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China’s Q1 GDP growth tops forecasts on policy support

RALF LEINEWEBER-UNSPLASH

BEIJING – China’s economy grew faster-than-expected in the first quarter, data showed on Tuesday, offering some relief to officials as they try to shore up growth in the face of protracted weakness in the property sector and mounting local government debt.

The government has unveiled fiscal and monetary policy measures in a bid to achieve what analysts have described as an ambitious 2024 GDP growth target of around 5%, noting that last year’s growth rate of 5.2% was likely flattered by a rebound from a COVID-hit 2022.

Gross domestic product (GDP) grew 5.3% in January-March from the year earlier, data released by the National Bureau of Statistics showed, comfortably above analysts’ expectations in a Reuters poll for a 4.6% increase and slightly faster than the 5.2% expansion in the previous three months.

“The result is positive for the economy to hit its target. Momentum appears to be stable for now, evidenced by the March data not surprising on the upside,” said Jeff Ng, head of Asia macro strategy at SMBC in Singapore

“I think sentiments are still leaning bearish. I’m anticipating some reversal, possibly from the last quarter of 2024.”

On a quarter-by-quarter basis, GDP grew 1.6% in the first quarter, above the forecast for growth of 1.4%.

The world’s second-largest economy has struggled to mount a strong and sustainable post-COVID bounce, burdened by a protracted property downturn, mounting local government debts and weak private-sector spending.

Fitch cut its outlook on China’s sovereign credit rating to negative last week, citing risks to public finances as Beijing channels more spending towards infrastructure and high-tech manufacturing, amid a shift away from the property sector.

The government is drawing on infrastructure work – a well-used playbook- to help lift the economy as consumers are wary of spending and businesses lack confidence to expand.

China’s consumer inflation cooled more than expected in March, while producer price deflation persisted, pointing to subdued domestic demand and reinforcing market calls for more stimulus to spur demand.

The economy was off to a solid start this year, but March data on exports, consumer inflation and bank lending showed that momentum could falter again.

Separate data on factory output and retail sales, released alongside the GDP report, also showed momentum is slowing.

Industrial output in March grew 4.5% from a year earlier, compared with a forecast increase of 6.0% and a gain of 7.0% for the January-February period.

Growth of retail sales, a gauge of consumption, rose 3.1% year-on-year in March, against a forecast increase of 4.6% and slowing from a 5.5% increase in the January-February period.

Fixed asset investment grew an annual 4.5% over the first three months of 2024, versus expectations for a 4.1% rise. It expanded 4.2% in the January-February period.

“On the face of it, the headline number looks good… but I think the momentum is actually quite weak at the end,” said Alvin Tan, head of Asia FX strategy at RBC Capital Markets in Singapore.

 

CHALLENGES

The crisis in the property sector has been a major drag on China’s economy as it has rippled across business and consumer confidence, investment plans, hiring decisions and stock prices.

The government is drawing on infrastructure work – a well-used playbook – to help lift the economy as consumers are wary of spending and businesses lack confidence to expand.

. The People’s Bank of China (PBOC) has pledged to step up policy support for the economy this year.

Analysts expect further cuts in banks’ reserve requirement ratio and interest rates.

With the Federal Reserve and other developed economies showing no urgency to start cutting interest rates, China may also face a longer period of subpar export growth in a further blow to policymakers’ hopes of engineering a strong economic recovery.

Adding to the challenge for China, authorities also have to contend with ongoing tensions with the United States over trade, technology and geopolitics. – Reuters

Divers in the Philippines create nurseries for rescued coral

PHILSTAR

BAUAN, PHILIPPINES – A group of scuba diving experts and enthusiasts are setting up coral nurseries in a popular dive spot south of Philippine capital Manila to help in the propagation and recovery of damaged coral.

In coastal town Bauan in Batangas province, divers collect coral damaged and dislodged by natural calamities and man-made interference such as plastic waste and dynamite fishing, and salvage living parts before placing them in coral nurseries.

“If we select those that are actually more tolerant to climate change, to higher temperature, that can survive higher temperature, then you can actually propagate more, so next time you are actually like building a reef of the future,” said marine scientist Sam Shu Qin, co-founder of non-profit conservationist group Our Singapore Reefs which is taking part in the initiative.

