month of subdued growth,” the report quoted IHS Markit Principal Economist Bernard Aw as saying.
“The survey data pointed to further slowing in output growth and a modest sales trend while employment shrank again as firms indicated sufficient manpower to meet production demand,” he added.
“Despite the decrease in payroll numbers, capacity continues to be in abundance, which would weigh on hiring in the near future.”
The report noted that “September data showed that output volumes rose at the weakest rate since the survey started in January 2016,” blaming “a softening sales trend,” reduced overtime work, input shortages and rising cost of raw materials.
After declining in August, export orders increased last month even as “the degree of expansion was the mildest since the survey started in January last year.”
“The weak peso continued to pose a problem for manufacturers,” Mr. Aw added, referring to the peso’s persistent weakness against the greenback.
The local currency has depreciated 2.7% year-to-date to P51.08 to the dollar as of yesterday, surpassing the P48- to P50-to-the-dollar rate state economic managers have assumed for 2017.
“Not only did the cheaper currency fail to provide a boost to exports, it raised the cost of imports,” the report read.
“Coupled with supply shortages due to bad weather, costs for manufacturing inputs, especially in industrial metal and paper, increased further. There were also reports of rising cost inflation affecting production levels.”
The Bangko Sentral ng Pilipinas (BSP) on Friday last week estimated that inflation likely clocked 2.8-3.6% in September from August’s 3.1%, while BusinessWorld’s poll of 13 economists yielded a 3.2% median.
Production input costs rose at their fastest pace in five months, the report read.
Guian Angelo S. Dumalagan, Land Bank of the Philippines market economist, noted that “[o]ne thing surprising about the report though is that exports provided minimal boost to the overall manufacturing sector, despite depreciation of the peso and the general improvement in economic conditions abroad.”
“In part, this might be attributed to the fact that many of our exports are just re-shipments of imported products, which have become more expensive in local currency terms due to the peso’s weakening,” he said in an e-mail yesterday.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said in an e-mail that the Philippine index’s “increase, though marginal, may signal an eventual recovery comparable to growth in 2016 with increasing domestic demand due to the fast approaching holiday season.”
“I still expect Philippine manufacturing to grow in 2017, especially as more and more investments are anticipated from the government’s thrust of increasing infrastructure spending plus the impact of further tax reform when corporate taxes are eventually adjusted to be comparable regionally,” added Mr. Asuncion.
Survey data showed that a majority of respondents expected production to increase in the next 12 months on the back of new product launches, an improving economic climate, marketing activity and business expansion.
“[O]ptimism regarding output remained high, encouraging firms to increase purchases of inputs,” Mr. Aw said.
Not resting on his laurels
The Entrepreneur Of The Year Philippines 2017 has concluded its search for the country’s most inspiring entrepreneurs. Entrepreneur Of The Year Philippines is a program of the SGV Foundation, Inc., with the participation of co-presenters Department of Trade and Industry, the Philippine Business for Social Progress, and the Philippine Stock Exchange. In the next few weeks, BusinessWorld will feature each finalist for the Entrepreneur Of The Year Philippines 2017.
Dr. Peter Laurel
President
Lyceum of the Philippines
University — Laguna and Batangas Campus
LYCEUM of the Philippines University (LPU) has always been committed to providing quality education and developing leaders, lifelong learners and globally competitive professionals.
Dr. Peter Laurel, 60, has continued this vision. From a small provincial school, LPU has become the first private, non-sectarian, autonomous university in the country.
Mr. Laurel was asked by his family to help out with LPU, the school founded by his grandfather, former Philippine President Jose P. Laurel, in Intramuros, Manila.
After the success of the Manila campus, his father set up the Batangas branch in 1966, followed by the Laguna campus in 2000 and Cavite campus in 2008. Mr. Laurel presently runs the Batangas and Laguna campuses.
“The vision that has been propelling all of us is that you don’t need to go to Manila to get a good education,“ he explains.
“So right where you are — like Batangas and Laguna — you can have an education that is as good as, if not better, than what you can get from many of the Manila schools.”
Mr. Laurel states that his grandfather was very focused on nationalism.
“There’s a saying here ‘No one can love the Filipino more than Filipinos themselves’,” he said.
