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Melco revenues up 15.7%

THE developer of City of Dreams Manila grew its revenues by 15.7% in the fourth quarter of 2017, supported by the generally strong performance of its casino operations.

In a disclosure to the stock exchange on Friday, Melco Resorts and Entertainment (Philippines) Corp said net revenues came at $167.5 million in the three months ending December, against $144.7 million in the same period in 2016.

Adjusted earnings before interest, tax, depreciation, and amortization was up by 7% to $53.8 million during the fourth quarter, against $50.2 million in the comparable period last year.

Melco Resorts saw strong revenues across all segments, with rolling chip volume posting $2.9 billion for the quarter, 38% up year-on-year. The win rate for rolling chip was recorded at 3.1%, with expected wins within the range of 2.7% to 3%.

Mass market table games had a hold percentage of 30.9% for the period, allowing mass table revenues to inch up 26.9% to $189.2 million. Gaming machine handles enjoyed a strong quarter as well, as revenues grew 18% to $793.3 million.

Meanwhile, non-gaming revenues also climbed 11.7% to $31.4 million during the quarter.

The company noted that the unaudited financial results for the fourth quarter and full year 2017 results have also been filed with the United States’ Securities and Exchange Commission on Feb. 8.

Incorporated in 1974, Melco Resorts is one of the co-licencees that developed the integrated hotel, gaming, retail and entertainment complex called City of Dreams Manila in the state-run Entertainment City.

Shares in Melco Resorts lost 18 centavos or 2.07% on Friday, closing the week at P8.50 each. — Arra B. Francia

Authorities raid another factory that makes fake Mighty cigarettes

By Melissa Luz T. Lopez, Senior Reporter

AUTHORITIES raided another factory in Bulacan that made counterfeit cigarettes carrying the Mighty brand, the country’s Finance chief said.

Government operatives conducted a raid at RIS Compound in Barangay Tabe, where they discovered a factory of counterfeit cigarette packs at the back end of the site, Finance Secretary Carlos G. Dominguez III told reporters late Thursday.

The raid was conducted by members of the Philippine National Police Criminal Investigation and Detection Group and the Business Permit and License Office of the Guiguinto local government.

Fake cigarette cases — some of them carrying the Mighty brand — were seized in the factory, which is said to be owned by an Edward Ang.

Company executives of cigarette producers PMFTC Inc. Company representatives went on site to certify to the police that the cigarettes are counterfeit and that the facility “is not an authorized factory,” Mr. Dominguez said.

The Cabinet official noted that this is the second illegal factory of cigarettes in Bulacan discovered in the past four months. In November, authorities found out a factory of fake cigarettes located inside the Meycauayan Industrial Park which was razed by fire.

Manos Koukourakis, general manager of JTI Philippines, said separately that they commend the raid of the secret factory and committed to “step up support” in the government’s crackdown on illicit trade and counterfeiting.

JTI acquired embattled cigarette manufacturer Mighty Corp. last year as the Bulacan-based firm faced tax evasion charges worth P37.88 billion. Mighty paid a P25-billion settlement to the government, which covered P3.5 billion in unpaid excise taxes and P21.5 billion worth of internal revenue taxes of the company and its shareholders.

The Japanese firm bought Mighty’s assets at a deal priced at $496 million or around P46.8 billion.

Starting January, the Bureau of Internal Revenue will require all cigarette firms to adopt updated Internal Revenue stamps that bear tightened security features, as stated in Revenue Regulation No. 6-2017.

China Bank net profit up 15%

CHINA BANKING Corp. (China Bank) saw its net income grow in 2017 on the back of sustained growth in its core and fee-based businesses.

In a disclosure to the local bourse on Friday, China Bank said it posted a consolidated income of P7.4 billion last year, 15% higher than the P6.5 billion it recorded in 2016.

China Bank said its net earnings translated to a 9.9% return on equity, or net income earned as a percentage of stockholder investment. Its return on assets, or net income as a percentage of total assets, stood at 1.11%.

“2017 was a pivotal year in the transformation and development of the China Bank Group,” China Bank President William C. Whang was quoted as saying in the disclosure. “We grew as projected and I am pleased that our strong fundamentals and solid organic growth gave us the platform to meet the opportunities and challenges in 2018.”

The Sy-led lender’s net interest income rose 17% to P20 billion from the P16.7 billion recorded in a comparable year-ago period. This was driven by the 17% growth in its loan portfolio and its stable net interest margin of 3.09%.

