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Agriculture dep’t says strict bird flu quarantine hurt poultry industry

THE Department of Agriculture (DA) said it will relax its avian influenza quarantine rules, noting that the protocols it administered during the August outbreak pulled down the poultry industry.

“The cull within a one-kilometer radius and the seven-kilometer radius on restricted movement of birds had an adverse effect on the farmers in the affected areas,” Agriculture Secretary Emmanuel F. Piñol told reporters on Wednesday.

Earlier this month the DA eased transport restrictions by lifting the ban on movement within the seven-kilometer control zone.

Meanwhile, the industry may have to wait for two more months for the lifting of the one-kilometer quarantine zone and restore the market to pre-outbreak conditions.

Mr. Piñol said the DA will observe to its standard procedure of waiting 90 days in the case of avian influenza outbreaks before lifting all restrictions.

Mr. Piñol has said he now expects output of the poultry subsector, which rose in the second quarter, to contract in the third quarter as news of the outbreak discouraged consumers from purchasing poultry products.

The formal amendment of the avian influenza protocols is expected to be finalized after a workshop to be held also this month. 

The workshop will involve stakeholders and other agencies such as the Departments of Interior and Local Government, Health and Trade and Industry, among others.

“I will have to defer to decision of stakeholders and biosecurity experts hintayin resulta. My role is to be the impelementor of the biosecurity measures,” Mr. Piñol added.

The official said the agency is looking at European models, which call for the culling of birds only in the affected farm.

The South Korean practice of a 500-meter quarantine zone is also being studied.

The manual of procedures used by the Bureau of Animal Industry calls for a seven-kilometer zone from the periphery of the boundary of the Quarantine Area as a Control Area, “which may be extended as deemed necessary.”

Meanwhile, existing protocols also call for a one-kilometer quarantine radius from the affected farm, taking in major markets, processing plants and general service areas. — Janina C. Lim

New Apple Watch that makes calls turns comic book fantasy into reality

CUPERTINO, CALIFORNIA — More than two years after releasing the Apple Watch, Apple, Inc. has finally been able to replicate 1940s comic strip technology, an advance that analysts say will spur sales.

The Series 3 of the Apple Watch, released on Sept. 13 along with the much-anticipated iPhone X, features wireless LTE connectivity. That means customers will be able to make phone calls or send text messages from the watch without needing to have an iPhone nearby, as they do with earlier models.

The ability to make calls with a wristwatch has captured the imagination of tech enthusiasts at least since it was prominently featured in “Dick Tracy,” the comic about a private detective who, starting in 1946, used calls from his wrist to help bust bad guys.

To be sure, Samsung Electronics Co. Ltd. has sold smartwatches with mobile data connectivity since 2014, but the first devices were bulky and suffered from poor battery life because the data connection consumed extra power. They also require a separate phone number.

Apple claims its new Series 3, on the other hand, will have up to 18 hours of battery life and is just a fraction of a millimeter thicker than its previous Series 2. And it will have the same phone number as a customer’s iPhone, which is still required.

Analysts generally believe the new connectivity could ignite sales, though there is little consensus as to how much.

At $399, the new Watch is only slightly more expensive than the previous model, the $329 Series 2, which introduced standalone GPS capability. That $70 extra buys much more useful capabilities — including the ability to stream music from Apple Music.

“The third time is the charm for the watch,” said Bob O’Donnell of Techanalysis Research.

Apple does not say how many Apple Watches it sells. Bernstein analyst Toni Sacconaghi believes Apple will sell 12 million watches in its fiscal 2017 and 14 million to 15 million in fiscal 2018. Gene Munster with Loup Ventures predicted a much bigger bump, to 26 million units in 2018.

Either way, Apple is putting new pressure on smartwatch rivals like Fitbit, Inc. and Garmin Ltd, which would be hard-pressed from a technical and business standpoint to match Apple’s wireless features. Garmin and Fitbit did not immediately respond to requests for comment outside normal business hours.

The Watch will remain a blip in Apple’s sales, which were $215 billion last year. But it may be taking its place as part of a family of products that Apple loyalists cannot do without — all by making a schoolboy fantasy from the 1940s into reality for the masses. — Reuters

BIR to expand lineup of agent banks in 2018

THE Bureau of Internal Revenue (BIR) will expand its list of Authorized Agent Banks as collections via electronic payment schemes rise in importance.

BIR Deputy Commissioner Lanee S. Cui-David told reporters last week that the agency is currently in discussions with government financial institutions and commercial banks, to allow taxpayers to pay their dues via debit or credit cards in more banks.

