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China and Philippines quarrel over South China Sea collision

Philippine Coast Guard personnel documents a Chinese Coast Guard vessel shadowing the Philippines’ resupply mission at Second Thomas Shoal in the South China Sea, March 5, 2024. — REUTERS

– China and the Philippines traded accusations over a collision in the South China Sea on Monday, with Manila saying its armed forces would resist Beijing’s actions in the disputed waters, the latest in an increasingly testy series of confrontations.

US Ambassador to the Philippines MaryKay Carlson condemned China’s “aggressive, dangerous” maneuvers in a post on X, saying the collision had “caused bodily injury.”

The US State Department condemned what it called “escalatory and irresponsible” actions by China and reaffirmed that its mutual defense treaty with the Philippines applied to any armed attacks on Philippine armed forces, vessels, or aircraft anywhere in the South China Sea.

In the latest incident on Monday, China’s coastguard said a Philippine supply ship “deliberately and dangerously” approached a Chinese ship resulting in a slight collision after the Philippine ship “illegally intruded” into waters near Second Thomas Shoal, a charge that Manila rejected as “deceptive and misleading”.

The US State Department called the incident the latest in a series of Chinese “provocations” to impede supplies from reaching Philippines personnel stationed at the BRP Sierra Madre, a Philippine vessel grounded at the disputed Second Thomas Shoal, site of repeated confrontations with China this past year.

“PRC vessels’ dangerous and deliberate use of water cannons, ramming, blocking maneuvers, and towing damaged Philippine vessels, endangered the lives of Philippine service members, is reckless, and threatens regional peace and stability,” a State Department statement said.

China and the Philippines have traded barbs for months over dangerous maneuvers at the Second Thomas Shoal, an atoll within Manila’s 200-mile Exclusive Economic Zone (EEZ) in the South China Sea. China claims the area as its own.

China claims almost the entire South China Sea, a conduit for more than $3 trillion of annual shipborne commerce, including parts claimed by the Philippines, Vietnam, Indonesia, Malaysia and Brunei.

The Chinese coastguard said the Philippine transport and replenishment ship had ignored repeated warnings.

The Philippines’ task force on the South China Sea said Chinese vessels engaged in ramming and towing, putting lives at risk and damaging boats.

“China’s dangerous and reckless behavior in the West Philippine Sea shall be resisted by the Armed Forces of the Philippines,” Gilberto Teodoro, Manila’s defense minister, said in a statement. “China’s actions are the true obstacles to peace and stability in the South China Sea.”

The Philippines refers to the portion of the South China Sea that it claims as the West Philippine Sea. China’s embassy in Manila did not immediately respond to requests for comment.

The Philippine military earlier said the Chinese coastguard’s continued aggressive actions “are escalating tensions in the region”.

Several incidents have happened when the Philippines has deployed resupply missions for its soldiers living aboard a rusty, aging warship deliberately grounded by Manila in 1999 to reinforce its sovereignty claims.

China has warned the Philippines about intruding into what it says are its territorial waters and issued new rules, effective June 15, enforcing a 2021 law allowing its coastguard to use lethal force against foreign ships in waters it claims.

The new rules allow China’s coastguard to detain suspected trespassers without trial for 60 days.

In response, the Philippine coastguard said on Monday it has ordered the deployment of two vessels to patrol and ensure the safety of Filipino fishermen at Scarborough Shoal – a second flashpoint about 640 km (345 nautical miles) away from Second Thomas Shoal.

Separately, the US Pacific Fleet said in a statement it had concluded a two-day joint maritime exercise with the militaries of Canada, Japan, and the Philippines’ within Manila’s EEZ in the South China Sea. – Reuters

 

Peru PM says boost in China’s investments will not prompt US ‘resentment’

STOCK IMAGE | Image by Pete Linforth from Pixabay

 – Peru’s government does not expect an upcoming trip by President Dina Boluarte to China or the increase in investments by Chinese firms in the Andean nation to cause “resentment” from the US, Peru’s prime minister said on Monday.

Ms. Boluarte will visit Beijing at the end of this month, with meetings scheduled with counterpart Xi Jinping and representatives of Chinese giants such as Huawei and BYD at a time when Chinese investments have multiplied in recent years, to the concern of Western nations.