Gross loans grew 16.7% to P454 billion from the P389 billion it booked in 2016 on the back of strong demand across all segments, particularly consumer loans and corporate loans, which grew 25% and 19%, respectively.

The bank maintained its asset quality despite the loan expansion. China Bank’s non-performing loans (NPL) 12%, leading to an NPL ratio of 1.4%, which it noted was “lower than the industry average.” Its NPL coverage ratio also improved to 97% from 91% previously on a consolidated basis.

Meanwhile, its total deposits climbed 17% to P635 billion, boosted by its new branches.

“Low-cost funds increased 24% to P343 billion and raised CASA (checking & savings accounts) ratio to a healthy 54%, while the loans-to-deposit ratio was steady at 71%,” the lender said in the disclosure.

Non-interest income grew 20% to P6 billion on the back of higher service fees and commissions, trust revenues, foreign exchange gains, as well as income from acquired assets.

Excluding trading gains and non-recurring income, China Bank’s core operating income grew 18%, driven by its core business and the improvement in the contribution of subsidiaries.

China Bank Savings, its thrift banking arm, tripled its net income last year, the parent bank noted. China Bank Capital, the lender’s investment house, recorded a 25% earnings growth from increased participation in capital market deals.

Overall, the lender’s assets grew 19% to P752 billion alongside the growth of its core businesses.

Total capital funds grew 32% to P84 billion following its P15-billion stock rights offer conducted in May.

China Bank’s total capital adequacy ratio — a measure of the bank’s financial strength — stood at 13.47%, above the central bank’s 10% minimum requirement. Its common equity Tier 1 ratio of 14.23% also exceeded the minimum ratio of 6%. — KANV

Duterte appoints 15 new officials

Malacañang on Friday announced President Rodrigo R. Duterte’s 15 new appointees.

Mr. Duterte signed the appointment papers of the following officials this week:

Eduardo V. Bringas, Executive Director at Presidential Anti-Corruption Commission, Office of the President.

Astravel P. Naik, Executive Director V at Commission on Filipinos Overseas.

David L. Diwa, Member of the Board of Directors at Bases Conversion and Development Authority.

Mark Steven C. Pastor, Assistant Secretary at Department of Transportation.

Leandro Angelo Y. Aguirre, Deputy Privacy Commissioner at National Privacy Commission.

Carlo Antonio B. Almirante, Member of the Board of Trustees at Government Service Insurance System.

Gerard A. Salapantan, Presidential Legislative Assistant at Presidential Legislative Liason Office.

Arthur N. Escalante, Philippine Contractors Accreditation Board Member at Department of Trade and Industry.

Henry Anthony M. Torres, Director II at Office of Civil Defense, Department of National Defense.

Joseph Ray P. Gumabon, Assistant Director General II at Civil Aviation Authority of the Philippines, Department of Transportation.

Thomas M. Orbos, Undersecretary at Department of Transportation.

Cesar C. Cassion, Director IV at Department of Health.

Tomothy John R. Batan, Undersecretary at Department of Transportation.

Rosie C. Javate, Director III at Department of Public Works and Highways.

Wilfredo S. Mallari, Director III at Department of Public Works and Highways. — Arjay L. Balinbin

PAL earns 4-star rating from Skytrax

FLAGSHIP carrier Philippine Airlines (PAL) has been certified as a four-star airline by international air transport rating organization Skytrax.

The four-star rating means that the airline company has excellent standards in terms of production and staff services across different assessment categories for both onboard and airport environments.

PAL is the only local airline company to get the four-star rating. There are 40 other airlines in the world which have received this rating.

PAL president and chief operating officer Jaime J. Bautista credited this to their upgrades in the last two years.

“Since 2016, we have embarked on a journey of rolling out in-flight and on-ground innovations, opened new routes, increase connectivity across PAL’s route network, added new aircraft to our fleet and importantly, invested in the Buong Pusong Alaga (whole-hearted training of all our cabin crew, ground crew, and service providers domestically and internationally in order to enhance the passenger travel experience and earn a higher Skytrax rating,” he was quoted as saying in a statement.

Since 2016, PAL has been adding airplanes to its fleet, with a current total of 88 aircraft. It has also renovated eight Airbus A330s to have tri-class cabins.

PAL will be launching non-stop services to Brisbane, New York, as well as flights to India and additional routes to China and Japan within the year.