“There are actually ongoing talks with other banks like Land Bank [of the Philippines], Union Bank [of the Philippines],” she said.

She also noted that such services are undergoing a soft launch with the Development Bank of the Philippines.

Authorized Agent Banks, or AABs are financial institutions that are accredited to act as intermediaries in government transactions.

“We have lots of projects in store for 2018, so that is not just one project. But we have of course sustainability costs for the e-filing system. We need to maintain the system so we also incur costs for that and that is included in the 2018 budget,” she said.

As of July, the share of BIR collections generated by e-payments was 74%. In 2016, the e-payments level was 83%, up from 74% in 2015.

Ms. David added that the agency is also integrating its e-Filing and Payments System and their e-BIR Forms into a single system.

This year, the BIR is expected to collect P1.829 trillion in taxes. As of July, it has so far collected P986.09 billion. — Elijah Joseph C. Tubayan

FIDE World Cup Final last 16

The FIDE World Cup started with 128 players two Saturdays ago and now, after round 3, there are 16 players left standing. Here are the matchups for the 16 survivors for round 4.

Peter Svidler RUS 2756 vs Bu Xiangzhi CHN 2714

Maxime Vachier Lagrave FRA 2804 vs Alexander Grischuk RUS 2788

Vassily Ivanchuk UKR 2727 vs Anish Giri NED 2777

Daniil Dubov RUS 2666 vs Levon Aronian ARM 2802

Wesley So USA 2792 vs Baadur Jobava GEO 2702

Maxime Rothstein ISR 2695 vs Vladimir Fedoseev RUS 2731

Richard Rapport HUN 2675 vs Evgeniy Najer RUS 2694

Wang Hao CHN 2701 vs Ding Liren CHN 2771

A quick census shows five Russians, three Chinese and one each from USA, France, Ukraine, Netherlands, Armenia, Georgia, Israel and Hungary. Big names who are going home after Round 3 are Magnus Carlsen (the reigning world champion, no less), Vladimir Kramnik and the two American superGMs Hikaru Nakamura and Fabiano Caruana.

A quick summary of what happened in Round 3:

1. GM Anton Kovalyov withdraws from the World Cup.

Canada’s Anton Kovalyov, who created a sensation in the first round by eliminating former World Champion Vishy Anand, created another stir by becoming the first player to ever be disqualified from the World Cup for wearing shorts!

Apparently he had been wearing shorts from the very start and his attention had not been called, so why is it unacceptable now? Main organizer GM Zurab Azmaiparashvili gave Kovalyov 15 minutes to change but the Canadian GM just stood up and left.

GM Kovalyov wrote afterwards that he did not bring any pants to Tbilisi and would have gone to the mall to buy a pair if he had been informed earlier that his attire was not acceptable. He felt that Zurab Azmaiparashvili was overly aggressive in confronting him just before the start of play, calling him a gypsy and, rather than do anything stupid, he decided to leave the playing venue.

Many would probably disagree, but I find it hard to sympathize with the GM from Russia turned Canadian — when you go to the World Cup you are representing your country and dressing properly shows your respect both for your own flag, your opponent and his flag, as well as to the organizers.

2. Pure Frustration

Jobava vs Nepomniachtchi was a hard fight in every game. In what was to be the final game of their match the following occurred:

Jobava, Baadur (2702) — Nepomniachtchi, Ian (2741) [B50]
FIDE World Cup 2017 Tbilisi GEO (3.4), 11.09.2017

1.e4 c5 2.Nf3 d6 3.c3 Nf6 4.Bd3 g6 5.Bc2 Bg7 6.d4 cxd4 7.cxd4 0–0 8.0–0 Bg4 9.Nbd2 Nc6 10.h3 Bd7 11.Re1 Rc8 12.a3 b5 13.Bd3 Qb6 14.Nb3 Na5 15.Nxa5 Qxa5 16.Bd2 Qb6 17.Bg5 Rfe8 18.Qd2 a5 19.Bh6 b4 20.axb4 axb4 21.e5 Nd5 22.Be4 e6 23.Bxg7 Kxg7 24.Nh2 Ne7 25.Ng4 Ng8 26.Re3 dxe5 27.dxe5 Bc6 28.Bxc6 Rxc6 29.Rf3 Rd8 30.Qf4 Qc7 31.Nf6 Rc4 32.Qe3 Rcd4?? 33.Qxd4 1–0 because 33…Rxd4 is met by 34.Ne8+ winning back the queen with a free rook to spare.