Bauan, a two-hour drive from Manila, boasts a diverse coral population which has attracted diving enthusiasts for decades. But its coral has frequently suffered from natural hazards such as typhoons and human-caused destruction, endangering the ecosystem and tourism industry.

In 2020, parts of surrounding Batangas province suffered a mass coral bleaching event – when high temperature turns coral white through algae loss – with about 72 kilometers (45 miles) of coastline affected, said conservationist group Reef Watch Philippines.

It prompted Bauan-based scuba diving instructor and resort owner Carmela Sevilla to plant nurseries for detached coral, and invite likeminded conservationists to join the initiative.

Aside from providing a home for orphaned coral, nurseries serve as repositories in case there is a need to replenish coral amid environmental challenges brought by climate change, such as mass bleaching.

The Philippines is an archipelago of more than 7,600 islands with nearly 36,300 km of coastline, making it one of the world’s most marine resource-rich countries.

But some areas may suffer in what the US National Oceanic and Atmospheric Administration expects to be declared the fourth mass global bleaching event within the next three months.

“The goal is not to make such a huge difference, to be able to stop climate change or be able to really create a huge impact on conservation,” said Ms. Sevilla who, with volunteers, has so far collected 64 pieces of damaged coral for two nurseries.

“Small efforts are what will make a difference because it builds up over time, it builds up slowly, and it’s something that can last, and it helps create an impact,” she said. – Reuters

Paxys to hold annual meeting of stockholders on May 10

 

 

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Remittances rise 3% in February

Cash remittances coursed through banks rose by 3% to $2.65 billion in February. — REUTERS

By Aaron Michael C. Sy, Reporter

MONEY SENT HOME by overseas Filipino workers (OFWs) rose by 3% in February, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

Data from the central bank showed cash remittances coursed through banks rose to $2.65 billion from $2.57 billion a year earlier.   

Month on month, the tally was 6.7% lower than $2.84 billion in January.

Overseas Filipinos’ Cash Remittances

The growth in cash remittances was also faster than 2.7% in January and 2.4% a year ago.

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

Remittances from land-based workers rose 3.4% to $2.13 billion, while money sent by sea-based workers edged up 1.2% to $520 million.

“We’ve seen that the uptick in February inflation had an impact in terms of the real Philippine peso value of remittances,” Carlo O. Asuncion, chief economist at Union Bank of the Philippines, Inc., said. “Thus, we think that inflation may pose this challenge until El Niño challenges start to fade in the second half of 2024.”

Inflation quickened to 3.4% in February from 2.8% in January, but this was slower than 8.6% a year ago. February marked the third straight month that inflation was within the 2-4% target range.

For the January-to-February period, cash remittances increased by 2.8% to $5.48 billion from $5.33 billion a year ago.

“The growth in cash remittances from the United States, Saudi Arabia, Singapore, and the United Arab Emirates (UAE) contributed mainly to the increase in remittances in January-February 2024,” the BSP said.

The United States accounted for 41.4% of overall remittances in the first two months of the year. Singapore was the second-biggest source of remittances at 7.3%, followed by Saudia Arabia (5.6%), Japan (5.2%) and the United Kingdom (4.8%).

Other sources of remittances were the UAE (3.8%), Canada (3.2%), Taiwan (2.9%), Qatar (2.8%) and Malaysia (2.5%).

Mr. Asuncion also noted that the share of remittances from Middle East countries had dropped.

“I noticed that there were marked share declines for host countries from the Middle East, but there has also been marked share upticks from other host countries like the US, Japan and the United Kingdom,” he said.

In a Viber message, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the continued increase in remittances is a bright spot for the Philippine economy because it drives consumer spending.

Meanwhile, personal remittances from OFWs also went up by 3% in February to $2.95 billion.

Remittances from workers with more than one-year contracts went up by 3.3% to $2.31 billion, while money sent by OFWs with less than one-year contracts inched up by 1.7% to $570 million.

Year to date, personal remittances rose by 2.8% to $6.1 billion from $5.93 billion a year ago.

Mr. Ricafort said he expects modest growth in remittances in the next few months.

“For the coming months, single-digit growth in OFW remittances could still continue as OFW families/dependents still need to cope with relatively higher prices/inflation locally that would require sending more remittances,” he said.

Risks of an economic slowdown or a recession in the US could also drag remittance growth because it could lead to job losses for OFWs, Mr. Ricafort added.

