Rise in infections, slow economic activity to dent recovery prospects

August 28, 2020 | 6:09 pm

THE CONTINUED surge in coronavirus infections will be a major barrier to economic recovery in the Philippines as consumer confidence remains low, Nomura Global Markets Research said.

“This will keep households and businesses cautious even if no lockdown is reinstated,” it said in a note on Friday.

Restriction measures have been eased in Metro Manila and some surrounding provinces last week after two weeks under modified enhanced community quarantine in response to a call from the medical community for a “timeout” to slow down the rise in infections.

The Philippines and Indonesia are still struggling to contain the virus. as compared to Malaysia and Thailand which have already flattened the curve, the report noted.

“We believe this not only reflects higher testing capacity but also higher local transmission rates, consistent with the uptrend in positivity rates since June,” Nomura said.

“The prolonged local outbreak remains a major risk to the recovery, especially because economic centers are still hotspots,” it added.

Nomura earlier this month further revised its gross domestic product (GDP) forecast for the Philippines to -6.6%, worse than the 4.8% contraction it expected earlier.

Economic managers sees 2020 GDP shrinking by 4.5-6.6% this year before bouncing back to 6.5-7.5% growth in 2021.

Nomura said consumption, which makes up 70% of the economy, will bear a larger brunt from the rising unemployment and falling remittances.

SOFTER DECLINE

Meanwhile, a softer decline in the last two quarters of the year is expected following the easing of quarantine rules but a double-digit drop is still possible this quarter, former National Economic and Development Authority (NEDA) Secretary Cielito F. Habito said.

Mr. Habito told a Shareholders’ Association of the Philippines’ (SharePHIL) forum on Friday that they forecast GDP to shrink by 11.8% in the third quarter, better than the 16.5% drop in the second quarter, based on estimates of the Ateneo de Manila University where he is currently a professor.

He added that they expect fourth-quarter GDP to shrink by just 2.8% to bring its full-year forecast to an eight percent contraction.

These are against the actual 6.3% and 6.7% growth rates recorded in the third and fourth quarters of 2019.

Meanwhile, he expects the economy to rebound and post a 5.1% growth next year.

Despite eased quarantine rules in the second half, physical distancing protocols remain as the government looks to curb the spread of the virus under the new normal, while businesses are still expected to scale down their operations and others may even close shop, he said.

Mr. Habito said stimulus packages should be more focused on the “quality of spending, rather than quantity” as the country gears towards recovery. He said money should go to investments that have a great expenditure multiplier effect on the economy.

Lawmakers recently approved and ratified the Bayanihan To Recover As One Act or Bayanihan 2 that provides P165 billion in new spending for programs boosting the health systems and pump-priming the economy.

Mr. Habito also stressed the need to focus on the agriculture sector and to maximize the boost it can provide to the economy.

He said the sector, which has been considered a laggard in the past, “defied the lockdown” after posting a 1.6% growth in the second quarter amid the broad contraction in other sectors of the economy.

“That agriculture saved the economy from even worse decline reinforces the long-held view that we must really look to this sector as the economy’s ultimate backbone, COVID-19 or no COVID-19,” Mr. Habito said. — L.W.T. Noble and B.M. Laforga

Rural utilities’ energy sales inch up in Q1

August 28, 2020 | 5:52 pm

POWER UTILITIES in the countryside sold slightly more electricity in the first three months of the year, while their revenues also fell slightly, the National Electrification Administration (NEA) said.

Electric cooperatives’ energy sales in the first quarter went up 3% to 5,338 gigawatt-hours (GWh) over 5,162 GWh last year, the agency said in a statement on Friday.

Their revenues fell by 1.5% to P49.67 billion, compared to P50.41 billion a year ago, data from NEA’s Informational Technology and Communication Services Department showed.

Meanwhile, rural utilities recovered system losses from consumers at an average of 10.13% of their bills in the period, which is down by 0.41% points from last year.