Nepom was so disgusted with himself that within 30 minutes after resigning the game he had already left the hotel on his way to the airport.

3. Brilliant Fight

The games to the Aronian vs Matlakov match were particularly exciting. They went back and forth through the two classical games (1 win each), then the 25-minute tie-breaks (2 draws) then the 10-minute tie-breaks (1 win each) until the blitz tie-breaks where Aronian won the first and held the draw in the last. Just take a look at the first two games.

Aronian, Levon (2802) — Matlakov, Maxim (2728) [A28]
FIDE World Cup 2017 Tbilisi GEO (3.1), 09.09.2017

1.c4 e5 2.Nc3 Nf6 3.Nf3 Nc6 4.e3 Bb4 5.Qc2 Bxc3 6.bxc3 0–0 7.d3 d6 8.Be2 Re8 9.e4 Ne7 10.Nh4 Ng6 11.Nxg6 hxg6 12.0–0 c6 13.f4 b5 14.cxb5 cxb5 15.h3 Qb6+ 16.Kh2 Be6 17.a4 a6 18.Qb2 Nd7 19.Rb1 Rab8 20.axb5 axb5 21.Rf3 f6 22.f5 gxf5 23.exf5 Bd5 24.Rg3 Re7 25.Bh5 e4 26.d4 Bc4 27.Bf4 Ra8 28.Ra1 Rd8 29.Ra3 Nf8 30.Qa1 Bf7 31.Ra6 Qc7 32.Be2 Bc4 33.Bxc4+ Qxc4 34.Rxd6 Nd7 35.Qa7 Kf7 36.Qb7 Ke8 37.Re6 Rxe6 38.fxe6 Qxe6 39.Rxg7 e3 40.Qf3 1–0

Matlakov, Maxim (2728) — Aronian, Levon (2802) [D35]
FIDE World Cup 2017 Tbilisi GEO (3.2), 10.09.2017

1.d4 Nf6 2.c4 e6 3.Nc3 d5 4.cxd5 Nxd5 5.e4 Nxc3 6.bxc3 c5 7.Rb1 Be7 8.Nf3 0–0 9.Bc4 Qc7 10.Qe2 a6 11.a4 cxd4 12.cxd4 Bd7 13.0–0 Rc8 14.Bd3 Bxa4 15.d5 Nd7 16.e5 exd5 17.e6 Nf8 18.exf7+ Kxf7 19.Nd4 Bf6 20.Bxh7 Qe5 21.Rxb7+ Bd7 22.Qg4 Qxd4 23.Rxd7+ Nxd7 24.Qxd7+ Be7 25.Re1 Qe5 26.Bd2 Rd8 27.Qg4 1–0

4. Magnus Carlsen eliminated.

Remember the issue I discussed last Tuesday about the draw being favorable to the bottom half of the World Cup (the half that Wesley So is in) against the top half, where Magnus Carlsen, Sergey Karjakin and Vladimir Kramnik, the complainer, are in? Since Magnus and Karjakin have already been previously qualified for the Candidates’ tournament, if they both reach the semifinals then the two semifinalists from the bottom half are automatically qualified to the Candidates. Well, it has become a non-issue since Karjakin in round 2 and now Magnus Carlsen and Vladimir Kramnik (in round 3) have already been eliminated!

Carlsen never knew what hit him — he was just playing a normal game and then came 15…Bxh3! and suddenly he was under a full-scale attack. Bu Xiangzhi, previously the youngest grandmaster ever in history (before this title was taken over by Sergey Karjakin), is known for his solid positional style which sometimes borders on the boring. If he should retire today this brilliancy will be the game he will be remembered by.

Carlsen, Magnus (2822) — Bu, Xiangzhi (2710) [C55]
FIDE World Cup 2017 Tbilisi GEO (3.1), 09.09.2017

1.e4 e5 2.Bc4 Nf6 3.d3 Nc6 4.Nf3 Be7 5.0–0 0–0 6.Bb3 d6 7.c3 Be6 8.Re1 Qd7 9.Nbd2 Rab8!?

A novelty. Bu explained that its purpose is twofold: (1) To defend the b7–pawn after …Bxb3, Qxb3, and (2) He is planning to play …d6–d5. White might respond with Ba4 to pin his c6–knight, but now, with the rook on b8, he can interject with …b7–b5.

10.Bc2 d5!?

Sacrificing the e5–pawn. The game is going to resemble very much the Marshall Attack.

11.h3?!