Mr. Asuncion said he expects remittances to grow by 3% this year, and 2.8% in 2025.

“We still think that remittances will rise as expected despite rising geopolitical risks, particularly in the Middle East,” he said.

Meanwhile, Bank of the Philippine Islands Lead Economist Emilio S. Neri, Jr. said remittance growth could accelerate due to increased OFW deployment this year.

“OFW deployment hit a record high in 2023…We expect the growing size of overseas Filipinos to send more just as new workers are sent abroad,” he said.

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

Philippines faces $16-B funding gap for green transition

Solar panels are seen on the roof deck of a mall in Quezon City, July 13, 2015. — REUTERS

By Kyle Aristophere T. Atienza, Reporter

SINGAPORE — The Philippines saw a 57% increase in “green” investments to $1.46 billion in 2023, but still falls short of the over $16 billion in required capital investments needed for its green transition, a report showed.

Private green investments in the Philippines accounted for nearly a fourth of the $6.3 billion in total green investments in Southeast Asia last year, according to the 2024 Green Economy Report for Southeast Asia.

“However, an investment gap exists, and significant efforts must be made to meet the required capital investment of $16.6 billion,” it said, noting that the Philippines could achieve this by boosting blended finance, improving renewable regulations and strengthening regional collaboration.

The report by Bain & Company, GenZero, Standard Chartered and Temasek was launched at the 2024 Ecosperity forum, which gathered leaders across the world to track developments in the global green economy.

The Philippines’ score in Bain & Company’s 2024 Green Economy Index increased by three points to 39 from the previous year. The report said the Philippines’ “upward trajectory” was driven by progress within corporates’ ambitions and roadmaps.

Vietnam recorded the biggest improvement — up by five points to 38 — but it still lagged behind the Philippines along with Cambodia (38), which saw a three-point increase.

Singapore had the highest score at 55, up by four points from the previous year. It was followed by Malaysia (43), Indonesia (41) and Thailand (39).

Laos and Myanmar got a score of 30 and 27, respectively. Brunei got 8.

The region is “woefully off-track” on green investments, said Kimberly Tan, GenZero’s managing director.

Green investments in Southeast Asia jumped by 21% to $6.3 billion last year, mainly due to renewable energy projects and “green” data centers. Malaysia and Laos saw a 326% and 126% surge, respectively, in green investments.

However, Southeast Asia is still facing a $1.5-trillion investment gap until 2030 to fund its green transition. Clean energy accounts for only 10% of power supplies in the region, with fossil fuel subsidies being about five times higher than renewable investments, according to the report.

“Despite Southeast Asia’s structural challenges, immense potential exists to accelerate the energy transition and build the green economy,” Dale Hardcastle, director of the Global Sustainability Innovation Center at Bain & Company, said in a statement. “Focusing on proven solutions to decarbonize and accelerators such as blended finance or other incentives can catalyze investment, while governments need to figure out the more complex changes.”

The Philippines lacks sector-specific emission targets, and only four of 10 major emitting companies have set net-zero and emissions goals, according to the report.

However, it said domestic investments in infrastructure for green energy are “brisk.”

Philippine renewable energy investments have risen after it allowed full foreign ownership in the sector starting November 2022. It also established special lanes to expedite such projects.

The report said the Philippines should build more solar projects through blended finance, establish a clear framework to enforce renewable portfolio standards and develop a comprehensive energy roadmap to give investors predictability.

“It is an exciting time in the Philippines, with generational changes happening in digital payments, infrastructure and climate transition,” Mike Samson, chief executive officer at Standard Chartered Bank Philippines, said in a statement. “The Philippines is on the cusp of significant growth.”

Mr. Samson said the Philippines should work with its Southeast Asian neighbors on technological transfer and co-innovation of clean technologies; cross-border investments in “greenification” of manufacturing and nickel processing; and shared agreements on key standards.

DEFORESTATION
Meanwhile, the report cited “further deforestation” in the Philippines due to continued commodity-driven forest loss from mining, forestry and other urbanization activities.

Environment Secretary Antonia Yulo-Loyzaga said in a panel discussion after the launch of the green economy report that “there are great opportunities” in the Philippines for “reforestation, afforestation and for carbon sequestration.”

The Philippines has 30 million hectares of land, 15 million of which are classified as forests.

She said the Department of Finance is working with the World Bank and the ADB to finalize a policy framework for emission trading schemes and a possible carbon tax.

