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Firm to receive up to $70M if MH370 found in new hunt

KUALA LUMPUR — Malaysia signed a deal with an American firm on Wednesday to resume the search for MH370 almost four years after the plane disappeared, with the company to receive up to $70 million if successful.

The new hunt, which will last 90 days, is expected to start in mid-January when a high-tech vessel leased by the seabed exploration firm, Ocean Infinity, reaches a new search zone in the southern Indian Ocean.

The Malaysia Airlines jet disappeared in March 2014 with 239 people — mostly from China — on board en route from Kuala Lumpur to Beijing, triggering one of the world’s greatest aviation mysteries.

No sign of the plane was found in a 120,000 square kilometer (46,000 square mile) search zone selected by satellite analysis of the jet’s likely trajectory.

The Australian-led sea search, the largest in aviation history, was suspended in January last year.

But three firms submitted bids to resume the hunt privately and after lengthy negotiations, the Malaysian government agreed to engage Ocean Infinity on a “no find, no fee” basis.

“I would like to reiterate our unwavering commitment towards solving the mystery of MH370,” Transport Minister Liow Tiong Lai said Wednesday at a signing ceremony for the deal.

The new search zone is an area of approximately 25,000 square kilometers in the Indian Ocean.

If the company finds the Boeing 777, the amount they are paid will depend on where it was located, said Mr. Liow.

If it is found within the first 5,000 square kilometers, they will receive $20 million. The amount rises gradually to a maximum of $70 million if the jet is found outside the 25,000 square kilometer search zone.

Relatives of MH370 passengers welcomed the decision.

“We are grateful the Malaysian government is resuming the search for MH370,” V. P. R. Nathan, whose wife Anne Daisy was on the plane, told AFP.

“We do not know what happened, we need to know what happened before we can get closure.”

The ship that will conduct the hunt is a Norwegian research vessel named Seabed Constructor, which is carrying 65 crew members and set off from South Africa in early January for the search zone.

It is carrying eight autonomous drones, equipped with sonars and cameras, that will scour the waters in the hunt for the wreckage and can operate in depths up to 6,000 meters (20,000 feet).

Only three confirmed fragments of MH370 have been found, all of them on western Indian Ocean shores, including a two-meter wing part known as a flaperon. — AFP

PLDT unit to forge foreign deals in Q1

PLDT, Inc.’s digital innovations unit Voyager Innovations, Inc. expects to sign deals with foreign partners within the first quarter of the year.

“It’s going to be financial and strategic,” PLDT Chairman, President and CEO Manuel V. Pangilinan told reporters on the sidelines of the The Outstanding Young Men awardees announcement, when asked about partnerships with foreign firms.

Asked whether the deals could be signed within the first quarter of the year, he replied: “I’ll stick my neck out for it.”

The signing of partnerships is key to Voyager’s overseas expansion plans. Mr. Pangilinan previously said that Voyager needs to scale and aim for a larger market and venture outside the country.

Voyager Innovations President and CEO Orlando B. Vea previously said the company is targeting emerging markets, particularly in Asia, where it sees a strong demand for its services.

Voyager on Tuesday launched DigiHub, an office space at its Launchpad headquarters in Mandaluyong City that entrepreneurs can use. DigiHub is expected to be fully operational by first quarter of next year. 

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — P.P.C. Marcelo

Tata Steel starts today

The first super tournament of the year, the Tata Steel Masers to be held in the historic seaside resort in Wijk aan Zee, will be starting today. Apart from the exciting chess that is always part of the Tata Steel tradition, this tournament will act as some sort of heat check on the participants who will be playing in the Candidates Tournament in March.

Five of the eight Candidates will be participating in Wijk aan Zee: Fabiano Caruana USA 2811, Shakhriyar Mamedyarov AZE 2804, Wesley So USA 2792, Vladimir Kramnik RUS 2787 and Sergey Karjakin RUS 2753. Only Levon Aronian ARM 2797, Ding Liren CHN 2769 and Alexander Grischuk RUS 2767 will be absent.

The other players in Wijk are Peter Svidler RUS 2768, Vishy Anand IND 2767, Anish Giri NED 2752, Wei Yi CHN 2743, Maxim Matlakov RUS 2718, Hou Yifan CHN 2680, Baskaran Adhiban IND 2655 and England’s Gawain Jones 2640.

Wesley So is the defending champion here, by the way. You will recall this game from last year’s tournament. Before the last round Magnus Carlsen was half a point behind Wesley and the pairing were Carlsen vs Karjakin and Wesley vs Nepomniachtchi. The speculation was that Carlsen would beat Karjakin and Wesley-Nepom would end in a draw, setting up a tiebreak match between the two. That did not happen. Carlsen could only draw while Wesley crushed his opponent.