Magnus should have taken the pawn immediately. After 11.exd5! Nxd5 12.Nxe5 Nxe5 13.Rxe5 Bd6 14.Re1 Black does not have the pawn on h3 to target.

11…h6 12.exd5 Nxd5 13.Nxe5 Nxe5 14.Rxe5 Bd6 15.Re1 Bxh3! 16.gxh3 Qxh3

Threatening mate in 4 starting with …Bh2+

17.Nf1 Rbe8! 18.d4

The idea is Bc2–e4–g2.

18…f5! 19.Bb3 c6 20.f4 Kh7

Bu takes his king out of checking distance and threatens …Rf8–f6–g6.

21.Bxd5?

After this Black comes crashing through. For better or worse White had to play 21.Re2 and move his rook or queen to g2/h2.

21…cxd5 22.Re3 Rxe3 23.Bxe3 g5! 24.Kf2 gxf4 25.Qf3 fxe3+ 26.Nxe3 Qh2+ 27.Kf1 Rg8 28.Qxf5+ Rg6! 29.Ke1 h5 30.Kd1

Both players were in time trouble here. Carlsen only had about 5 seconds left on his clock. The rest of the game was played a tempo.

30…Kh6 31.Nc2 h4 32.Ne1 h3 33.Nf3 Qg2 34.Ne1 Qg4+ 35.Qxg4 Rxg4 36.Nf3 Rg1+! 0–1

Carlsen resigns because 36…Rg1+! 37.Nxg1 h2 the pawn cannot be stopped from queening.

5. Wesley So proceeds to round 4.

Wesley’s opponent, the Spaniard Paco Vallejo Pons, tried to wipe him off the board early, with the inevitable result.

Vallejo Pons, Francisco (2717) — So, Wesley (2810) [B12]
FIDE World Cup 2017 Tbilisi GEO (3.1), 09.09.2017

1.e4 c6 2.d4 d5 3.e5 Bf5 4.g4 Be4

More common is 4…Bd7. Six years ago Alexei Shirov fell to his worst loss with 5.c4 e6?! 6.Nc3 c5! 7.cxd5 exd5 8.dxc5 Bxc5 9.Bg2 (9.Qxd5 Qb6 10.Qg2 Nc6 11.Nf3 Nb4 12.Rb1 Bc6 White is against the ropes) 9…Ne7 10.h3 Qb6 11.Qe2 0–0 12.Nf3 d4 13.Ne4 Bb5 14.Qd2 Nbc6 15.a3 Ng6 16.b4 Be7 17.Bb2 Rfd8 0–1 Shirov,A (2709)-Anand,V (2817) Leon ESP 2011.

5.f3 Bg6 6.h4 h5 7.e6 Qd6!

The correct move, incidentally threatening a check on g3. One wonders what Vallejo had in mind as this is a known position and Black has an excellent score with it.

8.exf7+ Bxf7 9.Be3

The main line is 9.Ne2. This position occurred in the Tagaytay Zonals a few years ago. Future zonal champion Yeoh Li Tian beat the dentist Dr. Alfredo Paez with it — 9…Nd7 10.g5 e5 11.Bh3 Be6 12.f4 Bxh3 13.fxe5 Nxe5 14.Rxh3 (14.dxe5 Qb4+ followed by Qxh4+) 14…Ng4 15.Bf4 Qe6 Black had no problems at all. Paez,A (2151)-Yeoh,L (2278) Tagaytay City 2013. 0–1 31.

9…hxg4 10.fxg4 Nf6 11.Nc3 Qe6! 12.Kd2?!

Better was to give up a pawn with 12.Qe2 Nxg4 13.Bg5 but I believe that the Spaniard, a very dynamic and aggressive player, did not want to defend an inferior pawn-down endgame against “perfect technique” Wesley and preferred to keep queens on the board.

12…Nxg4 13.Bg5 Nf2 14.Qf3 Nxh1 15.Qxh1 [Now White intends Bh3 and Re1 to get some counterplay going on.]

15…Qd6 16.Bh3 e6 17.Rf1 Be7 18.Bf4 Qb4! 19.Nge2 Nd7 20.a3 Qxb2 21.Rb1 Qxa3 22.Rxb7 Qa6 23.Qb1 Rxh4 24.Bf1 <D>

POSITION AFTER 24.BF1

White is hanging on by a thread. Wesley finishes him off nicely.

24…Rxf4! 25.Nxf4 Qa5

With the deadly Bg5 coming up.