“We do not believe that our friends… like the United States will feel resentful because we’re bringing Chinese investments (to Peru),” Prime Minister Gustavo Adrianzen said at a press conference.

“We believe this is an invitation for Western capital to arrive, including from the United States,” he added.

Ms. Boluarte is set to meet with Xi on June 28, but will first sit down with executives from Cosco Shipping Ports, which is heading construction the vast Chancay “megaport” set to be a hub between Asia and South America.

Mr. Xi will attend the port’s inauguration in November, when the Asia-Pacific Economic Cooperation Forum (APEC) leaders summit will also be held in Peru.

The $3.5 billion Chancay port has garnered interest from Brazil to ship exports to Asia, but has also become a poster child for the challenge for the US and Europe to combat the rise of Chinese investments in Latin America.

 

MORE CHINESE INVESTMENT

Ms. Boluarte’s agenda also includes meetings with Jinzhao Mining and infrastructure group China Railway Construction Corp.

Mr. Adrianzen said on Monday that the decade-old proposal to build a train line from Peru, through Bolivia and to Brazil should be put back on the table to boost exports out of Chancay.

Through the port, Brazil would be able to significantly cut shipping times on key exports such as soybeans and meat which currently travel through the Panama Canal, analysts say.

The “Bi-Oceanic Railway” may not become reality in the short term, the prime minister said, but could come “as the megaport is developed” in the medium-to-long-term.

Bolivia and Paraguay are also interested in shipping exports out through Peru, Mr. Adrianzen said.

Paraguayan President Santiago Pena “asked Boluarte that (Paraguayan) exports to Asia leave from the port of Chancay” when the two spoke in September, the prime minister said.

China is Peru’s largest trading partner, and more than a third of Peru’s $65 billion in exports last year went to China. – Reuters

GameStop shares tumble after CEO says store network will shrink

By Mike Mozart from Funny YouTube, USA - GameStop, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=89854717

Shares of GameStop tumbled on Monday after CEO Ryan Cohen told investors that the video game retailer plans to operate a smaller network of stores, but did not provide details on what it intends to do with its cash pile.

GameStop shares were down 11.6% at $25.38 on Monday afternoon after the annual general shareholder meeting, which lasted about 20 minutes.

Cohen said he anticipates the business will be operated with “a smaller network and more value-added” items as part of the company’s attempt to boost sales and profitability.

He did not reveal how the company will use its roughly $4 billion in cash, which it built up following share sales in June and May, saying only that having a stronger balance sheet is “always an advantage.”

Shares of the video game retailer have gyrated wildly over the last month since Keith Gill, the stock influencer known as Roaring Kitty who helped kick off meme-stock mania in 2021, reappeared and later disclosed a large position in GameStop.

Investors had been hoping that Cohen would reveal more details of a strategic plan to revitalize GameStop’s business, analysts said.

Cohen’s lack of detail on acquisition plans “is disappointing for at least some investors,” said Michael Pachter, an analyst at Wedbush Securities with a price target of $13.50 on the company.

Pachter noted that GameStop’s recently released filings showed a profit margin of about 36%, suggesting the company is doing well in reselling used software and hardware. On the other hand, competition remains intense in the market for gaming consoles while the second-hand market for used software is slowly drying up as gamers shift to digital downloads, he said.

The company has been grappling with slowing sales as its core business of selling new and pre-owned video game discs takes a hit from consumers’ move to downloading games digitally or streaming. Net sales fell to $881.8 million compared with $1.24 billion a year ago, the company said on June 7, when it reported earnings earlier than expected.

GameStop raised $933 million by selling shares to cash in on a meme stock rally last month, when the stock doubled in value, and raised an additional $2.14 billion earlier this month. Still, shares are down sharply from their May peak and down more than 70% from 2021 intraday highs.

Gill triggered the most recent wave of exuberance among retail investors after he disclosed ownership of 5 million GameStop shares and 120,000 June $20 strike call options in a screen shot posted on Reddit on June 2.

Gill updated his position last week to show he owned about 9 million shares and no options on the company. – Reuters

Philex Mining Corp. to hold Annual Stockholders’ Meeting on July 9 at Grand Hyatt Manila

 

 


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Cash remittances up 3.1% in April

Money sent home by overseas Filipino workers jumped by 3.1% in April. — REUTERS

By Luisa Maria Jacinta C. Jocson, Reporter

CASH REMITTANCES from overseas Filipino workers (OFWs) rose by 3.1% year on year in April, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Data from the central bank showed cash remittances coursed through banks increased to $2.562 billion from $2.485 billion a year ago.