NEA, the agency governing these power distributors, noted the rate is 1.87% points lower than the government-prescribed 12% rate limit.

It said 95 cooperatives charged system loss recoveries within the mandated cap. Among them, utilities in Central Visayas charged the lowest average at 6.55%, followed by those in the Cordillera, Soccsksargen, and Northern Mindanao.

Earlier, lawmakers raised concerns about power distributors recovering system losses, or portions of electricity supply that dissipates in the process of distribution, at a rate of 20%.

The Philippine Rural Electric Cooperatives Association (Philreca) said about five of the 121 cooperatives have charged at that rate in 2019. Overall, 18 utilities went over the system loss recovery limit that year.

Electric cooperatives should “continuously strive towards improving their operations, and bring down their distribution system losses further,” NEA Administrator Edgardo R. Masongsong said. — Adam J. Ang

DBP expects to extend P39 billion in loans to MSMEs

August 28, 2020 | 5:44 pm

THE DEVELOPMENT Bank of the Philippines (DBP) is looking to hike lending to micro, small and medium enterprises (MSMEs) next month as lawmakers start discussions on a stimulus fund for the sector.

DBP expects to extend P39.14 billion in loans in September, which will add to the P3.2-billion for 131 MSME accounts the DBP approved from March 15 to June 30 this year.

“Based on the applications received so far and additional prospects identified, we expect to process no less than 401 transactions with an estimated loan amount of P39.14-billion,” Development Bank of the Philippines President and Chief Executive Officer Emmanuel G. Herbosa said in an email message.

“The BDP has identified that the MSME sector is one of the sectors most impacted by the pandemic. By providing financial assistance to MSMEs, through the grace period and option for loan deferment or loan restructuring, DBP has provided the additional credit that they need in order for them to survive or recover their operations and sustain their cash flow,” Mr. Herbosa said.

To serve more MSMEs, lawmakers proposed the Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) which aims to provide a P55-billion fund to the DBP, Land Bank of the Philippines and Philippine Guarantee Corporation to help MSMEs sustain economic activities.

The House Committee on Ways and Means recently approved a substitute for the GUIDE bill after lawmakers considered it as a separate stimulus fund from the P165-billion aid under the second round of Bayanihan To Recover As One Act or Bayanihan II. — Kathryn Kristina T. Jose

Peso rises on Fed’s policy shift

August 28, 2020 | 5:41 pm

THE PESO climbed on Friday on hints from the US Federal Reserve that it will keep borrowing costs low this year to push inflation up.

The local unit closed at P48.485 versus the greenback on Friday, appreciating by 47.5 centavos from Thursday’s P48.63 finish, data from the Bankers Association of the Philippines showed.

The peso opened Friday’s session at P48.60 per dollar, which was also its intraday low. Meanwhile, the local unit climbed to as high as P48.45 during the session.

Dollars traded climbed to $1.191 billion on Friday from Thursday’s $776.07 million.

A trader said the peso rose following the US central bank chief’s remarks on policy and inflation.

“Federal Reserve Chairman Jerome Powell will allow inflation to go ‘moderately’ above 2% for ‘some time to make up for the previous shortfalls from its inflation target,” the trader said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the Fed’s position pushed down the dollar.

“The US Federal Reserve to allow inflation to go higher led to the declines in government bonds, thereby partly leading to the weaker US dollar as a sell-off in US bonds. The US Treasury further reduced the allure of the dollar with still record low interest rates,” Mr. Ricafort said.

The Fed on Thursday rolled out a sweeping rewrite of its approach to its dual role of achieving maximum employment and stable prices, putting new weight on bolstering the US labor market and less on worries about too-high inflation, Reuters reported.

The Fed’s new monetary policy strategy, unveiled at the start of an annual central banking conference, pledges to address “shortfalls” from the “broad-based and inclusive goal” of full employment, a nod to research showing racial income disparities hold back economic growth.