Nepomniachtchi, Ian (2767) — So, Wesley (2808) [D00]
79th Tata Steel GpA Wijk aan Zee (13.2), 29.01.2017

1.d4 Nf6 2.Bg5 d5 3.Nd2 c5 4.dxc5 e6 5.e4 h6 6.Bh4 dxe4 7.Qe2 Qa5 8.0–0–0?! Qxa2 9.Qb5+? Nbd7 10.c6 bxc6 11.Qxc6 <D>

POSITION AFTER 11.QXC6

11…Bb7!

Obviously overlooked by White.

12.Qxb7 Qa1+ 13.Nb1 Rb8 14.Qxb8+

[14.Qc6 Qxb2+ 15.Kd2 Bb4+ followed by 0–0 and Rfc8. The only reason White did not resign here is because he didn’t want to lose a game in 13 moves]

14…Nxb8 15.Bb5+ Nfd7 16.Ne2 Be7 17.Bxe7 Kxe7 18.Nd4

White still has traps. If Black is not careful then Nb3, Qa2, Nc3 traps the queen.

18…Nc5 19.h4 Rd8 20.Rh3

And now Ra3 once again traps the queen.

20…Nd3+! 21.Bxd3 Rxd4 22.Be2 Rxd1+ 23.Bxd1 Qa5 24.Nd2 f5 25.Rg3 Qe5 26.Ra3 Nc6 27.g3 Qd4 28.Re3 Nb4 0–1

The top two Dutch players usually play in this event but this year only Anish Giri is participating. Loek Van Wely declined his invitation this year. Too bad — he had played in the previous 25 (!!) editions.

Maxim Matlakov is the European Champion so his invitation here is no surprise. He is 26 years old and lately making a big push to join the elite chess invitation list to all these superGM tournaments. He is a power player — deep opening preparation and an active aggressive style to cash in on the advantages and/or initiative gained from that phase. Here is a representative sample from the 2017 European Club Championship. Playing Black is Evgeniy Najer, the 2015 European Champion and a tactical monster who is nicknamed “Moscow Magic.”

Matlakov, Maxim (2730) — Najer, Evgeniy (2699) [D26]
33rd ECCC Open 2017 Antalya (3), 11.10.2017

1.Nf3 d5 2.d4 Nf6 3.c4 dxc4 4.e3 e6 5.Bxc4 c5 6.0–0 Nbd7

[6…a6 7.a4 Nc6 8.Nc3 is the standard continuation]

7.Nc3 a6 8.e4 b5 9.Bb3 cxd4 10.Nxd4 b4

A new move, but it looks like Black should have completed his development first with 10…Bc5.

11.Na4 Bb7

It turns out that the e4 pawn cannot be taken. After 11…Nxe4 12.Bxe6! fxe6 13.Nxe6 Qa5 14.Bf4 Black is under a very strong attack.

12.Bxe6!

Nevertheless!

12…fxe6 13.Nxe6 Qa5

[13…Qb8 14.Bf4]

14.Bf4 Rc8 15.Qb3?

[15.Re1]

15…Nh5?

[15…Bxe4! 16.Rfe1 Bd5 hard to believe, but Black is doing ok here]

16.Ng5! Nxf4 17.Qf7+ Kd8 18.Qxf4 Rg8

[18…Qxa4? 19.Nf7+ Ke8 20.Nxh8]

19.Rad1! Bc6 20.e5!

Threatening to push this pawn to e6.

20…h6

[20…Be7 21.Nc5! Bxc5 (21…Qxc5 22.Ne6+) 22.e6 Rc7 23.exd7 Bxd7 (23…Rxd7? 24.Qb8+ Ke7 25.Rfe1+ with a mating attack) 24.Ne6+ Kc8 25.Qf7 Rh8 26.Nxc7 Qxc7 27.Qd5 White has a decisive advantage]

21.Nf7+! Ke8 22.Qf5 Be7 23.Qg6

Threatening a discovered check with Ng5 followed by Ne6 mate.

23…Qxa4 24.Ng5+ 1–0

Hou Yifan is the highest rated woman chessplayer and Baskaran Adhiban was invited back because of the fantastic chess he played in last year’s Tata tournament. Gawain Jones is the qualifier from the 2017 Challengers Group.

