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Cebu Air reverses year-ago loss

CEBU Air, Inc. reported P42.1 million in profit in the third quarter, reversing last year’s losses.

In a regulatory filing, the listed budget airline said the quarter’s gains brought its nine-month profit to P4.38 billion, down 38.3% from P7.1 billion during the same period last year.

It reported a net loss of P583.6 million in the third quarter last year.

In its quarterly earnings report, Cebu Air said that third quarter revenues reached P14.67 billion, while the nine-month tally was P50.33 billion.

Both figures were higher than year-ago levels, thanks to higher ticket sales and cargo revenues.

“This increase was mainly attributable to the 2.7% growth in passenger volume to 14.873 million from 14.477 million last year driven by the increase in number of flights by 3.5% in 2017 as the Group added more aircraft to its fleet,” the company said in its quarterly financial report.

The airline, which operates under the Cebu Pacific brand, has 62 aircraft as of September, up from 56 a year ago.

RCBC Q3 profit driven by strong lending growth

RIZAL COMMERCIAL Banking Corp. (RCBC) said net profit rose 19% in the third quarter amid “vibrant” lending growth.

In a statement to the bourse on Friday, RCBC booked a net profit of P1.1 billion in the third quarter, against P893 million a year earlier.

In the year to date however, net profit fell 2% year-on-year to P3.4 billion.

RCBC said the nine-month performance was mitigated by interest income growth of 11% year-on-year to P13.1 billion at the end of September. This was driven by the bank’s “vibrant” lending business, with total customer loan portfolio expanding 17% to P338 billion.

RCBC’s corporate loans grew 15%, small and medium enterprise loans rose 13%, while credit card receivables were up 28%.

RCBC’s microfinance arm Rizal MicroBank grew its loan portfolio 42% due to “continuous efforts to enhance its current loan products responsive to the needs of its mandated market segments.”

RCBC’s total deposits grew to P374.6 billion at the end of September, up 13% from a year earlier. Current and savings accounts accounted for P219.2 billion, up 10%.

The bank sought to broaden customer reach by opening 26 new branches and deploying 64 new automated teller machines (ATMs) during the period. At the end of September, RCBC had 503 branches and 1,539 ATMs.

The non-performing (NPL) ratio at the end of September was 1.07%.

RCBC’s capital was P65.1 billion at the end of September, with the capital adequacy ratio under Basel III rules at 15.51%, with its common equity ratio at 12.43%.

Annualized net interest margin was 4.3%, up 24 basis points from a year earlier. The annualized return on equity and return on assets stood at 7.16% and 0.85%, respectively.

RCBC president and chief executive officer Gil A. Buenaventura said: “The increase in [current and savings account] deposits and growth in the bank’s total loan portfolio has helped fuel the responsiveness of our products to market demand.” — Karl Angelo N. Vidal

BCDA initiates Swiss challenge for national gov’t center proposal

THE Bases Conversion and Development Authority has invited bidders to place bids to compete with an unsolicited proposal for the planned National Government Administrative Center (NGAC) in New Clark City.

The BCDA said it is inviting potential joint venture partners for the development of a portion of the New Clark City Clark Special Economic Zone.

A pre-eligibility conference is set for Nov. 23 while submission of documents is set for Dec. 11.

The unsolicited proposal is from Malaysia’s MTD Capital Bhd. MTD Capital submitted a P121.8-billion proposal last month for a joint venture agreement to finance and provide technical and engineering expertise for the construction and operations and maintenance of the 207-hectare NGAC.

Unsolicited proposals are subject to a so-called Swiss challenge, under which competing bids are solicited from other parties who might top the original proposal. The original proponent is then entitled to match competing bids.

MTD Capital proposed that the NGAC house satellite and major administrative offices of certain government agencies, similar to government centers like Putrajaya, Malaysia and Sejong City, South Korea. Also included in the proposal are the construction of areas for embassies and international schools, housing facilities for government employees, sports facilities, and public schools, among others.

The NGAC is the flagship project of the BCDA and is a major component of New Clark City, a planned new metropolis in the Clark Special Economic Zone in Capas and Bamban in Tarlac. It is epected to house satellite offices of the government, as well as an integrated operations center, and sports facilities to train national athletes.

New Clark City will also include, aside from the NGAC, mixed-use real estate developments, an agro-industrial park, and a food-processing terminal, as part of a broader plan to decongest Metro Manila. — Patrizia Paola C. Marcelo

Resorts World operator still reeling from casino shooting

THE shooting incident at Resorts World Manila (RWM) last June continued to drag on Travellers International Hotel Group, Inc. (TIHGI)’s bottom line, as the company booked a net loss for the third quarter of 2017.