By the next quarter, PAL will be opening its two-storey, 1,250-sq.m. International Mabuhay Lounge at the Ninoy Aquino International Airport Terminal 2.

Skytrax chief executive officer Edward Plaisted was quoted as saying that the new rating PAL recognizes the airline’s “improvements in terms of product change and development and enhancement of the front-line staff service.

“New and retrofitted aircraft have played an important part in the quality improvement process, and this looks set to develop further when Philippine Airlines introduces the A350 into their fleet,” he added.

“We look for consistency of quality in the four-star rating, and we look to Philippine Airlines to ensure this is duly delivered to customers.” — Anna Gabriela A. Mogato

Gov’t to hire foreign experts to examine bodies of Dengvaxia victims

THE government will hire foreign experts to examine the bodies of children who allegedly died due to Dengavaxia, President Rodrigo R. Duterte said.

Presidential Spokesperson Herminio Harry L. Roque, Jr. told reporters in a press briefing on Friday that the President had a meeting last Thursday, regarding Dengvaxia with some officials including Secretary of justice (DOJ) Vitaliano N. Aguire II, Volunteer Against Crime and Corruption (VACC) chair Dante Jimenez who now serves as chairman of the Presidential Anti-Corruption Commission (PACC), and Public Attorney’s Office (PAO) chief Persida R. Acosta.

“During the meeting, the President declared that those responsible should be held to account,” Mr. Roque said in Filipino. “He also ordered public hospitals to provide services to those who were injected with the vaccine and that the government will pay for their health costs.”

Owing to the lack of clinical pathologists in the country, Mr. Roque said that the President sought to get a foreign expert to undertake a study of those who died after they were injected with the Dengvaxia vaccine. — Arjay L. Balinbin

Tax collections in 2017 highest in 11 years

By Melissa Luz T. Lopez, Senior Reporter

TOTAL TAX collections in 2017 accounted for 14.3% of the Philippine economy to log the highest in over a decade, the country’s Finance chief said, which comes ahead of the implementation of tax reform.

Finance Secretary Carlos G. Dominguez III said total tax effort reached 14.3% of gross domestic product (GDP) last year, which is the highest in the last 11 years.

Mr. Dominguez said this posted a 0.6% increase from the previous year.

“This is the highest rate of improvement since 2009,” Mr. Dominguez said during the 2018 tax campaign kick-off of the Bureau of Internal Revenue (BIR) at the Philippine International Convention Center on Friday.

The BIR’s P1.779 trillion tax collections last year accounted for 11.26% of GDP. For 2018, the bureau is looking to collect P2.039 trillion revenues.

The agency’s 2017 collections accounted for 97.27% of its target and went up by 12.92% from a year earlier.

Mr. Dominguez said the BIR’s collection efforts will receive a boost from the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Act towards realizing its collection target.

“While we expect some revenue losses in reducing the income tax rate, we should be able to offset these losses with a whole new range of excise taxes,” he added, noting that this will make it easier for the BIR to calculate and collect taxes “more efficiently.”

The Cabinet official said the large taxpayers unit is expected to generate bulk of the revenues, “in light of the cascade of tax reforms.”

Signed on Dec. 19 by President Rodrigo R. Duterte as Republic Act No. 10963, the TRAIN reduces personal income taxes for those earning below P2 million, alongside a simpler system for computing donor and estate taxes.

Foregone revenues will be offset by the removal of some exemptions to value-added tax; increased tax rates for fuel, automobiles, tobacco, coal, minerals, documentary stamps, foreign currency deposit units, capital gains for stocks not in the stock exchange, and stock transactions; and new taxes for sugar-sweetened drinks and cosmetic enhancements.

The government is looking to collect P82.3 billion from the TRAIN law this year, which will support the Build, Build, Build initiative of the Duterte administration.

Pag-IBIG Fund posts record high loans, earnings

STATE-OWNED Home Development Mutual Fund, also known as Pag-IBIG Fund, booked record-high home loan disbursements and earnings in 2017, it said on Friday.

In a statement, Pag-IBIG chairperson Eduardo D. Del Rosario said the mutual fund released P65.1 billion in home loans in 2017, which he noted was the highest ever housing loan disbursement in its 37-year history.

The home loans were doled out to its 80,964 members last year.

The fund’s net income of P30.27 billion in 2017 was likewise its highest thus far, and is also the first time it hit the P30-billion mark.

Pag-IBIG Fund’s total assets also grew to P488.74 billion.