There was some question as to why Wei Yi was invited rather than his compatriot Ding Liren. After all Ding is a candidate and rated no. 1 in China. Also, he played here in Wijk aan Zee in the 2015 edition and did not do too badly, finishing just half a point behind world champion Magnus Carlsen.

There was some speculation that the Dutch organizers intended to invite Ding but due to the language barrier got Wei Yi instead, but I don’t believe that. Invitations to the tournament are routinely sent out months before the actual event and apparently no one thought that Ding would finish 2nd in the World Cup, which was held in September.

Nevertheless Wei Yi is a very strong player who some say has the potential to become world chess champion. In addition to that Wei Yi has a very aggressive style which is very entertaining for the spectators — any tournament he participates in is fortunate.

In the 2017 World Cup Wei Yi almost got knocked out in the first round by the Canadian GM Bator Sambuev. Faced with a “win or go home” 2nd game he delivers.

Wei, Yi (2753) — Sambuev, Bator (2522) [C19]
FIDE World Cup 2017 Tbilisi GEO (1.2), 04.09.2017

1.e4 e6 2.d4 d5 3.Nc3 Bb4 4.e5 c5 5.a3 Bxc3+ 6.bxc3 Ne7 7.a4 Qc7 8.Nf3 b6 9.Bb5+ Bd7 10.Bd3 Nbc6 11.0–0 h6 12.Re1 0–0 13.h4

More common is either Ba3 or Bf4. IM John Watson, who has written several books on the French, speculates that the idea behind this move is probably h4–h5 followed by the sacrifice Bxh6 and then Qd2.

13…c4

Closing the center is usually bad for Black. Watson recommended 13…f5 14.exf6 Rxf6 with a nice fight ahead.

To show you how dangerous White’s formation is II will show you the following game: 13…Na5? (the Black knight is out of the play here) 14.Nh2!? cxd4 15.cxd4 Nf5 16.Ng4 White is already winning 16…Nc4?! 17.Nf6+! gxf6 18.Qg4+ Kh7 19.Qh5 Kg8 20.Bxf5 exf5 21.exf6 Rfe8 22.Bxh6 1–0. Vovk,Y (2539)-Bobula,M (2393) Kosice SVK 2010.

14.Bf1 f6 15.h5 fxe5 16.dxe5 Rf7 17.Ba3 Raf8

[17…Nf5 to keep watch on d6 does not work, as White can simply play 18.g3 followed by Bh3]

18.Bd6 Qd8 19.Be2 Rf5 20.Nh4 Rf4

[20…Rxf2 21.Nf3 traps the rook on f2.]

21.Bg4 R8f7

This move is a prelude to …d5-d4 and …Nd5.

22.f3 d4

Sambuev’s idea. He wants White to “trap” his rook by 23.g3 when he has 23…Nd5 and White dare not take the rook because 24.gxf4 (repositioning the vulnerable knight on h4 by 24.Ng6 is met violently: 24…Rxg4 25.fxg4 Qg5 once again the Black pieces become very active) 24…Qxh4 25.Qd2 Rxf4 Black is clearly better.

23.Ng6 Nd5 24.Nxf4 Rxf4 25.cxd4 Rxd4 26.Qe2 Qg5 27.Qf2 Rd2 28.Re2 Rd4 29.Ree1 Rd2 30.Re2 Rd4 31.Qe1 g6 32.Re4 gxh5 33.Bh3 Rd2 34.Kh1 Rxc2 35.f4 Qg6 36.f5! exf5 37.Qd1

With an attack on c2 as well as d5. 37…fxe4?

Sambuev loses his control. Best is 37…Nc3 38.Qxc2 Nxe4 39.Qxc4+ Kg7 40.Re1 and it is still a game.

38.Qxd5+ Kg7 39.Rg1 Be8 40.Rf1 h4 41.Bf8+ Kh8 42.Ba3 Kg7 43.Rf6 e3 44.Rxg6+ Bxg6 45.Qd7+ Kh8 46.Bf8 1–0

Nice fight.

Looking forward to a great tournament!

 

Bobby Ang is a founding member of the National Chess Federation of the Philippines (NCFP) and its first Executive Director. A Certified Public Accountant (CPA), he taught accounting in the University of Santo Tomas (UST) for 25 years and is currently Chief Audit Executive of the Equicom Group of Companies.

bobby@cpamd.net

Resilient Heat

If there’s any surprise to the Heat’s fourth-place standing in the Eastern Conference, it’s that they didn’t bare their fangs early. Having managed to retain the core of the roster that had them going 30 and 11 in the second half of their 2016-2017 campaign, not a few quarters figured they would be hitting the ground running. Instead, they played up-and-down ball until the first week of December, with four losses in five matches depressing their record to 11 and 13 and compelling even diehard fans to wonder if a playoff berth was more a broken promise than a realistic expectation.