“We are looking at bilateral as well as multilateral consultations,” Ms. Loyzaga said.

The report noted only Indonesia, Malaysia, Singapore and Vietnam have been able to put a price on carbon.

Several Philippine agencies such as the Justice and Energy departments and a presidential investments office were also looking for another possible offshore gas field, she said.

The Malampaya gas field, the country’s sole indigenous source of natural gas that accounts for at least 40% of electricity needs in the capital region, is projected to run dry by 2027.

Philippine agencies were also updating guidelines for offshore wind and floating solar projects, Ms. Loyzaga said.

PHL may explore gas reserves within ‘nonconflict’ areas

PHILSTAR FILE PHOTO

By John Victor D. Ordoñez, Reporter

PHILIPPINE President Ferdinand R. Marcos, Jr. on Monday said the Philippines is looking into exploring gas reserves in nonconflict areas within the country’s exclusive economic zone in the South China Sea, as it tries to diversify its energy mix and boost its power generation capacity.

“It is important to the Philippines that we explore those reserves and see exactly what there are and how we go about exploiting them and bringing that gas supply to the Philippines,” he said during a forum organized by the Foreign Correspondents Association of the Philippines.

“So, the low-hanging fruit will be those reserves that are within our exclusive economic zone that are not in a conflict area.”

The Philippines is hard-pressed to find other sources of indigenous energy as the Malampaya gas field, which supplies a fifth of the country’s power requirements, nears depletion.

The gas field is expected to run out of easily recoverable gas using current techniques by 2027.

PXP Energy Corp.’s exploration work at Reed Bank, another potential source of gas in disputed waters, remains suspended due to tensions with China.

“That’s the correct move. It’s quite urgent for our energy security for us to look for oil and gas reserves since Malampaya’s reserves are dwindling fast,” Calixto V. Chikiamco, Foundation for Economic Freedom president, said in a Viber message. 

Mr. Marcos said the government is looking at liquified natural gas (LNG) as a transition fuel to renewable energy (RE).

“And that is why it is imperative for the Philippines to now examine… (in order) to guarantee the supply of LNG to our country so that we have sufficient power,” he said.

“But with all the plans that we have, essentially to industrialize the Philippines, essentially to enter into the digital space, all of these require a great deal of power.”

The government aims to boost the share of RE in the power generation mix to 35% by 2030 and to 50% by 2040. Renewables currently account for 22% of the Philippine energy mix.

Mr. Marcos said talks with China regarding oil and gas exploration in the South China Sea have not progressed due to disagreements on which areas fall within their respective territories.

He said Manila is likely to pursue these ventures with corporations since the country is not yet capable of large-scale heavy engineering in exploring these areas.

China claims more than 80% of the South China Sea, which is seen as a substantial source of oil and gas deposits and where billions of dollars of trade pass through each year.

“The upstream oil and gas sector is fully aligned with the government’s initiatives to explore hydrocarbon boundaries, prominently in the West Philippine Sea,” Edgar Benedict C. Cutiongco, president of the Philippine Petroleum Association of the Upstream Oil and Gas Industry, told BusinessWorld in a text message.

The Philippines should still focus on harnessing renewable energy sources such as geothermal, wind and solar power to reduce its reliance on oil and coal, John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said in a Viber message.

Philippine Ambassador to the US Jose Manuel D. Romualdez has said Manila is “working closely with our allies not only the US but also Japan and Australia” to exploit resources in the South China Sea.

China, however, has said any plans for resource exploitation in the waterway should not involve countries outside the region.

“Even if we do well with the nonconflict areas, we still have to look at all the others, whether they be in conflict areas or otherwise,” Mr. Marcos said.

No spike in oil prices for now amid Mideast tension

Fuel retailers said pump prices would increase by P0.40 per liter of gasoline, P0.95 per liter of diesel, and P0.85 per liter of kerosene, effective on Tuesday (April 16). — REUTERS

THE DEPARTMENT of Energy (DoE) does not see a spike in pump prices amid concerns of a wider conflict in the Middle East after Iran’s retaliatory attack against Israel.

Energy Secretary Raphael P.M. Lotilla said that they would monitor oil prices for the week.

“While the market may initially have reacted, we hope that it will normalize,” he told reporters.