In a regulatory filing, the owner and operator of RWM said it delivered a net loss attributable to the parent of P408 million, coming from an attributable profit of P1.18 billion in the July to September period of 2017.

On a nine-month basis, net loss attributable to the parent was recorded at P34.13 million, against earnings of P2.98 billion in the same period a year ago.

The casino area of Resorts World Manila was closed for 27 days in June this year due to a shooting incident that left 38 people, including the gunman, dead. The second floor of the casino, where the gaming tables are, has yet to be restored, pulling gross gaming revenues down to P12.8 billion, 28% lower compared to the P18.02 billion posted in the same period a year ago.

Despite the losses recorded, the company noted it has started to see visitors coming back to the integrated resort and casino estate.

The Andrew L. Tan-led firm noted average occupancy of hotels inside the estate was at 78% for the nine-month period. Foot traffic meanwhile averaged 23,000 daily in the third quarter, and 25,000 for the January to September period.

Meanwhile, the non-gaming segment booked P2.9 billion in revenues, a 5.1% year-on-year increase.

Gross revenues for the nine months ending September meanwhile stood at P15.7 billion, albeit 24% lower than the P20.8 billion reported in the same period a year ago.

“We are happy to see guests returning to the property and are excited to introduce Phase 3 of (RWM) very soon. This development will be fully operational by the end of 2018 and will realize our vision to be among the premier world-class integrated entertainment and tourism destinations in Asia,” TIHGI President and Chief Executive Officer Kingson U. Sian said in a statement.

Shares in TIHGI dropped four centavos or 1.04% to P3.81 at the stock exchange on Friday. — ABF

BSP rediscount lending rises in Oct., drops in 10 months

PHILIPPINE BANKS increased their usage of the Bangko Sentral ng Pilipinas (BSP) peso rediscount facility in October to P370 million, against P133 million in September.

In the 10 months to October rediscount transactions amounted to P973 million, well below the P1.74 billion a year earlier.

Philippine banks can borrow from the BSP’s rediscount facility to meet their short-term funding needs.

Banks issue promissory notes backed by client loans to tap the facility. The funds can be used to issue more loans or service withdrawals.

The BSP imposed uniform borrowing rates on July 21 with the closure of the special window for thrift, rural, and cooperative banks.

The BSP has two rates for short-term secured peso borrowings: 90-day loans at 3.5625%, and 180-day loans at 3.625%.

Central bank officials have said that liquidity remains ample in the financial system, limiting the use of the rediscount facility as banks continue to hold enough cash for their day-to-day transactions. — Elijah Joseph C. Tubayan

DoF confident infra will sustain 7% GDP growth

THE GOVERNMENT is confident the economy will sustain a 7% growth rate over the medium term, the Finance department said.

“The 6.5% growth for the first semester makes the Philippines the second-fastest growing economy in Asia after China. We retain the 7% growth rate target for the year, spurred by the investment spending in the infrastructure program. We believe this growth rate is sustainable well into the medium term,” Finance Secretary Carlos G. Dominguez III said in a statement on Friday.

He said his confidence is based on the government’s ability to deliver on its P8.4 trillion infrastructure program.

Government spending in the nine months to September was up 8% year-on-year at P2.01 trillion, equivalent to 69.23% of the P2.91 trillion target for 2017.

“Increased investments in modernizing the country’s infrastructure will be the key driver of our growth the next few years. These investments seek to bring up our infra to match those of our most progressive neighbors. By modernizing our infrastructure, we will address congestion in our ports, airports and roads,” Mr. Dominguez said.

“Investing in infrastructure has the highest multiplier effect on the economy. It creates construction jobs in the short term and manufacturing jobs in the long term. It improves land prices, assists in raising our agricultural productivity and encourages dispersal of our industries into the regions,” he added.

The government aims to raise the share of infrastructure spending to 7.4% of gross domestic product by 2022, from a 4.7% share in 2016, and 5.4% programmed this year.

“The quality of our infrastructure fell behind those of our neighbors because of many years of under-investment. While we grappled with the debt crisis and imposed austerity, our investment in new infra fell to nearly half the regional average.”

The Philippine Statistics Authority (PSA) will release the third quarter gross domestic product (GDP) results on Nov. 16.

Mr. Dominguez also noted that agriculture will also keep pace with rapid growth due to more investment in modern farm systems, which will, in turn, “speed up the liberation of our rural poor from poverty.”

However, he said that the government has to pass the comprehensive tax reform program, to enable it to pay for its infrastructure buildup.