If nothing else, though, the Heat are resilient. Boasting of a relentlessly gritty culture fostered by lead executive Pat Riley and perpetuated by disciple and head coach Erik Spoelstra, they have used the last month to underscore their resiliency. They have a league-best eight wins in their last 10 outings, including five straight, and the fact that they’re six games above .500 with a negative point differential serves only to highlight their fortitude in the crunch.

Take yesterday’s road set-to against the surging Raptors. Under duress and in danger of leaving the Air Canada Centre with a setback after erecting a lead of as many as 12 points, they hung tough and survived. As Spoelstra has noted, they seem to “find a way at the end.” Sure, they benefited from the absence of Kyle Lowry and the late ejection of Serge Ibaka. Still, there can be no discounting the brilliant play-calling and outstanding execution that led to the game-winning basket.

Moving forward, the Heat have reason to believe they can be even better. Their fate is certainly theirs to carve, and if recent history holds true, they stand to put up a worthy challenge to the so-called elite. In short, it’s who they are that fuels the thought of what they can be.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is the Senior Vice-President and General Manager of Basic Energy Corp.

UK farm subsidies to linger after Brexit

THE British government said Thursday it will match European Union (EU) subsidies for farmers for around five years after Brexit until it puts in place a new system focusing more on environmental protection.

British farmers receive around £3 billion (€3.37 billion, $4.06 billion) a year from the bloc’s Common Agricultural Policy (CAP), of which around three-quarters is delivered through direct payments, according to the National Farmers Union. 

Environment Secretary Michael Gove said the government would match these so-called Basic Payment Scheme funds for “a number of years” beyond a two-year transition intended to ease Britain’s withdrawal.

A government official said this would likely be around five years after Brexit — to 2024 — although the proposals will depend on a consultation due to be launched later this year.

“That guaranteed income should provide time for farmers to change their business model if necessary, help to make the investment necessary for any adjustments and prepare for the future,” Gove told a farming conference in Oxford.

Britain will leave the CAP when it leaves the EU in March 2019, but is seeking a transition period in which the relationship with Brussels will continue on similar terms.

Gove said the CAP was “fundamentally flawed,” adding: “Paying landowners for the amount of agricultural land they have is unjust, inefficient, and drives perverse outcomes.”

During the extended transition period, the government proposes to reduce the funds given to the largest landowners.

Gove said a new system of subsidies after Brexit would take greater account of efforts to protect and enhance the environment, such as through planting woodland and increasing biodiversity.

Allowing public access to farms, and innovative use of technology could also be linked to public funds, he said. — AFP

Suspension of SSI has implications on BPO industry, says official

DAVAO CITY — Suspending the company whose 37 employees died in a fire just two days before Christmas here will result in about P97 million in lost salaries in the information technology-business process management industry, an industry association official said. “That is why we have to find a way to enable (Research Now) SSI to resume operations,” said lawyer Samuel R. Matunog, president of Information and Communication Technology Davao, on Monday in reference to the company’s impending suspension of operations. Mr. Matunog’s reaction came about after the Philippine Economic Zone Authority announced it was suspending the company. Thirty-seven of its employees perished following a fire that razed down the NCCC Mall on Dec. 23 last year. Mr. Matunog said his association is urging the government to lift the suspension order as the company, which started its operations in the city in 2008 as a market researcher using telephone interview services, has started looking for a new location for its operations so that its 500 employees could resume their jobs. The company said it is planning to resume operations within the next two months in another cite in the city so that its employees can return to work. The company announced that even when the employees have not gone back to work, they continue to receive their salaries as it is also “exploring (other) avenues to provide them with employment.” It added that it has continued to “reimburse employees for personal effects that were destroyed in the fire. As assistance to the victims’ families, it said it has raised about $115,000 in funds. This developed as a city councilor proposed that companies set up photo luminescent paints on hallways and fire exits as part of the mechanism to help employees get out of burning buildings. Councilor Maria Belen S. Acosta, head of the public safety committee of the local legislative body, said other countries have used the glow-in-the-dark paint “to guide persons to emergency exits and other possible means of egress especially when the power goes out.” — Carmelito Q. Francisco

Back to the future

By Raymond Nicky Franco

SAN Miguel Corp. (SMC) is one of the biggest conglomerates in the country by revenue and profits. However, we (at MyTrade/Abacus) don’t have active coverage on the company and, until quite recently, neither did anybody else. Maybe the breadth of its operations makes valuation such a daunting task or that concerns about high leverage have kept investors wary. This is unfortunate because back in the 1990s, analysts would delve into the firm’s quarterly results to get a read on the Philippine economy. In particular, there was a time when SMC’s domestic beer sales performed nearly lock step with gross domestic product (GDP). These days, most equity fund managers are underweight on the stock and, indeed, on the group as a whole.