26.Qe1 Bg5 27.Qg3 Bh6 28.Bd3 0–0–0! 29.Rb3 e5 30.dxe5 d4 0–1

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

Vehicle firm eyes entry in Mindanao mining sector, container terminals

TRUCKS AND bus firm Scania, through its exclusive Philippine distributor BJ Mercantile, Inc., is eyeing to enter Mindanao, starting with mining companies. “We’re talking right now on how we can position ourselves in Mindanao… Nakita namin ang malaking (We have seen big) progress in Mindanao and our products and services are tailored-fit to support the ongoing boom,” said Vic G. Marinduque, head of sales for Visayas and Mindanao. The company is also looking at setting up a workshop service facility in the southern island, according to Peachy G. Tamayo, BJ Mercantile marketing manager. “Generally we want to penetrate the key cities, and we have started out in Cebu, then Mindanao,” Ms. Tamayo said. Apart from the provision of transport units, Scania also aims to bring in its digital system to improve work and logistics flow in mining and container terminals. — Maya M. Padillo

Peso slips ahead of data

THE PESO snapped its week-long rally versus the dollar as it resumed trading yesterday as sentiment towards the United States recovered, and ahead of the release of inflation data which could dictate the next moves of the Federal Reserve.

The local unit closed at P50.975 against the greenback on Wednesday, down by seven centavos from the P50.905 finish on Monday.

Yesterday’s close was the  weakest logged since a P51.095 exchange rate on Sept. 6.

Financial markets were closed on Tuesday after Malacañang suspended work in government offices in Metro Manila due to heavy rains brought about by typhoon Lannie (international name: Talim) and tropical storm Maring (Doksuri). The Bangko Sentral ng Pilipinas suspended all trading, clearing, and settlement transactions following the declaration.

Trading resumed on Wednesday with the peso opening weaker at P50.98 against the greenback.  It touched P51.04 as its intraday low, while P50.90 was its best showing for the day.

Two traders attributed the sideways movement of the peso to market anticipation ahead of key developments in the global financial markets later this week, while noting that the depreciation of the peso came as the dollar bounced back from last week’s lows.

“The dollar continues to recover. I think the tension between North Korea and the US is easing, and also the impact of Hurricane Irma was not as strong as expected. We saw a correction as major currencies traded higher versus the dollar,” one trader said in a phone interview.

“Once the peso breached the P51 figure, profit taking took place.”

The trader said the peso simply consolidated, ahead of some speculation that the Bank of England might hike rates at its policy meeting later this week.

A second trader said the peso simply moved sideways yesterday as it had no new leads to ride on, with market players on a wait-and-see mode ahead of US inflation data due on Thursday.

The turnout of US inflation will provide some hints whether the Fed can still proceed with a third rate hike within the year, with market watchers now seeing a slim chance for another round of policy tightening by December.

Both traders said there were no signs that the Bangko Sentral ng Pilipinas intervened during yesterday’s session, which saw the peso close a few centavos below P51.

Dollars traded yesterday totalled $610.4 million, higher than the $436 million which exchanged hands on Monday but hitting the average volume seen daily.

For today, the two traders expect the peso to trade between P50.90-P51.10, moving sideways until the market receives key data which will be reflected during Friday’s session. — Melissa Luz T. Lopez

Mindanao farmers’ appeal for further ban on Luzon poultry products ignored

DAVAO CITY — The lifting of the ban on the entry of poultry products from Luzon will go ahead despite a petition by poultry industry associations in Mindanao for Agriculture Secretary Emmanuel F. Piñol to continue the ban until November.

“There is still no declaration that we are free from the avian flu that affected several farms in Pampanga and Tarlac and until then the government should ensure that Mindanao remains free from the virus by blocking the entry of poultry products from Luzon,” Lalaine A. dela Victoria, president of the Davao Poultry and Egg Producers Association, told BusinessWorld in an interview.

After Mr. Piñol has lifted the ban on Luzon products, the Mindanao poultry farmers decided to bring their appeal to the local government unit (LGU) level. The signatories to the appeal are the Southern Philippines Egg Producers Association, Northern Mindanao Egg Group, Davao Poultry and Egg Producers, Inc., and Davao United Game Fowl Breeders Association.

Mindanao’s growers are asking LGUs to ban “any poultry, eggs and any related products from Luzon until the conditions for lifting the ban have been complied (with).” It claims “there is no compelling reason for any undue haste in lifting the temporary ban” since Mindanao is self-sufficient when it comes to poultry products.