The government tax plan, in its current configuration under the approved House Bill No. 5636, would yield P133.8 billion in the first year of implementation.

Its counterpart bill in the Senate is still under deliberation less than two months before it is due to be implemented in January.

“We are hopeful this first package could be enacted before the end of the year. This will enable us to implement income tax rate reductions and increased exemptions by the start of next year,” Mr. Dominguez said. — Elijah Joseph C. Tubayan

Funding mass transport projects sought in tax reform measure

SENATOR Grace Poe in a statement on Friday, Nov. 10, proposed that revenues from petroleum excise taxes in the first tranche of the Duterte administration’s tax reform package could be used to supplement public mass transportation projects.

“We are hoping that this earmark in the tax reform could help fund ambitious mass transportation projects without the need to fully rely on foreign borrowings,” Ms. Poe, chairperson of the Senate committee on public services, said in her statement.

Senator Juan Edgardo M. Angara sponsored last September Senate Bill No. 1592, or the proposed Senate version of the Tax Reform for Acceleration and Inclusion (TRAIn) Act as prepared by the committee on ways and means, which he heads.

Under the earmarking provisions of the bill, the government shall allocate incremental revenues generated from the petroleum excise tax to the unconditional cash transfer program for the bottom 50% poorest households, as well as to the implementation of Public Utility Vehicle modernization project.

Ms. Poe wants this amended to include “other mass transportation projects.” She said she has written Mr. Angara to consider her proposal.

These public transport projects should “provide an efficient way to serve an expanding population, address congestion and reduce costs,” the senator said in her statement.

The statement also noted the Finance department’s estimates showing some P40 billion in revenues if the Senate version on oil excise taxes is approved.

Ms. Poe issued her statement amid the periodic malfunction in the Metro Rail Transit 3.

Think tank says implementation issues to hinder tourist tax

A TAX on foreign tourists has the potential to raise additional revenue for the government at a negligible cost to foreign travelers, though such a tax would be difficult to implement, a government think tank said.

Although it is not referring to any proposed legislation, the National Tax Research Center (NTRC) said a tax on spending by foreign visitors poses “administrative difficulties” and may also have a negative impact on the tourism industry.

“Albeit the potential of the proposed foreign tourist tax to raise much-needed revenue for the government to be used for tourism-related projects and programs, its imposition, as of the moment, may need further study given the negative effect it may pose to the tourism industry and the administrative difficulty in identifying those who travel purely for leisure and/or vacation purposes who are the real target of the proposed tax and those who visit the country for medical treatment, official trip/mission or for business,” the NTRC said in the Tax Research Journal.

Tourism taxes in other countries often take the form of an accommodation tax or an airline tax.

A tax on accommodation for foreign tourists similar to that imposed by European countries, may amount to P1,000 to P1,500 per person.

An accommodation tax could generate for the government around P9.4 billion to P14.2 billion over five years.

“The percentage share of said option to total per capita tourist expenditure is very minimal at 2% and 3% for P1,000 and P1,500 respectively; hence, it is deemed affordable to tourists,” the report read.

It said if airline tickets of foreign arrivals were taxed at the same rate as travel tax (P1,620 for economy class tickets), it could raise some P15.3 billion over five years, and the cost to a foreign visitor would be about 3% of travel spending per person.

The government expects the tourism industry to grow at an average of 15.4% in the next five years. By 2022, the Tourism department estimates that foreign visitor arrivals will rise to 12 million from 5.78 million in 2016.

“It is a known fact that a tax imposed on any sector can somehow stifle growth especially if said tax is excessive. The proposal may also be difficult to administer considering that the purpose of tourists traveling to the country may vary,” NTRC said.

Those who travel for business, medical treatment or official missions “are not the target of the proposed tax but those who are traveling to the country for leisure and/or vacation purposes,” it added.

“Considering also that the country lags behind other ASEAN (Association of Southeast Asian Nations) member countries in terms of attracting tourists, a tax imposed thereon would further make the country uncompetitive.”

Among the 10 ASEAN countries, the Philippines ranked sixth in foreign tourist arrivals during the 2011-2016 period.

“It may be worthy to weigh the potential revenue to be raised from the said tax proposal vis-a-vis its impact on tourist arrivals and their ability to bring about economic benefits to the country in terms of income, employment, and revenue associated therefrom,” the think tank said.

In 2016, the tourism industry was equivalent to 8.6% of the economy, the third-largest share next to Cambodia’s 12.2% and Thailand’s 9.2%. — Elijah Joseph C. Tubayan

Peso strengthens on dollar unwinding ahead of long weekend

THE peso strengthened slightly on Friday amid optimism over the economy’s prospects and as the long weekend prompted the unwinding of long-dollar positions.