A resurgence of interest, however, may be just around the corner. Last November, management announced the consolidation of its beer and liquor holdings into Pure Foods (PF) which will then be renamed San Miguel Food and Beverage (SMFB). The transaction was reported to be worth P336 billion which then implies that the merged entity has a valuation of P468 billion.

Using this figure, SMC Chairman Ramon S. Ang (RSA) said SMFB will conduct a follow on offering (FOO) as soon as next month for as much as 30% of the enlarged capital or up to $3.0 billion worth of shares. Investors appear to have taken the FOO news with a few grains of salt. The share price of soon to be renamed Pure Foods has been stuck near P500 which is far below the indicated valuation of nearly P800 per share.

Combining the country’s dominant beer company with the largest processed meat producer and the second-ranked liquor maker is like “going back to the future” for RSA. He is, in effect, reviving the San Miguel of old when it was purely a food company.

Although the new entity will be carved out from the present conglomerate, it would still be a behemoth. Most metrics (sales, operating income, profits, etc.) will show that SMFB will be bigger than Universal Robina Corp. (URC).

On attributable net income alone, we project that it will be around P18 billion for the former while consensus estimates are at P11 billion for the latter.

Another distinction for SMFB, especially since it makes for stark contrast with URC, is that it will not be impacted by the sugar sweetened beverage (SSB) tax included in RA 10963 (TRAIN). In fact, there may be a brief surge in sales for SMFB as those getting tax cuts may splurge on some discretionary items like beer, liquor and meats.

A small float and an even more negligible level of liquidity have kept Pure Foods out of most fund managers’ radars. A bulked up SMFB with a promised float of 30% is likely to command the attention and portfolio allocations that a company of its size should have. Moreover, SMFB would easily rank among the 20 biggest listed companies by market capitalization and would likely be added to the PSE index in due time (maybe as soon as March 2019).

By far, however, the biggest selling point for the stock and RSA’s planned FOO is this: Pure Foods is a better economic bellwether than some of the more popular listed firms. We recently updated our list of stocks that have revenues and profits that are highly correlated to GDP growth. To be included in this list, a company must have a market cap of at least P30 billion, revenue and profit correlation with GDP greater than 0.5 and at least 30 quarters of data available.

The results of our screen show that only nine companies are in the top 20 in terms of revenue and profit correlation to the country’s economic growth.

Based on this analysis, the four firms that appear to be most attuned to GDP should come as no surprise. These are Ayala Land (ALI), Jollibee (JFC), SM Investments (SM), and Ayala Corp. (AC). An equal-weighted portfolio consisting only of these four stocks would have had a cumulative return of 202% in the past 7 years, 105% in the last 5 years and 45% in the last 3 years. These returns compare quite favorably to the PSE Index’s performance during the same time frames (104%, 47%, and 18%) and would have given investors excess returns over the benchmark of 98%, 58%, and 26%, respectively.

Amazingly, the company that is next most correlated to the Philippine economy (still based only on revenues and income) is not SM Prime (the largest mall developer) or BDO Unibank (number one bank by most measures) or Meralco (biggest electricity distributor) or PLDT (most profitable telco). Rather, it is Pure Foods. The stock’s cumulative returns over the past 7, 5, and 3 years were spiked by news of the planned business combination but would have been less than stellar without it. This is probably due to the stock’s lack of liquidity which will be greatly enhanced by its upcoming FOO. And with beer and liquor being folded in, we believe the merged entity’s correlation with the economy will remain or become even higher.

Those who read my missives regularly would know that I’m not positive on the SMC group. I have actually been critical of how the parent and its subsidiaries present quarterly earnings press releases. This time, however, we have to give RSA props.

Reviving the San Miguel of old through the proposed Purefoods-San Miguel-Ginebra merger is what one would call a game changer. Investors looking for another way to play the Philippines’ growth story should seriously look at SMFB.

Views and opinions expressed in this piece are those of the writer’s and do not reflect the policy or position of BusinessWorld. This piece is for information purposes only and should not be construed as a recommendation, an offer, or solicitation for the subscription, purchase, or sale of any of the security(ies) mentioned.