“We sent a petition to Davao City Mayor Sara Z. Duterte-Carpio and we were informed by City Administrator Zuleika T. Lopez that the mayor wants to consult expert advice before she decides on the matter,” Ms. Dela Victoria said. The farmers are also talking with other LGUs in Region XII on the possible ban of poultry products from Luzon, she added.

Department of Agriculture-Davao Region Director Ricardo M. Oñate said based on PSA data as of July, the biggest concentration of poultry in Mindanao is in Northern Mindanao with 21 million layers, broilers and native chicken. The numbers in the other regions are 12.4 million for the Davao Region, 9 million for Soccsksargen, 7.68 million for Zamboanga Peninsula, 2 million for the Caraga Region and 1.6 million for the Autonomous Region in Muslim Mindanao.

Mr. Oñate said among the plan of action being implemented in the island to ensure it remains free from the Avian flu are: monitoring of domestic fowls, issuance of certificate of inspection of poultry meat and products, checkpoint apprehensions, biosecurity, issuance of shipping permit and veterinary health certificate, vaccination of poultry workers and handlers, implementation of Wildlife Law, coastal monitoring of fowl smuggling, and implementation of prescribed biosecurity measures.

Dr. Arlene Vytiaco, Head of the Animal Disease Control Section of the Bureau of Animal Industry (BAI) said the authorities cannot yet declare the country free from avian flu since cleaning and disinfection activities are still ongoing.

“The cleaning and disinfection is still going on and it is only after a 21-day period after the cleaning that the poultry farms can restock sentinel birds,” Ms. Vytiaco said in an interview during the Mindanao-wide Avian Influenza Conference held in the city last week. Commercial farms can only restock up to 100 sentinel birds while backyard farms can restock up to 30 birds, after the waiting period for the disinfection is completed.

Ms. Vytiaco said the agency will collect samples during a 35-day period and monitor the birds every day. If there are clinical signs of bird flu, another culll is required. But if the stocks show negative results then the birds will be harvested, followed by another two-week cleaning and disinfection stage.

“Only then if we get clear results then we can declare we are free from avian flu,” she said.

The industry raised its concerns about poultry from Luzon to the OIC director of BAI and Assistant Secretary Enrico P. Garzo during the conference. It said it will also raise the same concerns with Mr. Piñol.

“We follow an international protocol when it comes to the avian flu and given the circumstances we have no reason to lift the ban on poultry products from Luzon to Mindanao, said Ma. Teresa R. Bacayo, Chief of the Veterinary Quarantine Services (VQS)  at the Davao International Airport. She said the protocol is science-based and there is no choice but to limit the ban only on a certain radius from the poultry farms in Pampanga and Tarlac. — Carmencita A. Carillo

EDC Goes Private: What Happens Next?

AS EVERYONE probably knows by now, Energy Development Corporation (EDC) is being privatized. Philippine Renewable Energy Holdings Corporation (PREHC) is bidding for as much as 8.9 billion shares of EDC at P7.25 per share for a total of P64.5 billion.

After the initial confusion regarding the so-called scale down provision included in the tender offer, the price has settled at around P6.90. This provides thin upside of about 4% (after transaction costs) for the shares that will be accepted for tender but not bad given that the payment date is only about two weeks away. What we are concerned with in this article, however, is what happens next?

PREHC crafted its buyout offer in such a way that EDC’s float will still be at least 10% after the tender closes. The company cited the desire to keep disruptions for shareholders to a minimum. The longer-term goal, however, is clear – the stock will be delisted at a later date.

Management of both EDC and its parent, First Generation Holdings (FGEN), have been mum on the details but we believe that a second tender offer, conducted specifically with the intention of delisting, will be done by year end. There are varying opinions on what the new tender offer price will be but it is likely, in our view, to be at P7.25 as well. This is why we have not been concerned about the scale down provision and why we have actually been pushing to buy EDC especially at lower levels.

Nevertheless, when the current tender offer expires on Monday, September 18, EDC is likely to decline while the market waits for PREHC’s next move. This may provide another opportunity for investors to profit from this privatization.

Once EDC exits the PSE Index (PSEi), two interrelated things will happen.

First, the PSE needs to determine which company will be added to its main benchmark. In the last periodic review, the Exchange decided to omit from its press release the names on its reserve list. However, based on our calculations, the choice will be amongst Vista Land (VLL), Robinsons Retail (RRHI), D&L Industries (DNL), Double Dragon (DD) and Bloomberry (BLOOM). Which of these will ultimately be added to the PSEi greatly depends on when EDC is actually delisted. Double Dragon, for example, has announced a follow-on offering before the end of the year. Meanwhile, a rumor went around last week saying that BLOOM was going to do a private placement (which management has denied). Things like these will keep investors guessing over the next few months.