However, it was the lowest level in 11 months or since $2.494 billion in May 2023.

Overseas Filipinos’ Cash Remittances

Month on month, remittances were 6.4% lower than $2.738 billion in March.

The year-on-year growth in cash remittances was also the fastest since 3.8% in December.

“The expansion in cash remittances in April 2024 was due to growth in receipts from both land- and sea-based workers,” the BSP said.

Money sent home by land-based workers went up by 3.2% to $2 billion while remittances from sea-based workers edged higher by 2.8% to $560 million.

From January to April, cash remittances rose by 2.8% to $10.782 billion from $10.487 billion a year ago.

“The growth in cash remittances from the United States, Saudi Arabia and Singapore contributed mainly to the increase in remittances in the first four months of 2024,” it said.

The United States accounted for 41.1% of overall remittances in the first four months. It was followed by Singapore (7%), Saudi Arabia (6%), Japan (5.1%) and the United Kingdom (4.5%).

Other sources of remittances were the United Arab Emirates (4.2%), Canada (3.2%), Qatar (2.8%), Korea (2.7%) and Taiwan (2.7%).

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the continued growth in remittances is a “bright spot” for the economy.

“Further reopening of the economy towards greater normalcy also led to increased spending, with some pent-up demand or even some revenge spending by OFW families,” he said in a Viber message.

Mr. Ricafort said the recent peso depreciation might have reduced the need for OFWs to send more remittances denominated in US dollars and other foreign currencies. 

In April, the peso closed at the P57 level for the first time since November 2022. The currency further depreciated to the P58-per-dollar level in May.

“As OFW remittances have more peso equivalent for every US dollar sent, (this is) a source of consolation for OFWs and their families and dependents, especially in coping with higher prices and interest rate payments since 2022 for any amortization or form of debt payment,” Mr. Ricafort said.

Meanwhile, BSP data showed that personal remittances from OFWs also went up by 3.1% to $2.859 billion in April from $2.773 billion a year ago.

Remittances from workers with more than one-year contracts rose by 3% to $2.16 billion year on year, while money sent by OFWs with shorter than one-year contracts increased by 3.6% to $620 million.

In January-April, personal remittances rose by 2.8% to $12.01 billion.

“For the coming months, single-digit or modest growth in OFW remittances would continue as OFW families still need to cope with relatively higher prices locally that would require the sending of more remittances,” Mr. Ricafort added.

The BSP expects cash remittances to grow by 3% this year.

BoI-approved investment pledges drop 23% to P27.4 billion in May

A Philippine flag is being hoisted at the Rizal Monument in Manila. — PHILIPPINE STAR/EDD GUMBAN

THE BOARD of Investments (BoI) on Monday said it approved P27.41 billion worth of investment pledges in May, down 23% from the P35.7-billion pledges approved a year ago.

In a statement, the agency said approved investment pledges reached P640.22 billion in the first five months of 2024, up by 14% year on year, and the “highest five-month approval in the BoI’s 57-year history.”

Approved investment pledges in May were the lowest since P27.07 billion in February 2024.

The BoI said the 66 projects approved in May are expected to create over 1,700 jobs.

It said P26.74 billion worth of projects were being undertaken by local investors, and P675.23-million projects by foreign investors.

For the January-to-May period, the investment approvals consisted of 209 projects, which are expected to create 13,871 direct jobs.

Of the total, P525.85 billion were domestic investments, while P114.37 billion were foreign investments.

The domestic investments will go to projects in Calabarzon, Ilocos Region, Central Luzon, Bicol Region and Western Visayas.

Switzerland was the top source of foreign investments during the period, accounting for P62.89 billion of the total.

It was followed by the Netherlands (P39.33 billion), Singapore (P6.07 billion), China (P1.53 billion), Taiwan (P1.28 billion) and the US (P953 million).

The renewable energy (RE) sector accounted for P607.47 billion of the total investments during the five-month period, up by 20.7% from P503.18 billion a year ago.

RE projects have been increasing since the government opened the sector to full foreign ownership last year.

Investments in the agriculture sector reached P9.56 billion, while investments in the real estate industry stood at P8.17 billion.