It also promises to aim for 2% inflation on average, so that periods of too-low inflation would likely be followed by an effort to lift inflation “moderately above 2% for some time.”

The change suggests the US central bank’s key overnight interest rate, already near zero, will stay there for potentially years to come as policymakers woo higher inflation.

Mr. Ricafort expects the peso to move from P43.30 to P48.70 versus the dollar on Tuesday. Markets are closed on Monday for National Heroes’ Day. — KKTJ

Sun Life Foundation launches savings program for public school teachers

August 28, 2020 | 5:37 pm

SUN LIFE Financial-Philippines Foundation, Inc. (Sun Life Foundation) launched a money management program on Thursday that it said has increased savings of public school teachers in its six-month pilot run.

Sun Life Foundation introduced Sun Pera-Aralan 2020 which helps public school teachers prepare a weekly budget through Peso Sobre, which contains funds set aside each week for specific purposes, such as expenses for food, transportation, utilities and schooling.

Since the program’s pilot run last year, 67% of the 10,224 participants said they have added at least P3,000 to their monthly savings. Entry-level public school teachers earn P23,816 each month.

“Nakakalungkot sabihin na karamihan sa kanila ay lunod sa utang, pero ito ang katotohanan. Sa katunayan, dalawa o tatlong linggo pa lang matapos nilang makuha ang kanilang isang-buwang sweldo ay ubos na ito,” Sun Life Foundation President Alexander S. Narciso said in a statement.

Sun Life Foundation eyes 125,000 more beneficiaries in five years as it intensifies financial literacy and health projects under Rise Brighter PH 2020.

The foundation has been using social media to help public school teachers keep their saving habits and find other ways to manage their finances.

“The program also has a Facebook support group that encourages teachers to stay on track by connecting them with fellow teachers in the program and with volunteer Sun Life advisors who can provide further guidance,” Mr. Narciso said.

Sun Life Foundation also coordinates with the Department of Education and AHA! Behavioral Design, Inc. which designed the money management program. — K.K.T. Jose

GERI slashes this year’s capex by 38%

August 28, 2020 | 4:52 pm

By Denise A. Valdez, Senior Reporter

Property developer Global-Estate Resorts, Inc. (GERI) is cutting its capital expenditure budget by 38% this year as it delays new project launches due to the coronavirus pandemic.

“[W]e expect a 38% reduction in capital expenditures this year from P6.5 billion to P4 billion as the lockdowns, regional quarantine measures, and physical distancing rules continue to restrict the movement of materials and workers in our construction sites,” GERI President Monica T. Salomon told stockholders in a meeting Friday.

The P4-billion budget will be spent on new projects within GERI’s integrated estates and property acquisitions for future business expansion. It is also investing in digital transformation to support the changing trends and habits of consumers.

“The company will continue to observe financial discipline to ensure financial stability through prudent cash management and operational efficiency,” Ms. Salomon said.

In a statement, GERI said it will be turning over P3-billion worth of projects this year, spread across its properties in Aklan, Batangas and Iloilo.

These will be residential units and commercial lots within integrated communities Boracay Newcoast, Twin Lakes and Sta. Barbara Heights.

“The company believes that its integrated leisure estates and lifestyle communities, which make possible contained living set in the backdrop of natural environments, are sustainable and resilient models and will stand to benefit from the ongoing fundamental changes in people’s behavior and way of life,” Ms. Salomon said.

She noted when the quarantine restrictions were eased starting June, GERI saw its reservation sales jump back to pre-quarantine levels at P3.6 billion from P2.2 billion in the first quarter.

“[W]hile tourism in the country grounded to a halt, Boracay Newcoast continued to be the bestseller among our integrated estates, proof of an underlying demand for resort properties,” Ms. Salomon said. “We also saw a significant rise in residential lot sales in our projects with access to natural environments….”

GERI operates a total of eight integrated tourism developments located in Batangas, Laguna, Cavite, Las Piñas City, Boracay, Iloilo and Rizal.