 

Raymond “Nicky” Franco is a Certified Public Accountant and received his Chartered Financial Analyst (CFA) designation in 2000. He is the Head of Research of Abacus Securities and the head of its online trading arm, MyTrade (mytrade.com.ph).

Shares flat as investors pocket gains from rally

By Arra B. Francia, Reporter

LOCAL STOCKS were flat on Wednesday as investors resorted to profit taking ahead of the release of 2017 financial reports next month.

The benchmark Philippine Stock Exchange index (PSEi) barely moved yesterday, shedding 0.03% or 3.43 points to 8,920.29.

The broader all-shares index meanwhile gained 0.10% or 5.54 points to 5,144.17.

“Locally, the market was tired after successive winning sessions including the last days of December. Index saw some pullback amid a lack of news-flow in the local front and as investors await the corporate results season which will be in full swing next month,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said.

The main index has been setting new record highs in the previous days, breaching the 8,900 mark for the first time on Tuesday, riding on the anticipation for corporate income tax cuts under the second package of the tax reform program.

“We saw a ‘pause to refresh’ after yesterday’s (Tuesday’s) big gains. We may see more pullbacks but these are all buying opportunities. The mining sector really held the market together with gains from SCC (Semirara Mining and Power Corp.),” Eagle Equities, Inc. Research Head Christopher John Mangun said in a text message on Wednesday.

Overnight, Wall Street bounced back, with the Dow Jones Industrial Average rising 0.41% or 102.8 points to 25,385.50. The S&P 500 index picked up 0.13% or 3.58 points to 2,751.29, while the Nasdaq Composite index inched up 0.09% or 6.19 points to 7,163.58.

Back home, sectoral counters were split, with four advancers and two decliners. The mining and oil sub-index jumped 2.18% or 253.53 points to 11,863.52, followed by services, which rose 1.37% or 22.13 points to 1,636.04. Financials added 1.23% or 28.20 points to 2,320.72, while industrials climbed 0.23% or 27 points to 11,691.14.

On the other hand, property gave up 1.33% or 55.28 points to 4,082.66, as holding firms lost 0.38% or 34.69 points to 9,095.73.

A total of 672.17 million issues changed hands on Wednesday for a value turnover of P6.53 billion. This is thinner than the P8.36 billion recorded on Tuesday.

Advancers narrowly beat decliners, 105 to 104, while 53 issues remained unchanged.

Foreign investors continued their buying streak, with net foreign inflows recorded at P626.45 million, although this was less than half of the P1.42 billion posted on Tuesday.

Most other Southeast Asian stock markets took a breather on Wednesday, in line with Asian peers, with the Philippine index retreating from a record high on profit booking.

Asia shares ex-Japan slipped 0.30% after six straight days of gains that had taken it within a stone’s throw from a record high touched in November 2007. — with Reuters

VMC profit falls as sugar prices decline

VICTORIA’S MILLING Company, Inc. (VMC) recorded a double-digit drop in earnings for the September to November 2017 period, dragged by declining sugar prices accompanied by rising costs in production.

In a regulatory filing on Wednesday, the listed firm posted a net income attributable to the parent of P46.75 million in the three months ending November 2017, 60% lower than the P119.63 million it generated in the same period in 2016.

This comes amid a 38% increase in revenues for the period to P1.84 billion, compared to the P1.33 billion realized in the same period a year ago. Revenues from sugar milling operations accounted for the bulk of the total.

For the refined sugar component, VMC said it tripled its volume, selling 704,000 50-kilogram (LKG) bags during the quarter, from a net production of 1.18 million LKG. One LKG is equal to one 50-kilogram bag of sugar. This generated P694-million revenues for the company, even as average refined sugar prices slipped by 18%.

VMC noted there was no alcohol production for the period due to the ongoing expansion of its facilities. Demand for the product declined for the period, resulting to a 64% drop in revenue contributions or P92 million. 

The raw sugar segment, meanwhile, accounted for P71 million of revenues, amid a 22% hike in raw sugar prices recorded in the industry. Raw sugar milled in the first quarter was recorded at 1.82 LKG per ton cane, indicating a 40% increase in total raw sugar production.

Molasses produced also increased to 39,000 metric tons, 44% higher than the 28,000 metric tons produced in the same period a year ago.

Higher volumes sold, however, failed to offset the average increase in sugar prices, the company said.

“Management’s course of action is to continue implementing cost control measures in this challenging condition but remains optimistic about the future prospects of the business due to stable demand and possible recovery of prices in succeeding quarters,” the company said. 