Tensions in the Middle East have escalated after Iran launched hundreds of drones and missiles at Israel late on Saturday. This was in retaliation for an alleged Israeli attack on the Iranian consulate in Syria earlier this month.

“The increasing price is brought about by the OPEC+ reduction and not necessarily related to this conflict,” Rino E. Abad, director of the Oil Industry Management Bureau, told reporters on the sidelines of an event in Taguig City.

Earlier this month, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, also known as OPEC+, agreed to maintain oil output cuts until end-June.

Mr. Abad said they have seen a consistent increase in oil prices.

“It seems like there really is a shortage from a fundamental perspective of supply-demand, which is brought about primarily by the production cut, not necessarily about the conflict,” he added.

However, Mr. Abad warned that problems could arise if the conflict affects the Persian Gulf.

“The closure of the Persian Gulf would be difficult because fuel tankers won’t be able to pass through,” he said in Filipino.

The Philippines is a net importer of petroleum products. In the first half of 2023, the country imported 3.476 billion liters of crude oil, 23.7% higher than in 2022, data from the DoE showed.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said there would still be volatility in global crude oil prices due to geopolitical tensions.

“Though NYMEX (New York Mercantile Exchange) crude oil prices are slightly lower today at $85 per barrel levels versus $86 a week ago, it could still lead to some pickup in prices since the Philippines is a net-importing country and imports all of its oil requirements,” he said in a Viber message.

Gerry C. Arances, executive director of think tank Center for Energy, Ecology and Development, said that the administration of President Ferdinand R. Marcos, Jr. should prepare and implement subsidies to the most vulnerable sectors in case of a spike in oil prices.

“If regional tensions worsen and Hormuz becomes a trigger point, the worldwide oil and gas supply will contract and countries will compete with each other for the available supply,” he said in a Viber message.

“The Israel-Iran conflict, like other geopolitical conflicts in the past few years, should serve as a wake-up call for the Philippine government to raise its ambition and accelerate the transition to renewable energy,” Mr. Arances added.

The Development Budget Coordination Committee (DBCC) earlier this month kept the assumptions for Dubai crude oil price at $70 to $90 per barrel for this year and $65 to $85 per barrel for 2025 to 2028. “This reflects the latest futures prices and forecasts that suggest tempered global crude oil prices over the medium term,” the DBCC said.

In separate advisories on Monday, oil companies said pump prices would increase by P0.40 per liter of gasoline, P0.95 per liter of diesel and P0.85 per liter of kerosene, effective on Tuesday (April 16).

This marks the fifth straight week that prices of gasoline have increased, and the second consecutive week of price hikes for diesel and kerosene.

This would bring the total adjustment of gasoline this year to a net increase of P9.70 per liter, diesel at P7 per liter, and kerosene at P2.25 per liter.

POTENTIAL IMPACT
Meanwhile, the British Chamber of Commerce Philippines (BCCP) and the UK Department for Business and Trade acknowledged the heightened tensions in the Middle East, calling for restraint by leaders.

In a statement sent on Monday, BCCP Executive Director Chris Nelson said the growing tension in the Middle East could potentially impact oil prices, interest rates, and the stock market. These could also lead to another spike in inflation and disruption in supply chains.

“We all hope for restraint and what we can try to do is how we can assist the Philippines with supply opportunities. I would just reiterate that inflation is a key concern in many countries. I would say that the UK is working hard with the Philippines on the supply chain,” Mr. Nelson said.

The Bangko Sentral ng Pilipinas (BSP) sees inflation averaging 3.8% this year and 3.2% next year. It kept the key policy rate steady at 6.5% for a fourth straight meeting.

Mr. Nelson said that the UK could help in terms of securing the supply of meat, particularly pork, in the Philippines,

“We would once again say that we would like to see the complete implementation of Executive Order (EO) 50 and no alteration of approach on the minimum access volume which could reduce supply and potentially have an impact on inflation,” he said.

Last December, President Ferdinand R. Marcos, Jr. signed EO 50 which extended the lower tariffs on pork, corn, and rice for another year.

Meanwhile, UK Department for Business and Trade Philippine Country Director James Thackery highlighted the UK’s expertise in clean energy and infrastructure.

He said that the recent trilateral partnership among the US, Japan, and the Philippines presents an opportunity “to deepen (the UK’s) partnership with the Philippines.”