“As Pag-IBIG Fund’s contribution to the pro-poor agenda of President Rodrigo [R.] Duterte, homeownership was made even more affordable especially to the low-income earners,” Mr. Del Rosario said, speaking at the 2017 Chairman’s Report held in Pasay City.

Pag-IBIG Fund added that its members will benefit from the upbeat financials as it will disburse the bulk of its earnings through dividends.

“For 2017, Secretary del Rosario said that if Pag-IBIG Fund will have the same pay out as in 2016 at 90%, it may credit to members’ accounts P27.29 Billion in dividends — the biggest amount ever credited by Pag-IBIG Fund,” the statement added, referring to Mr. Del Rosario who also heads the Housing and Urban Development Coordinating Council.

The mutual fund also posted a savings collections at P36.6 billion and multi-purpose loan releases at P45.37 billion.

“Our strong financials and record-breaking housing loan takeouts benefit primarily our members… We’ve reached our targets, and we’ve done it with flying colors,” Pag-IBIG Fund chief executive officer added. — K.A.N. Vidal

Drop in cement prices lead to Cemex earnings fall

EARNINGS of Cemex Holdings Philippines, Inc. (CHP) were cut by more than half in 2017, as higher cement volumes sold for the period failed to offset the continued drop in cement prices.

In a presentation to investors, the company said net income slowed by 65% to P659 million in 2017, against the P1.87 billion it recorded a year ago. Operating EBITDA (earnings before interest, taxation, depreciation, and amortization) also declined by 50.7% to P3.3 billion, compared to P6.7 billion in 2016.

“Lower prices was the main reason for the decrease, as well as higher fuel and distribution costs,” the company said.

Net sales for the period dropped by 10% to P21.78 million, prompted by a 10% decline in domestic cement prices.

Construction of infrastructure projects drove the demand for cement last year, particularly in the fourth quarter as CHP noted an acceleration of government approvals for such projects.

“In 2018, the rollout of several big-ticket infrastructure projects and the rehabilitation of Marawi City will continue to boost the sector,” the company said.

Demand from the residential sector meanwhile contracted in the fourth quarter of 2017, but CHP expects to see some recovery this year as the tax reform program boosts higher take home pay for Filipino workers.

“The sector’s growth will be supported by the income-boosting tax reform, remittances from overseas Filipino workers, and the government’s emphasis on affordable housing,” said the CHP.

2018 CAPEX
Amid the company’s lower performance in 2017, CHP is keeping a positive outlook on the Philippine’s construction industry as it allots P3.7 billion in capital expenditures this year.

“CHP remains positive on the prospects of Philippine construction, with expectations of sustained economic expansion in 2018,” CHP President and Chief Executive Officer Ignacio Mijares was quoted as saying in a statement.

The company is currently undertaking a $225-million expansion of its Solid Cement Plant in Antipolo, Rizal, and is now finalizing negotiations with suppliers and contractors. CHP looks to start the operations of a new line by the first quarter of 2020.

“We remain focused on executing our capacity expansion plan in Solid Cement Plant. In addition, we are undertaking efforts to de-bottleneck our operations, achieve higher customer service levels, and reduce costs to drive growth for our business,” Mr. Mijares said.

With this, the expansion of the Solid Cement plant will corner the bulk of CHP’s P3.7-billion capex, or P3 billion. The remaining P700 million will be spent for maintenance capex, while P40 million will be for strategic capex.

Incorporated in 2015, CHP supplies cement under the APO, Island, and Rizal brands. The company also has a ready-mix concrete product called Promptis which is sold in Metro Manila.

Shares in CHP were down by 1.21% or five centavos to finish at P4.08 apiece at the Philippine Stock Exchange on Friday. — Arra B. Francia

DoTr, Bombardier sign deal to buy signaling equipment for MRT3

THE Department of Transportation on Friday signed a memorandum of agreement (MOU) with Canadian company Bombardier Transportation for the procurement of an original equipment manufacturer (OEM) signaling spare parts and maintenance of MRT-3’s signaling system.

The MOU also extends to a two-year contract for Bombadier as a maintenance provider for MRT-3 through direct contracting and emergency procurement.

The Canadian company has been supplying and maintaining the train’s signaling system for the first 12 years of operations, being the propriety rights owner of Cityflo 250 Light Rail and Metro Signaling Solution, which is used in the MRT-3.

However, DOTr decided to procure spare parts and maintenance services from a third party, which had failed to provide quality service.