Incorporated in 1919, VMC’s core business is the operation of mill and refinery facilities for sugar production, as well as engineering services. Its subsidiaries include Victorias Food Corp., Victorias Agricultural Land Corp., Canetown Development Corp., Victorias Green Energy Corp., and Victorias Gold and Country Club, Inc. 

Shares in VMC were flat at P2.90 at the Philippine Stock Exchange on Wednesday. — Arra B. Francia

IC shuts down BFPMBAI operations

THE Insurance Commission (IC) has shut down the operations of Bureau of Fire Protection Mutual Aid Beneficiary Association, Inc. (BFPMBAI) for conducting business without license.

In a statement sent to reporters on Thursday, Insurance Commissioner Dennis B. Funa announced he has shut down BFPMBAI via an order putting the association under conservatorship on the ground of “continuing inability or unwillingness to maintain a condition of solvency or liquidity deemed adequate to protect the interest of policyholders and creditors.”

The order, dated Dec. 12, was issued after the commission found out that BFPMBAI continued its operations despite having an administrative case filed by Fire Services Mutual Benefit Association, Inc. (FSMBAI).

FSMBAI is a duly licensed mutual benefit association comprised of officers, employees and retirees of Bureau of Fire Protection and some personnel from Department of the Interior and Local Government.

In line with the administrative case, Mr. Funa issued a decision on Feb. 9, 2017 ordering BFPMBAI to cease and desist its operations, as well as pay a P200,000 fine after the IC learned that the association is operating as an MBA without the necessary secondary license from the commission.

The Feb. 9 decision was later affirmed by the commission in a cease and desist order issued on Sept. 8.

“[W]e have no recourse but to enforce prompt corrective action by placing BFPMBAI under conservatorship in order to protect the interests of its members and/or creditors,” Mr. Funa said.

BFPMBAI, in an explanation following the issuance of the cease and desist order, said the IC’s move to halt its operations is premature, considering that “the resolution of the same is now the subject of BFPMBAI’s appeal to the Secretary of Finance.”

In response, Mr Funa said: “The [c]ommission cannot be deprived of its regulatory powers under the Insurance Code by reason of the pendency of an appeal taken from the Commission’s decision, order, or ruling issued in the exercise of its adjudicatory powers, unless enjoined by a court of competent jurisdiction or directed by the Secretary of Finance.”

Mr. Funa also advised the public to report any fraudulent insurance companies to their office.

“The Insurance Commission has zero tolerance for unlicensed insurance activity in the country,” Mr. Funa added.

The amended Insurance Code defines an MBA as a non-stock and non-profit company organized for the purpose of “paying sick benefits to members, or of furnishing financial support to members while out of employment, or of paying to relatives of deceased members of fixed or any sum of money.”

IC granted 35 MBAs licenses to operate until 2018, data as of end-August 2017 showed. — Karl Angelo N. Vidal

S. Korea’s Moon says Trump deserves ‘big’ credit for North Korea talks

SEOUL — South Korean President Moon Jae-in credited US President Donald J. Trump on Wednesday for helping to spark the first inter-Korean talks in more than two years, and warned that Pyongyang would face stronger sanctions if provocations continued.

The talks were held on Tuesday on the South Korean side of the demilitarized zone, which has divided the two Koreas since 1953, after a prolonged period of tension on the Korean peninsula over the North’s missile and nuclear programs.

North Korea ramped up its missile launches last year and also conducted its sixth and most powerful nuclear test, resulting in some of the strongest international sanctions yet.

The latest sanctions sought to drastically cut the North’s access to refined petroleum imports and earnings from workers abroad. Pyongyang called the steps an “act of war.”

Seoul and Pyongyang agreed at Tuesday’s talks, the first since December 2015, to resolve all problems between them through dialogue and also to revive military consultations so that accidental conflict could be averted.

“I think President Trump deserves big credit for bringing about the inter-Korean talks, I want to show my gratitude,” Mr. Moon told reporters at his New Year’s news conference. “It could be a resulting work of the US-led sanctions and pressure.”

Mr. Trump and North Korean leader Kim Jong Un exchanged threats and insults over the past year, raising fears of a new war on the peninsula. South Korea and the United States are technically still at war with the North after the 1950-53 Korean conflict ended with a truce, not a peace treaty.

‘BASIC STANCE’
Washington had raised concerns that the overtures by North Korea could drive a wedge between it and Seoul, but Mr. Moon said his government did not differ with the United States over how to respond to the threats posed by Pyongyang.