He added that the UK is interested in establishing a Joint Economic and Trade Committee in the Philippines and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. — Sheldeen Joy Talavera and Justine Irish D. Tabile

Jet fuel prices may challenge airlines after Q1 boost — analysts

RUDY DONG-UNSPLASH

By Ashley Erika O. Jose, Reporter

A SURGE in demand during Holy Week and the start of the summer season likely boosted revenue growth for airline companies in the first quarter (Q1), according to analysts, but cautioned about potential challenges ahead due to rising jet fuel prices.

“The surge in travel demand coinciding with the timing of the Holy Week, which occurred in late March,  and the onset of the summer season would’ve likely supported the revenue growth of airline companies in the first quarter,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail on Monday.

However, the volatility of the fuel market due to the ongoing geopolitical tensions and the additional output cut by the Organization of the Petroleum Exporting Countries and their allies including Russia (OPEC+) may hurt airlines growth for the period, he added.

“Prospects of higher jet fuel prices, driven by geopolitical tensions in the Middle East, and prolonged oil output cuts from OPEC+ could lead to some demand and margin pressures in the near term,” he also said. 

In March, members of OPEC+ announced that they would extend the oil output cut of about 2.2 million barrels per day until the second quarter to maintain a balanced oil market supply.

On Monday, oil companies were set to hike pump prices by P0.40 per liter for gasoline, P0.95 per liter for diesel, and P0.85 per liter for kerosene.

These price adjustments brought a year-to-date net increase of P9.70 for gasoline, P7 for diesel, and P2.25 for kerosene.

The Department of Energy said that surging oil prices are expected to continue due to the OPEC+ cut, while downplaying the impact of the ongoing Israel-Iran conflict.

The Civil Aeronautics Board (CAB) has retained the airline fuel surcharge at Level 6 for April.

Latest data from the Energy department showed that Dubai crude climbed by nearly $4 per barrel for the first week of April. The international prices of gasoline, diesel, and kerosene have also increased by about $2.40, $3.60, and $3.40 per barrel, respectively.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also said that the volatility of oil prices could pose risks to airline operations, as it may drive operating costs to increase further.

“Number of domestic airline passengers already exceeded pre-pandemic levels. Offsetting risk factor is the volatility in global crude oil prices amid increased tensions in the Middle East that could increase operating costs and could narrow profit margins,” he said in a Viber message.

For Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce, airlines are still expected to significantly benefit from the post-pandemic revenge travel trend.

“Philippine airline companies seem positive based on the momentum gained in 2023 and early 2024,” he said, adding that growth may be sustained despite the changing market environment.

“Sustained growth will depend on the ability of airlines to adapt to changing market conditions, diversify their revenue streams, and mitigate risks associated with external factors beyond their control.” 

For 2023, Cebu Air, Inc., the operator of budget carrier Cebu Pacific, registered a net income of P7.9 billion for 2023, reversing its losses in 2022.

The company recorded an operating income of P8.6 billion, while its EBITDA, or earnings before interest, taxes, depreciation, and amortization, reached P21.8 billion, marking a significant increase from the P664 million in 2022.

Its total expenses climbed 20% to P82 billion, which it attributed to higher fuel costs and fleet-related expenses.

PAL Holdings, Inc., the listed operator of flag carrier Philippine Airlines (PAL), saw its attributable net income more than double to P16.81 billion last year.

PAL noted that its jet fuel consumption rose by 8% due to increased flight activity last year. The company added that fuel costs accounted for 45.3% of its overall expenses.

“The post-pandemic revenge travel trend indeed seems to have benefited airlines… While the outlook appears positive, sustaining this growth and maintaining strong financial results in the first quarter of 2024 may face challenges. External factors such economic instability, and unpredictable shifts in travel restrictions,” Mr. Arce said. 

To recall, CAB recorded a total of 50.18 million passenger volumes for 2023 covering both domestic and international flights.

The Tourism department reported 5.45 million international visitors in 2023, surpassing the year’s target of 4.8 million.

For 2024, the department aims to attract 7.7 million international visitors.

Flag carrier PAL said it expects passenger volume to rise up to 20% in 2024 from its more than 14 million passengers in 2023.

Last year, the airline company carried a total of 14.7 million passengers, marking a 58% increase from the 9.3 million passengers recorded in 2022.