Second, at least P52.9B of the P64.5B will be paid out to the public. Some of this will immediately be plowed back into the market by index tracker funds.

Whatever stock replaces EDC in the index, therefore, is likely to mount a strong rally especially if it does not have a strong institutional following yet. Some investors, on the other hand, may want to keep exposure in the energy sector by buying Semirara (SCC) which is significantly expanding its coal mining output, diversifying into cement production and recently gave a generous special cash dividend.

Of course the most obvious alternative is First Gen. Even after the tender offer, it would still have an economic interest of at least 40% in EDC and at least 60% of its voting rights.

Some may reflexively dismiss FGEN, however, because: 1) it is the worst performing index stock year-to-date, 2) weak H1 results are likely to carry over to the next 1-2 quarters because its new power plants, San Gabriel and Avion, remain significantly under-utilized, and 3) its falling market capitalization leaves it vulnerable to getting kicked out of the PSEi during the next review.

Nobody knows when First Gen will bottom out but it certainly looks very cheap at current levels. At the end of trading last week, the company had a market capitalization of P64.9B. This is smaller than the intrinsic value of its EDC stake (P68.7B = 9.48B shares x P7.25 PREHC offer price per share). In a very tangible sense, therefore, buying FGEN at the current price means one is buying EDC at less than fair value and getting the four power plants directly owned by the parent company with a combined capacity of 2,011 megawatts (MW) for free.

On the other hand, if we were to include debt in the equation and use enterprise value to see how much of a bargain FGEN is at current levels, we would find that the stock is trading at about $0.4m/MW. This is far lower compared to the replacement cost of the company’s entire 2,011MW natural gas portfolio which is between $1.6 to $1.8 million per MW.

Things can get uglier if, as we expect, FGEN gets booted out of the index in the next semiannual review. However, tying up with PREHC should pay big dividends in the long run and FGEN’s remaining stake in EDC should increase in value.

Moreover, exiting the index could be a blessing in disguise. It may, in fact, become a turning point for FGEN similar to what happened with BLOOM (it has rallied more than 100% since it was deleted from the PSEi last year). The time looks ripe for investors to take a good second look at FGEN.

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).

Acer updates gaming PC with AMD Ryzen 7 CPU

ACER Philippines on Sept. 11 launched the Acer GX-281, the first pre-assembled CPU in the country powered by Advanced Micro Devices’ (AMD’s) next-generation Ryzen 7 processor.

The new AMD Ryzen 7-powered Acer GX-281 promises superspeed data transfer, massive storage and expansion capabilities, stunning 4k resolution visuals, and Qi standard wireless charging.

The Ryzen 7 processor boosts the GX-281’s performance further with 8 CPU cores, 16 Threads, a 3.4GHz base clock speed which may be extended to 3.8GHz, and an Extended Frequency Range (XFR) for premium performance and processor cooling.

“The Ryzen 7 has grown a tenacious reputation among gamers and content creators worldwide for its exceptional processing power and surprising affordability,” said AMD director of Consumer Sales for APJ, Peter Chambers. “We’ve always been committed to innovating solutions to meet our customer’s needs, which we share with Acer Philippines in the launch of this new product.”

Sporting an impressive eight cores each with Simultaneous Multi-Threading (SMT), the Ryzen 7 boasts a 52% improvement in instructions per clock versus AMD’s previous best which means it is able to process more clock for clock. The Ryzen 7 also platforms single-threaded performance that heavy PC users such as gamers and content creators will surely enjoy not just for its powerful processing ability, also but its affordability.

The Acer GX 281 comes in two variants: GX 281 Ryzen 5 (P74,999) features Radeon RX 580, 8 GB DDR4, and 256 GB SSD plus 1 TB HDD, while the GX 281 Ryzen 7 (P96,499) features Radeon RX 580, 16 GB DDR4, and 256 GB SSD plus 1 TB HDD.

American investors’ sentiments and perceptions about the Philippines

PSE index climbs further as US stocks hit record

THE MAIN INDEX maintained its rise on Wednesday after the trading break the previous day as US stocks hit record highs.

The Philippine Stock Exchange index (PSEi) closed higher by 4.57 points or 0.05% at 8,053.88

Meanwhile, the broader all-shares index finished lower by 2.26 points or 0.04% at 4,776.35.