The BoI approved P4.61 billion worth of transportation and storage projects, as well as P4.36 billion worth of manufacturing projects.

Investments surged in the financial and insurance sectors, with P227.95 million worth of projects in the January-to-May period, up more than three times from P67.82 million a year ago.

The DTI said the increase in the five-month approval aligns with the surge in foreign direct investments (FDIs) in the first quarter.

In January to March, FDI net inflows increased 42.1% to $2.97 billion from $2.09 billion a year earlier, the Bangko Sentral ng Pilipinas (BSP) said.

“The upward trajectory in FDI net inflows and approved investments follows the pattern of commitments from various trade missions initiated by investment promotion agencies, including the goodwill fostered through the President’s business trips abroad,” Trade Secretary and BoI Chairman Alfredo E. Pascual said in a statement.

For 2024, the BoI has an internal target of reaching up to P1.5 trillion in investment approvals.

Last year, it approved P1.26 trillion in investments, 66% or P763.22 billion of which were foreign investments. — Justine Irish D. Tabile

Outlook for IPOs still murky for second half

BW FILE PHOTO

By Revin Mikhael D. Ochave and Sheldeen Joy Talavera, Reporters

COMPANIES might be reluctant to go public in the second semester amid persistent inflation, high interest rates, peso weakness and lackluster trading volumes at the stock market, analysts said.

This puts in doubt whether the Philippine Stock Exchange (PSE) can achieve its target of having six initial public offerings (IPO) this year.

“It’s a generally challenging environment for IPOs. We are still not seeing the kind of robust investor sentiment that can support better valuations for issuers and drive stock prices higher,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

“Large IPOs will probably get pushed back until we see a dovish shift in monetary policy and sizeable foreign fund flows into our market,” he added.

This year, the PSE has had only two IPOs, with OceanaGold (Philippines), Inc. making its stock market debut on May 13, followed by Citicore Renewable Energy Corp. (CREC) on June 7. 

“(The IPO target is) doable if the Federal Reserve and Monetary Board (MB) do the rate cuts by September,” BDO Capital & Investment Corp. President Eduardo V. Francisco told BusinessWorld in a Viber message.

Last week, the US Federal Reserve said it needs to see more evidence of easing inflation before lowering borrowing costs. The Fed also projected it would only cut rates by December.

Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has said the earliest the central bank could begin cutting rates is by August as inflation risks remain on the upside.

The BSP has kept the benchmark rate steady at a 17-year high of 6.5% since October 2023 to tame inflation.

April Lynn C. Lee-Tan, chief equity strategist at COL Financial Group, Inc. said the current environment is still not conducive for IPOs.

“Stocks are flat year to date and investor sentiment is weak as evidenced by lackluster volumes,” she said in a Viber message.

Investors are concerned that high inflation and elevated interest rates, as well as peso depreciation, will affect economic growth, she said.

Headline inflation quickened for the fourth straight month in May to 3.9% amid rising utility and transport costs alongside increasing food prices. This brought the five-month average inflation to 3.5%, within the BSP’s 2-4% full-year forecast.

In mid-May, the peso sank to the P58-per-dollar level for the first time since November 2022.

The peso closed at P58.65 a dollar on Friday, weakening by seven centavos from its P58.58 finish on Thursday.

“There are still a lot of economic uncertainties and market dynamics [that] could affect investor sentiment and pricing strategies. That’s why companies planning to go public need to navigate these complexities carefully,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

TWO MORE?
Meanwhile, China Bank Capital’s Mr. Colet said the local bourse might see “at most” two companies conducting their IPOs in the second half.

“Some potential issuers that were initially looking to list this year have opted to wait for better market conditions. For example, prospective REIT (real estate investment trust) candidates are holding off their IPO plans while interest rates remain elevated,” he added.

The local bourse could have its third public listing this year with the planned P580-million IPO of NexGen Energy Corp., which was recently approved by the Securities and Exchange Commission.

NexGen Energy is expected to list its shares on the PSE by July 16, based on the company’s preliminary prospectus dated May 31.

AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said it is unlikely for the PSE to reach its IPO target this year.

“There’s simply not enough liquidity in the market to absorb an IPO of significant size at this time. It is possible if it is all small or if it is high-yielding preferred issues,” he said in a Viber message.