As a distinct part of the curriculum, LPU runs courses on Jose P. Laurel’s teachings, including values and philosophy.
According to Mr. Laurel, the people of LPU is one their biggest strengths.
They focus on training and mentorship to put their people in the position to succeed.
Most of the members of the LPU Management Committee are homegrown and they are the ones who are most dedicated to the growth of the universities.
“The spirit of oneness is the moving force behind our success,” he explains.
LPU follows a system of meritocracy.
As a general rule, even family members have to meet certain requirements, such as graduate degrees, before they are allowed to join the business. This helps them professionalize the school and maintain a high level of competence and quality in its management team.
Innovation is one of the factors that drives LPU’s strategic direction.
FOCUS ON RELEVANCE
Mr. Laurel says that all program offerings should be relevant and responsive to the needs of future students.
Three years ago, his team set up a high school in preparation for the K-12 program and established a culinary institute and offer several TESDA courses.
LPU not only provides regular academic offerings, but also education for maritime professionals, lifestyle and short courses, as well as English language proficiency training for foreign students.
LPU will be opening a College of Medicine and College of Optometry, the first in Batangas.
LPU also houses the College of Allied Medical Professions, College of Business Administration, College of Computer Studies, College Of Criminal Justice, College of Dentistry, College of Education, Arts and Sciences, College of Engineering, College of International Tourism and Hospitality Management, and the College of Nursing.
LPU’s next objective is to internationalize the school and be recognized in the Asia-Pacific region.
LPU is the first Private Non-Sectarian University to achieve a QS (rating system) three-star rating.
Mr. Laurel also initiated LPU’s internationalization by forging partnerships with academic institutions and companies worldwide. An example of this is its hospitality school, which is co-operated with the Dusit Thani Group.
Online classes is the next challenge LPU will take on.
“We expect that, over time, there will be less people in our classrooms,” expresses Dr. Laurel.
“So right now we’re developing our management systems. In the next three years 30-50% of the courses must be online through the Learning Management System platform.”
EXPANSION
For the next few years, LPU will be focusing on expansion. It plans to open campuses in the Clark Freeport and Special Economic Zone and in Davao City.
Mr. Laurel also spoke of other Bayleaf Hotels, run by LPU, in Batangas, Davao and Laguna, to complement its hospitality and tourism programs.
The Commission on Higher Education has awarded LPU Batangas the Center of Excellence for Hotel and Restaurant Management, Tourism and Medical Technology and Center of Development for Business Administration and Information Technology.
It is the first university in the Philippines to be granted full international accreditation for Hotel and Restaurant Management and Tourism by the International Centre of Excellence in Tourism and Hospitality Education.
It was also the first university in Asia to be certified Gold by the Investors in People, a British international standard for human resource training and development.
Mr. Laurel, a recipient of a Go Negosyo award, believes that persistence is what got Lyceum of the Philippines University to where it is today.
“Success is in the small steps one takes every day,” he tells aspiring entrepreneurs, “not the giant leap.”
“I think perseverance in taking those small steps is what counts in the long run.”
The official airline of the Entrepreneur of the Year Philippines 2017 is Philippine Airlines. Media sponsors are BusinessWorld and the ABS-CBN News Channel. Banquet sponsors are Bench; Bounty Fresh Food, Inc.; CDO Foodsphere; Fiori Di Marghi; Global Ferronickel Holdings, Inc.; Hyundai Asia Resources, Inc.; Intermed Marketing Phils., Inc.; Jollibee Foods Corp.; LBC; SteelAsia and Universal Harvester, Inc.
The winners of the Entrepreneur Of The Year Philippines 2017 will be announced in an Oct. 18 awards banquet at the Makati Shangri-La Hotel. The Entrepreneur Of The Year Philippines will represent the country in the World Entrepreneur Of The Year 2018 in Monte Carlo, Monaco in June 2018. The Entrepreneur Of The Year program is produced globally by Ernst & Young.
ERRATUM
In the Sept. 29 The Entrepreneur Of The Year Philippines 2017 article, titled: “Pushing boundaries,” HCS Management Corp. President and Chief Executive Officer Charles Streegan’s furniture company should have been identified as Pacific Traders & Manufacturing Corp., which is under HCS, a holding company. The article may be found at http://www.bworldonline.com/pushing-boundaries/.