The peso closed at P51.245 against the dollar yesterday, compared with its P51.27 finish on Thursday.

The peso weakened to P51.30 at the open, with the intraday high at P51.09 and the low at P51.36.

Trading volume was $732.9 million, up from P614.9 million on Thursday, with the three-day holiday next week for the Association of Southeast Asian Nations summit leading traders to reduce their dollar positions.

A trader told BusinessWorld that as the peso strengthened past P51.20, dollar-buying gained momentum led by parties trading in oil, which is paid for in dollars. This activity led the peso to close at P51.245.

Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said positive foreign direct investment (FDI) data released yesterday also supported the peso.

The Bangko Sentral ng Pilipinas (BSP) said net foreign direct investment inflows totaled $1.2 billion in August, up 70% from a year earlier.

Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said FDI and other data did not affect market sentiment.

“Except for inflation, other data released seem not to be influencing market movements,” Mr. Asuncion said in an email.

On Tuesday, the BSP reported that October inflation was 3.5%, a three-year high.

Meanwhile, another trader attributed the peso’s strength to continued concerned over the fate of the US tax reform package, amid fears of a delay until 2019. — Karl Angelo N. Vidal

Bourse up on week despite Friday’s fall

THE PHILIPPINE STOCK EXCHANGE Index (PSEi) chalked up its second weekly gain despite falling on Friday largely under the weight of Wall Street’s retreat from Wednesday’s record highs in the face of revived worries about planned US tax reforms.

PSEi gave up 86.34 points or 1.01% to finish 8,433.48 on Friday — even as it was 0.68% up on the week — while the all-shares index dropped 47.96 points or 0.96% to 4,931.86.

Only one of the six sectoral indices ended Friday with gains, while foreigners stayed largely sellers for the second straight day.

“Philippine and US stocks lost ground, pulling back from all-time highs, as investors expressed concern over a report that tax legislation due to be unveiled by Senate Republicans would delay a corporate tax cut until 2019,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message.

“Locally however, many were selling ahead of the ASEAN summit due to the long holidays and with some investors wanting to see the output of their meetings.”

While also noting that “[t]he local stock market also trailed the the sluggish performance of US equities as US trade figures raise concerns about the progress of (US President Donald) Trump’s tax reform”, Jervin S. de Celis, equities trader at Timson Securities, Inc., noted via separate text message that “PSEi ended negative after investors booked profits from index heavyweights such as JG Summit (Holdings, Inc.) and SM Prime (Holdings, Inc., or SMPH). SMPH also reached an all time yesterday of P38.25, prompting investors to liquidate some shares.”

SM Prime had reported last Nov. 6 that net income that went to controlling equity holders increased by 16.38% to P5.66 billion last quarter from P4.863 billion a year ago, fueling a 14.86% annual rise in nine-month attributable profit to P20.047 billion.

Friday saw shares of SM Prime and of JG Summit drop 3.56% to P36.60 apiece and by 2.47% to P75.05 each, respectively. The day’s 20 most actively traded stocks saw MacroAsia Corp. lose the most, dropping 6.69% to end P22.30 apiece.

Those that gained were led by Integrated Micro-Electroncis, Inc. and BDO Unibank, Inc. whose shares added 2.29% to finish P22.30 apiece and 1.79% to P147.60 each, respectively.

Reuters reported that Wall Street stocks on Thursday pulled back from Wednesday’s fresh peaks “as investors turned their attention to a US Senate Republican plan that would delay expected corporate tax cuts”. The Dow Jones Industrial Average on Thursday lost 0.43% to end 23,461.94, the S&P 500 Index went down by 0.38% to 2,584.62 and the Nasdaq Composite Index dropped 0.58% to 6,750.06.

Other Asian bourses were a mixed bunch on Friday, with Japan’s Nikkei 225 and TOPIX Index, South Korea’s KOSPI Index, the Jakarta Composite Index and the S&P/ASX 200 Index losing 0.82%, 0.70%, 0.30%, 0.23% and 0.33%, respectively, while Hong Kong’s Hang Seng Index, the Straits Times Index, the Shanghai Composite Index and the MSCI AC Asia Pacific gained 0.09%, 0.05%, 0.16% and 0.01%, respectively.

Friday saw only one Philippine sectoral index gain: financials added 7.9 points or 0.37% to finish 2,094.61.