Sy-led SM Prime Holdings, Inc. has deferred its planned real estate investment trust (REIT) IPO, while Razon-led Prime Infrastructure Capital, Inc. postponed its first share sale as they wait for better market conditions.

“Recall that CREC had to reduce its offer to get the listing to push through, and SM’s REIT and Razon’s Prime Infra have definitively pushed back their IPOs to next year. The reality is, unless we can trade at least P7 billion per day, our market is too dry for an IPO,” Mr. Garcia said.

On the other hand, Mark V. Santarina, a trader at Globalinks Securities and Stocks, Inc., said that there is cautious optimism, especially for companies in sectors that are attracting investor interest, such as renewable energy.

“Despite the overall low trading volumes, the successful IPOs earlier in the year suggest that with the right market timing and sector focus, additional IPOs could be well-received,” he said in a Viber message.

He added that broader economic conditions and investor sentiment are crucial to the success of IPOs in the second half.

“The challenges for IPOs in the second half of 2024 include maintaining positive investor sentiment in a market with low trading volumes and potential volatility. Companies must demonstrate strong financial health and growth potential to attract investors,” Mr. Santarina said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said he is “cautiously optimistic” that the PSE could hit its target of six IPOs this year.

“If market conditions improve, triggered by Fed and local rate cuts later this year and in 2025, there could be more IPOs and other share sales since sellers of shares would like to sell at the highest price possible. That can only happen if market conditions improve further,” he said in a Viber message.

“At the very least, local stock markets could be partly supported by new record highs in most US stock markets recently,” he added.

On Friday, the benchmark PSE index dropped by 0.11% or 7.13 points to close at 6,383.70, while the broader all-share index gained 0.13% or 4.75 points to 3,447.75.

Central bank might deliver fewer rate cuts this year

Bangko Sentral ng Pilipinas main office in Manila. — BW FILE PHOTO

THE BANGKO SENTRAL ng Pilipinas (BPS) is expected to deliver fewer rate cuts later this year as the US Federal Reserve is likely to delay its own policy easing.

“The BSP may begin its own easing cycle in the fourth quarter, lagging the Fed’s first policy rate cut to support the peso,” the Metrobank Research and Market Strategy Department said in a report.

“Given the new projections on US policy rate, we now forecast a total of 50 basis points (bps) in cuts for the year to 6%, down from our previous projection of 75 bps.”

Fed officials are now pricing in just one rate cut this year, compared with expectations of three cuts previously. They also signaled that policy easing might be pushed back to as late as December.

Last week, the US central bank left its policy rate unchanged at 5.25%-5.5% for a seventh straight meeting.

“The Fed kept rates unchanged and remained cautious of the future of rate cuts, implying just one cut — a far departure from three to five cuts,” Reyes Tacandong & Co. Senior Adviser Jonathan L. Ravelas said in a Viber message.

Metrobank Research said the Fed might cut rates as early as September.

“The Fed may begin cutting rates as early as its Sept. 18 Federal Open Market Committee (FOMC) meeting and by a total of 50 bps for the full year to 4.75%-5% as inflation is expected to have peaked by June and July, observable by August,” it added.

BSP Governor Eli M. Remolona, Jr. earlier said the BSP could begin cutting rates as early as August, for a total of 25-50 bps for the entire year.

Mr. Remolona also said the BSP does not need to wait for the US central bank to begin reducing rates because its own monetary decisions are “independent” of the Fed.

On the other hand, Finance Secretary Ralph G. Recto, who is a member of the Monetary Board, said it is unlikely for the BSP to cut ahead of the Fed.

Mr. Recto said it was “highly probable” that the BSP would only begin its easing cycle once the Fed starts cutting rates.

Mr. Ravelas said he expects “no change” in the monetary decision of the BSP at the next policy meeting.

The Monetary Board is set to hold its next policy review on June 27.

The central bank has kept its benchmark rate steady at a 17-year high of 6.5% since October 2023. 

The BSP raised borrowing costs by 450 bps from May 2022 to October 2023. — Luisa Maria Jacinta C. Jocson

Medical Doctors, Inc. to conduct virtual Annual Meeting of Stockholders on July 16

 

 


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PXP Energy Corp.’s Annual Stockholders’ Meeting set on July 8 at Grand Hyatt Ballroom III

 

 


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Wilcon Depot sets P2.2-B capex to expand store network

@WILCONDEPOT.PH

WILCON Depot, Inc., a publicly listed retailer specializing in home improvement and construction supplies, has set aside a capital expenditure (capex) budget of up to P2.2 billion for this year.