“This initial round of talks is for the improvement of relations between North and South Korea. Our task going forward is to draw North Korea to talks aimed at the denuclearization of the North,” Mr. Moon said. “(It’s) our basic stance that will never be given up.”

Mr. Moon said he was open to meeting North Korea’s leader at any time to improve bilateral ties, and if the conditions were right and “certain achievements are guaranteed.”

“The purpose of it shouldn’t be talks for the sake of talks,” he said.

However, Pyongyang said it would not discuss its nuclear weapons with Seoul because they were only aimed at the United States, not its “brethren” in South Korea, nor Russia or China, showing that a diplomatic breakthrough remained far off.

North Korea’s Rodong Sinmun newspaper said all problems would be resolved through efforts by the Korean people alone.

“If the North and South abandon external forces and cooperate together, we will be able to fully solve all problems to match our people’s needs and our joint prosperity,” it said.

Washington still welcomed Tuesday’s talks as a first step towards solving the North Korean nuclear crisis. The US State Department said it would be interested in joining future talks, with the aim of denuclearizing the North.

The United States, which still has 28,500 troops stationed in South Korea, initially responded coolly to the idea of inter-Korean meetings. Mr. Trump later called them “a good thing” and said he would be willing to speak to Mr. Kim.

Lee Woo-young, a professor at the University of North Korean Studies in Seoul, said it was wise of Mr. Moon to praise Mr. Trump, his sanctions and pressure campaign.

“By doing that, he can help the US build logic for moving toward negotiations and turning around the state of affairs in the future, so when they were ready to talk to the North, they can say the North came out of isolation because the sanctions were effective.”

The United States and Canada are set to host a conference of about 20 foreign ministers on Jan. 16 in Vancouver to discuss North Korea, without the participation of China, Pyongyang’s sole major ally and biggest trade partner.

China would not attend the meeting and is resolutely opposed to it, said foreign ministry spokesman Lu Kang.

“It will only create divisions within the international community and harm joint efforts to appropriately resolve the Korean peninsula nuclear issue,” he told a regular briefing on Wednesday.

LARGE OLYMPICS DELEGATION
Pyongyang also said it would send a large delegation to next month’s Winter Olympics in South Korea.

Washington agreed with Seoul last week to postpone until after the Olympics joint military exercises that Pyongyang denounces as rehearsals for invasion. But it also said the apparent North-South thaw had not altered the US intelligence assessment of the North’s weapons programs.

The United States has also warned that all options, including military, are on the table in dealing with the North.

“We cannot say talks are the sole answer,” Mr. Moon said. “If North Korea engages in provocations again or does not show sincerity in resolving this issue, the international community will continue applying strong pressure and sanctions.”

Seoul said on Tuesday it was prepared to offer financial assistance and lift some unilateral sanctions temporarily so North Koreans could attend the Olympics. North Korea said its delegation would include athletes and officials, among others.

However, Mr. Moon said on Wednesday South Korea had no plans for now to ease unilateral sanctions against North Korea, or revive economic exchanges that could run foul of United Nations sanctions.

Mr. Moon also said his government would continue working towards recovering the honor and dignity of former “comfort women,” a euphemism for those forced to work in Japan’s wartime brothels.

But historical issues should be separated from bilateral efforts with Japan to safeguard peace on the Korean peninsula, he added.

“It’s very important we keep a good relationship with Japan,” Mr. Moon said.

On Tuesday, South Korea said it would not seek to renegotiate a 2015 deal with Japan despite determining that the pact was insufficient to resolve the divisive issue, and urged Japan for more action to help the women. — Reuters

Construction jobs eyed for displaced firecracker industry workers

THE Department of Trade and Industry (DTI) said workers in the firecracker industry who may be displaced by a looming ban on their products may be offered assistance in setting up businesses or retrained for construction work.

“We will definitely help offer livelihood and negosyo offers, [o]r jobs like in the construction industry,” Trade Secretary Ramon M. Lopez said on Thursday in a text message to reporters.

President Rodrigo R. Duterte on Monday called for a law banning firecrackers nationwide. Such a ban would displace around 75,000 workers, especially in Bulacan.

Retrained workers can help partly make up for the shortage of construction workers, a potential bottleneck for the government’s ambitious infrastructure program.

Former undersecretary for competitiveness and ease of doing business Ruth B. Castelo said late last year that there is a shortage of about 2.5 million workers in the construction industry.

Workers in the construction industry are estimated at 3.3 million.

The DTI has a collaboration with the Technical Education and Skills Development Authority to supply the needed workers and has signed an agreement with Japan to help train them. — Anna Gabriela A. Mogato