“Local shares continued on their ascent albeit minimal as US stocks rose to all-time highs on Tuesday as financials received a boost from rising yields,” said Luis A. Limlingan, business development head at Regina Capital Development Corp.

The major Wall Street indexes hit record closing highs on Tuesday, with financial stocks leading the charge. The Dow Jones Industrial Average rose 61.49 points or 0.28% to 22,118.86; the S&P 500 gained 8.37 points or 0.34% to 2,496.48; and the Nasdaq Composite added 22.02 points or 0.34% to 6,454.28.

Mr. Limlingan said US markets rose after fears over Hurricane Irma and geopolitical tensions in Korea eased.

“Wall Street also digested comments from Treasury Secretary Steven Mnuchin on tax reform. European stocks rose for a fifth day with banks in the driver’s seat reflecting a rise in government bond yields,” he said.

Mr. Mnuchin said he was “hopeful” that tax reform would be accomplished by year’s end, adding the administration is thinking about backdating reform to Jan. 1.

Backdating “is still something we are considering and it would be a big boon for the economy,” he said at the Delivering Alpha conference presented by CNBC and Institutional Investor.

Mr. Limlingan added, however, that “price action was tempered by selling pressure” in tech stocks.

Some analysts said the PSEi might once again break the 8,100 level after recent developments here and abroad.

“Looks like we will retest 8,100 again soon,” Miko S. Sayo, a trader at Angping & Associates Securities, Inc., earlier said. “Let’s see if we can finally break above it.”

Four of the six sector indices managed to post gains, led by the mining and oil counter, which advanced by 172.42 points or 1.25% to finish at 13,944.68. Financial stocks inched up by 11.81 points or 0.6% to 1,978.31; industrials gained 22.91 points or 0.2% to 11,275.49; and property moved higher by 2.26 points or 0.05% to 3,808.29. On the other hand, services lost 20.64 points or 1.18% at 1,721.73, while holding firms gave up 15.85 points or 0.2% at 7,918.7.

Advancing stocks outpaced decliners at 108 to 96, while 45 issued finished unchanged. Value turnover stood at P12.88 billion or more than twice the previous trading day’s P6.1 billion. Volume of trade also improved to 1.36 billion from 899.17 million previously.

Foreigners changed course and bought more stocks than they sold, resulting in a net buying of P3.34 billion. Net selling on Monday reached P232 million.

BDO Unibank, Inc. was the most active stock yesterday, followed by Ayala Land, Inc. and SM Investments Corp. — Victor V. Saulon with Reuters

Davao City working with ADB for launch of bus system by 2019

By Carmencita A. Carillo,
Correspondent

DAVAO CITY — The city government is working with the Asian Development Bank (ADB) in planning the High Priority Bus System (HPBS), which it hopes to launch along major thoroughfares by 2019.

“We are working with the Asian Development Bank in creating a workable plan as we shift from the outdated and expensive public utility jeepneys (PUJ) to a more convenient, cleaner and faster mode of transportation,” Mayor Sara Duterte-Carpio said in a news conference after her first State of the City Address on Tuesday.

The mayor issued an executive order creating the Transportation and Traffic Planning Committee that is working with the ADB on the HPBS as well as drafting a comprehensive transportation plan.

Ms. Carpio said the target is for all local government infrastructure projects to be completed by 2019, the year her term ends.

The ADB is set to present the HPBS to the city by November, after which the city will prepare the infrastructure requirements for the system within 2018 and the initial implementation by 2019.

The ADB started its study on the HPBS in mid-2016. The initial findings, which were submitted to the city government in April, showed the HPBS to be a more viable option compared to the previously proposed Bus Rapid Transit. The HPBS plan involves the deployment of 100-seat capacity buses that will ply the major roads, while the PUJs will be relegated to inner or feeder routes.

“There are already routes that have workable plans,” Ms. Duterte-Carpio said, but did not give details.

Part of the plan, she added, is to provide alternative livelihood and investment options for PUJ drivers who will be affected.

“We do not want our jeepney drivers to be poor and sickly, we want the drivers to become entrepreneurs and invest in the HPBS project where they can become partners to a modernized transport system for the city,” she said.

The mayor said she expects resistance to the project, especially from the PUJ drivers, but said, “The protest and opposition are natural, but we are prepared.”

Ms. Carpio also said that she is not in favor of the entry of other alternative modes of transport, such as ride-hailing services, as this would mean more vehicles in the streets. Only Grab currently operates taxi services in the city.

Instead, she has encouraged the taxi operators association to invest in a single DavaoTaxi app and an official taxi complaint site.

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