Data provided by the company showed that PAL managed to mount a total of 105,294 flights last year, 35.8% higher than the 77,533 total flights in 2022. Meanwhile, Cebu Pacific flew over 20 million passengers on more than 140,000 flights. This translated to approximately a 41% increase in passengers and a 30% increase in flights compared to the previous year.

CREC taps RCBC for up to P20-B financing

SAAVEDRA-LED Citicore Renewable Energy Corp. (CREC) has secured a financing deal with Rizal Commercial Banking Corp. (RCBC) totaling up to P20 billion to fund solar projects.

The initial tranche of P9 billion was arranged by RCBC Capital Corp., CREC said in a statement on Monday.

“The structure is believed to be the first-of-its-kind project financing in the Philippines, which covers various project portfolios instead of the typical per-project financing structure,” the company said.

Proceeds from the initial funding tranche will be used for CREC’s development of solar power plant projects in Batangas, Pampanga, and Negros Occidental.

These have a combined installed generating capacity of at least 600-megawatt direct current and up to approximately one gigawatt of solar energy capacity.

The company is targeting to complete the commercial operations of the first and second phases of the Negros Occidental project in September 2024 and 2025, respectively.

Meanwhile, the expected commercial operation dates for the first and second phases of both Batangas and Pampanga projects are December 2024 and 2025, respectively.

“RCBC’s support will assist us to fulfill our 1 GW (gigawatt),” CREC President and Chief Executive Officer Oliver Tan said. “We thank RCBC for their trust in us and we will endeavor to meet our goals with excellence.”

CREC is aiming to list its shares on the Philippine Stock Exchange on May 31, according to its prospectus dated April 3.

The company is set to offer 1.79 billion common shares at a maximum price of P3.88 apiece, including an additional 267.86 million shares for overallotment. — Sheldeen Joy Talavera

ICTSI receives green light for Visayas Container Terminal

ICTSI.COM

THE Philippine Ports Authority (PPA) has issued a notice to proceed to International Container Terminal Services, Inc. (ICTSI) for the rehabilitation and operation of the Visayas Container Terminal (VCT), formerly known as the Iloilo Commercial Port Complex in Western Visayas, the company said.

The Razon-led port operator is set to commence operations and upgrade the facility upon signing the notice to proceed, the company told the stock exchange on Monday.

ICTSI said it will work on improving terminal productivity and service quality by investing in the development and rehabilitation of the terminal’s infrastructure and deploying cargo-handling equipment.

The PPA awarded in January the 25-year contract to operate the VCT to ICTSI, the port’s lone bidder.

The contract includes a concession fee of P750 million, PPA said. This amount is 50% higher than the P500 million minimum fixed fee set by the agency in its bid invitation.

“Our significant investments in modern infrastructure, cargo-handling equipment, and operational efficiency will drive this transformation,” Christian R. Gonzalez, ICTSI executive vice-president said in a statement.

The VCT has about 627 meters of operational quay length and 20 hectares of land for container and general cargo storage, warehousing, and other cargo-handling activities.

The facility caters to Iloilo province and the entire Panay Island. Situated apart from older port facilities on Panay Island’s southern coast in Panay Gulf, it benefits from being one of the country’s safest harbors, according to ICTSI.

ICTSI said capacity and efficiency constraints have hindered the seaport’s full potential as it aims to unlock the facility’s full potential.

Currently, the seaport managed a total volume of 100,000 twenty-foot equivalent unit or TEUs and two million metric tons of non-containerized cargo annually.

“iCTSI’s involvement will transform the port, addressing these challenges and unlocking its economic benefits. The port will be operated exclusively to serve foreign vessels and cargoes, with a provision for domestic vessels and cargoes in the initial five years,” the company said. — Ashley Erika O. Jose

First half seen challenging for IPOs

By Sheldeen Joy Talavera, Reporter

GOING public in the first half of 2024 may be challenging due to the uptick in inflation and hawkish policy stance from the central bank, analysts said.

“We are now seeing volatility in equity markets due to stubborn inflation, a potential delay in interest rate cuts, and elevated geopolitical risk,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message last week.

“As a result, it has become more challenging to do an IPO (initial public offering) during the first half of this year,” he added.

Headline inflation accelerated to 3.7% year on year in March, data from the Philippine Statistics Authority showed. This is within the forecast of the Bangko Sentral ng Pilipinas for the month of 3.4% to 4.2%.