The five other sub-indices lost: property by 82.02 points or 2.03% to 3,955.41, holding firms by 95.27 points or 1.09% to 8,612.20, mining & oil by 119.94 points or 0.95% to 12,417.48, industrials by 85.22 points or 0.77% to 10,908.93 and services by 12.2 points or 0.71% to 1,688.66.

Stocks that declined outnumbered those that gained 134 to 73, while 44 others were unchanged.

Trading volume thinned to 1.172 billion shares worth P7.53 billion from Thursday’s 1.502 billion shares worth P9.324 billion.

Net foreign selling persisted for a second day at P222.786 million, 6.67% less Thursday’s P238.756 million. — with inputs from P. P. C. Marcelo

7-Eleven licensee says Q3 profit up 18%

THE local licensee of 7-Eleven convenience stores said earnings grew by the double digits in the third quarter fueled by an increase in same-store sales for the period.

In a regulatory filing, Philippine Seven Corp. (PSC) reported an 18% increase in net income to P201.9 million in the third quarter of 2017, against the P171 million it posted in the same period in 2016.

The company attributed the growth to better sales coupled with the continued expansion of its network, with system-wide sales recorded at P9.1 billion for the quarter, up by an annual 20.7%, and at P27.2 billion for the nine months ended September. This came from the operations of 2,172 stores by the end of the third quarter, or an addition of 332 stores during the period.

Of its portfolio, PSC operates 1,739 stores in Luzon, 288 in Visayas, and 145 in Mindanao. Franchisees of the 7-Eleven brand account for 54% of all the stores, while 46% are corporate-owned.

Including first half results, PSC’s net income was flat at P648.3 million, compared to the P643.4 million booked in the first nine months of 2016.

PSC said it continues to expand its store network by introducing its stores to both new and existing markets, coupled with enhancing the sales of each stores.

“There are various programs lined up covering expanding merchandise assortment and launching of new food and beverage items to serve as differentiation compared with other channels. The e-commerce business was launched to take advantage of growing customer preference towards innovation and convenience,” PSC said.

The company has committed to spend P3.5 billion for its store expansion program for this year, with most of the allocation intended for new store openings, store renovations, and equipment acquisition.

Shares in PSC closed 2.44% lower or P5 at P200 apiece at the stock exchange on Friday. — Arra B. Francia

San Beda takes Game One of NCAA finals

By Michael Angelo S. Murillo

THE defending champions San Beda Red Lions are one step away from another National Collegiate Athletic Association title after taking Game One of their best-of-three finals over the Lyceum Pirates, 94-87, yesterday.

Getting solid contributions from foreign player Donald Tankoua and veterans Robert Bolick and Javee Mocon, the Lions hung tight to deal the Pirates their first defeat of the season while coming ever close to their 10th title in 12 years and 21st all time.

The contest was tight right at the onset.

Lyceum made an early jump to start the opening quarter but San Beda charged back strong to claim the frame, 22-21.

In the second quarter, league most valuable player CJ Perez and Mike Nzeusseu conspired to rally their team to a strong rally, allowing the Pirates to overtake the Lions by halftime, 50-45.

The two teams went back and forth in the third frame, bent on establishing momentum as the contest got deeper.

The scored was knotted at 64-all as the third canto lapsed.

With the outcome still open heading into the final 10 minutes of the match, the protagonists buckled down for the sprint.

San Beda raced to a 77-76 lead with five minutes left in the game.

Mocon and Bolick then started to take charge thereafter for the Lions as they swung to an 89-82 separation with 55 ticks to go.

Nzeusseu and Perez pulled Lyceum to within four points, 91-87, with 20 seconds remaining but that was the closest they would get as San Beda held on for the win.

Tankoua had a double-double of 27 points and 20 rebounds while Bolick finished with 24 points.

Pro-bound Davon Potts had 15 points with Mocon tallying 11 points and nine boards.

Perez, meanwhile, led Lyceum with 25 points and eight boards while Nzeusseu had 14 points and eight rebounds.

“Happy we got this win. The boys really stepped up and showed how they wanted it bad,” said San Beda coach Boyet Fernandez after their win.

“But this is not yet over. We still need to win one more,” he said.

Lyceum barged into the finals outright after sweeping the elimination round.

Its back is now against the wall heading into Game Two on Nov. 16 at the Smart Araneta Coliseum.

Meanwhile earlier in the day, Perez was named league MVP.

Perez led the NCAA in scoring with 19.3 points per game to go along with 6.5 rebounds, 3.6 assists and nearly two steals a contest.

In winning the top individual plum, Perez beat out teammate Nzeusseu, Mocon and Emilio Aguinaldo College’s Sydney Onwubere.

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