The use of non-OEM signaling spare parts was done to save costs but is one of the reasons for the frequent breakdowns of the MRT-3, DOTr secretary Arthur P. Tugado said.

“For years, MRT-3’s signaling system was not maintained properly, and was not upgraded when due. That is why this time, we want to be sure that we get the right spare parts and that we maintain the system right,” he added.

“Bombardier’s track record is exceptional. They are the original manufacturer of MRT-3’s signaling system, and we are directly dealing with Bombardier, not a [joint venture], not a consortium, not any middleman.” — Anna G. A. Mogato

Gov’t cites benefits from removal of QR on rice imports

MAJORITY of Filipinos are expected to benefit from lower retail prices of rice should the agricultural tariffication law be amended, the National Economic and Development Authority (NEDA) said.

“About 93% of Filipino households are rice consumers and they stand to benefit from lower price of rice. It is high time that the bill amending the two-decade-old law is passed,” Socioeconomic Planning Secretary Ernesto M. Pernia was quoted as saying in a statement on Friday.

Mr. Pernia was referring to the Republic Act (RA) No. 8178, also known as the Agricultural Tariffication Act of 1996.

The passage of a bill seeking to amend RA 8178 will lift the quantitative restriction (QR) on rice imports and impose a 35% tariff on rice coming from Association of Southeast Asian Nations member-states such as Vietnam and Thailand, NEDA said.

According to NEDA’s preliminary estimate, headline inflation rate would be reduced by a percentage point if the domestic wholesale rice market reduces prices to the level of imported rice.

“At 35% tariff rate, the landed cost of imported rice, particularly from Thailand and Vietnam, along with its transport cost to the local market would be around P30.30 per kilogram,” NEDA’s statement read, adding that the price is about P4.31 lower than domestic wholesale price of rice.

With the price reduction, a Filipino family of five could save up to P2,362 per year, equivalent to 13% of its annual average rice expenditure of P17,921 indicated in the 2015 Family Income and Expenditure Survey.

NEDA added that once the law is amended, it is expected to ease the temporary inflationary impact of the tax reform law and the world oil prices, translating to increased savings of a household.

Inflation clocked in at 4% last month, its fastest reading in more than three years or since October 2014’s 4.3%. The government attributed the faster price increases to the implementation of the Tax Reform for Acceleration and Inclusion law which took effect last Jan. 1.

Mr. Pernia added that the tariff revenues to be generated will be funnelled back to Filipino farmers through Rice Competitive Enhancement Fund for the modernization and enhancement of the efficiency of the country’s rice industry.

Part of the fund will also directly support local farmers who will be affected by the lifting of the QR.

Since the entry of the Philippines to the World Trade Organization (WTO) in 1995, the country has been securing a waiver several times to extend the imposition of QR on rice imports in support of the local farmers’ preparation for competition.

With the expiration of the Philippines’ Waiver on the Special Treatment of Rice last June 30, 2017, there has been increasing pressure from WTO member countries for the Philippines to fulfill its obligation to tariffy rice, Mr. Pernia said. — KANV

Mercury Drug, PayMaya team up for cashless payments

LOCAL drugstore chain Mercury Drug Corp. struck a deal with PayMaya Philippines, giving its customers a cashless payment option through the scan-to-pay scheme called PayMaya QR.

The new payment scheme will soon be available in all Mercury Drug branches nationwide.

In a company statement, Mercury Drug President Vivian Q. Azcona said the innovation will improve their customer experience.

“This partnership with PayMaya is another way for us to innovate and further improve on the experience of our suki customers,” she said.

“We are excited to be among the pioneers in embracing this cashless technology,” she added.

The company’s assistant to the president Steve Q. Azcona said that this would lessen the queuing times in their stores.

“There is no need to process loose change anymore,” he explained in the same statement.

Voyager Innovations and PayMaya President and Chief Executive Officer Orlando B. Vea said that with the partnership with Mercury Drug, they are also planning to “roll out more initiatives in the coming months that will transform Mercury Drug customers’ experience.”

Voyager Innovations has set a goal of 30 million users by 2020.

Paymaya Philippines is the digital financial arm of Philippine Long Distance Telephone Inc. (PLDT) and Smart Communications Inc.’s Voyager Innovation.

Hastings Holdings, Inc., a unit under PLDT’s beneficial trust fund subsidiary MediaQuest Holdings, Inc., has partial interest over BusinessWorld through the Philippine Star Group which it controls. — Anna Gabriela A. Mogato

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