This allocation comes as the company moves closer to achieving its goal of opening 100 stores, Wilcon Depot Vice-President for Investor Relations Mary Jean G. Alger said during a virtual press conference on Monday.

“This year, we only budgeted P2.2 billion because some of the stores that we opened, especially in the first quarter, were all spillovers from last year,” she added.

Last year, the company’s capex spending did not surpass P3 billion. Wilcon Depot had allocated P3.8 billion as its capex budget for that year.

“We’ve always budgeted way above what we spent. For the last two years, we budgeted close to P4 billion but we haven’t even exceeded P3 billion (in capex spending),” Ms. Alger said.

Wilcon Depot is aiming to open ten stores this year. The company opened a branch in Bacolod on May 31, marking its 94th store.

“We’re targeting to open ten stores, but we always do more than what we target. We’re doing construction work for more than what we target because in construction, you’re never really sure that the target date of completion will be met,” Ms. Alger said.

She also said the company is expected to recognize a one-time loss following the fire incident at its Baliuag City branch in April.

“We may need to recognize the loss already because one of our branches, the Baliuag branch, was burned down. The assessment is not complete yet, but once it is, or even before the official assessment is completed, we may have to acknowledge the loss,” she noted.

Wilcon Senior Executive Vice-President and Chief Operating Officer Rosemarie B. Ong said the company is banking on stronger same-store sales for the remaining months of 2024.

The company sees softer demand in the home improvement sector, citing macroeconomic challenges such as high interest rates.

“We’re hoping that same-store sales growth will be positive. It’s not just in the Philippines, but basically it’s a global phenomenon. It’s a global challenge. We’re hoping that you know, at least it will still be positive on the low side but seeing the trend, though, it’s been very erratic,” Ms. Ong said.

Meanwhile, Wilcon President and Chief Executive Officer Lorraine Belo-Cincochan said the company is exploring opportunities to expand internationally.

“There are many possibilities. It might be in Southeast Asia or in Asia, particularly where it’s closer logistically,” she said.

“This is something we study. This is something we discuss and, ultimately, we do want to plan for it if ever. It’s not yet in the immediate future,” she added.

For the first quarter, Wilcon Depot posted a 23.1% drop in its net income to P740 million as net sales fell by 2.5% to P8.31 billion.

Wilcon Depot stocks were last traded on June 14 at P18.32 apiece. — Revin Mikhael D. Ochave

PLDT’s data center sale may boost operations, financial standing — analysts

By Ashley Erika O. Jose, Reporter

PLDT Inc.’s plan to sell at least 49% of its data center business is expected to improve the company’s data center operations and its financial position, according to analysts.

“The sale of a substantial stake in its data center business could significantly improve PLDT’s debt situation, freeing up capital for future investments,” First Grade Finance, Inc. Managing Director Astro C. del Castillo said in a Viber message on Monday.

PLDT plans to sell a 49% stake in its data center business, ePLDT, Inc., to a foreign company for over $1 billion.

“If they get a good valuation for their stake, then that should be positive for PLDT. The sale is expected to generate a windfall that can be used to cut debt and fund capital expenditures,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said.

In a regulatory filing, PLDT said its consolidated long-term and short-term debts grew by P141 million to P254.94 billion as of end-March.

PLDT’s decision to partner with a foreign entity in its data center business will enable the company to expand and strengthen its presence in the rapidly advancing fields of technology and artificial intelligence, Mr. Colet said.

With this development, the company will not proceed with its planned real estate investment trust listing for ePLDT. 

First Grade Finance’s Mr. Del Castillo said the sale would also make PLDT attractive to investors by improving the company’s debt situation.

“Additionally, PLDT could benefit from the new investor’s data center management expertise and access to more technologies,” he said.

However, the sale presents some challenges such as losing a portion of future revenue generated from the data center, he added.

“The long-term impact on PLDT’s profitability will depend on how effectively it reinvests the proceeds from the sale and manages its remaining assets,” he said.

He also said that there are regulatory risks involved, as the data center industry is relatively new in the country, and the government might impose restrictions on partnerships in this sector.

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