The Monetary Board last week kept rates steady at 6.5% for a fourth straight meeting and signaled a possible delay in rate cuts due to upside risks in inflation.

Mr. Colet said that elevated interest rates impact equity valuations and reduce the appetite for equities “because investors can get fairly attractive returns by investing in debt instruments that are considered safer than stocks.”

“Tight monetary policy tends to slow down the economy by making borrowing more expensive, so those factors also impact the prospects of a company,” he said.

“If we the goal is to raise as much volume at the best valuation, it might be better to wait until we see a tapering of inflation and a clearer path to monetary policy easing before launching a sizable IPO,” Mr. Colet said.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said that while the environment for conducting IPOs may be more challenging, “it’s not necessarily prohibitive.”

“Companies considering IPOs would need to carefully assess market conditions, investor sentiment, and their own business fundamentals before proceeding,” he said in a Viber message.

Despite the uptick in inflation and hawkish cues from the central bank, the market environment remains favorable for potential IPOs, according to Rastine Mackie D. Mercado, research director at China Bank Securities Corp.

“While investor appetite for equities is seeing some softness due to changing expectations on rate cut timings, especially from the US Federal Reserve, we think that this should firm up through the coming months especially as major central banks start to cut rates,” he said.

Markets are likely to watch out the take-up and price performance of the first IPO of the year “as this could help set the pace for succeeding issuances,” he added.

Mining company OceanaGold Philippines, Inc. is targeting to publicly list on May 13, based on the updated prospectus of its Australian-Canadian parent company OceanaGold Corp.

On Friday, the company secured the approval of the Philippine Stock Exchange (PSE) for its P7.9-billion IPO. It will offer 456 million common shares at a price of up to P17.28 each.

Another planned IPO for this year is Saavedra-led Citicore Renewable Energy Corp. (CREC), which is aiming to list its shares on the PSE on May 31, based on its prospectus dated April 3.

CREC is set to offer 1.79 billion common shares at a maximum price of P3.88 apiece, including an additional 267.86 million shares for overallotment.

The company trimmed its planned IPO size to P7.9 billion from P12.9 billion. The move came after SM Investment Corp. invested P5 billion in its subsidiary Citicore Energy REIT Corp. (CREIT).

CREIT is the country’s first real estate investment trust listing focused on renewable energy.

For 2024, the PSE is targeting to have at least six IPOs and is expecting about P40 billion worth of capital to be raised.

“While inflation and interest rates do play a significant role in shaping market sentiment, other factors such as investor confidence, economic growth prospects, industry trends, and geopolitical factors also come into play,” Mr. Arce said.

Alternergy, NGCP ink interconnection deal for Alabat wind

UNSPLASH

ALTERNERGY Holdings Corp., through its subsidiary Alternergy Tanay Wind Corp. (ATWC), has signed an agreement with the National Grid Corporation of the Philippines (NGCP) to connect its 100-megawatt (MW) Tanay Wind Power Project in Rizal to the grid.

“The ICA (interconnection agreement) signing for the Tanay Wind Power Project is a big step,” ATWC President Knud Hedeager said in a statement on Monday.

“NGCP’s approval is a positive response to fostering connectivity for renewable energy projects and increased critical energy infrastructures,” he added.

The agreement was done weeks after the signing for ICA of the 64-MW Alabat Wind Power Project in Quezon province.

“Similar to the ICA for the Alabat Wind Power Project, NGCP stands to provide assistance to Alternergy’s Tanay Wind Power Project which will contribute substantial renewable capacity to the grid to bolster the country’s energy sufficiency and sustainability,” NGCP President and Chief Executive Officer Anthony L. Almeda said.

“As the transmission network provider and system operator, NGCP’s mandate is to expand the capacity and reliability of the grid to accommodate new generation projects,” he added.

The Tanay Wind Power Project is set to commence development phase after obtaining the certificate of confirmation of commerciality from the Department of Energy.

It has also completed and signed the commercial contracts, particularly the wind turbine supply agreement and the balance of plant engineering, procurement, and construction contract.

The company has committed to deliver the wind project by end of 2025.

Alternergy aims to develop up to 1,370 MW of renewable energy sources such as onshore and offshore wind, solar, and run-of-river hydropower.

At the local bourse on Monday, the company’s shares went down by P0.01 or 1.39% to close at P0.71 each. — Sheldeen Joy Talavera

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