In the first semester, the company’s earnings dropped 37% to P544.8 million, as it closed its hotels during the period of the strict lockdown. Its consolidated revenues declined 29% to P2.91 billion.

Shares in GERI at the stock exchange shed one centavo or 1.25% to 79 centavos each on Friday.

Filinvest Land plans to sell up to P30-B in debt papers

August 28, 2020 | 4:50 pm

Gotianun-led Filinvest Land, Inc. (FLI) on Friday said it is planning to sell up to P30 billion worth of debt paper.

The property developer told the stock exchange on Friday it filed a shelf registration of a planned issuance of fixed-rate, peso-denominated retail bonds with the Securities and Exchange Commission.

Of the P30-billion shelf registration, FLI intends to initially offer P9-billion in bonds, which will have an oversubscription option of up to P2.25 billion.

FLI management will determine other terms and conditions of the planned issuance such as the interest rate of the offer bonds.

The offer bonds will be comprised of 3-year and 5.5-year bonds, maturing in 2023 and 2026, respectively, for which the allocation will be determined by FLI based on the book building process.

To arrange the offering, the company has tapped BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., East West Banking Corp. and SB Capital Investment Corp. as joint lead underwriters and bookrunners, and First Metro Investment Corp. as co-lead underwriter. China Banking Corp. – Trust and Asset Management Group will be the trustee.

The offer bonds will be issued in minimum denominations of P50,000 each, and in integral multiples of P10,000 thereafter.

Local debt watcher Philippine Rating Services Corp. has given the bonds a credit rating of PRS Aaa, the highest in its scale, which means the bonds are seen to have minimal credit risk.

FLI did not specify on Friday the purpose of the bonds, but it previously said it was allocating P16 billion for capital expenditures in 2020.

The company’s attributable net income contracted 24% to P2.3 billion in the first half, as revenues slid 30% to P8.81 billion, weighed down by operational disruptions due to the coronavirus pandemic.

Shares in FLI at the stock exchange inched up two centavos or 2.17% to close at 94 centavos apiece on Friday. — Denise A. Valdez

ABS-CBN shuts down studio tours, retail business

August 28, 2020 | 4:47 pm

ABS-CBN Corp. on Friday announced its studio tour operations and retail businesses will be permanently shuttered on Aug. 31.

In a statement, the Lopez-led media giant said Studio Tours, ABS-CBN Store, Hado Pilipinas, Heroes Burger, and ABS-CBN Studio Experience will stop operations.

“These ventures are part of ABS-CBN’s services to Filipino families affected by the denial of its broadcasting franchise by the House of Representatives last July 10,” it said in a statement.

ABS-CBN has been conducting educational tours inside its Quezon City headquarters since 1997.

ABS-CBN Studio Experience, an indoor theme park located in Ayala TriNoma mall in Quezon City, has only been operating for two years. Its adjacent burger joint Heroes Burger was also closed down.

Hado Pilipinas was an exclusive partnership between ABS-CBN and Japan’s meleap Inc. to introduce the technosport Hado in the country.

ABS-CBN began implementing a company-wide retrenchment program after its congressional franchise was denied.

The media network posted a P3.16-billion loss in the second quarter, as revenues plunged by 55.2% to P4.68 billion.

Shares in ABS-CBN inched up 0.28% to close at P7.25 each on Friday. — AJA

DoE approves work budget for Ayala’s Palawan exploration block

August 28, 2020 | 4:44 pm

An exploration unit of the Ayala group can proceed with the new phase of its petroleum discovery in Palawan after the Department of Energy (DoE) signed off on its proposed appraisal period activities and budget.

The department approved the $1.70-million budget of Palawan 55 Exploration & Production Corp., a subsidiary of listed ACE Enexor, Inc., for its appraisal work, including a commitment to drill at least one oil well by 2022.

Once the DoE authorizes the company to proceed with the drilling, it expects a budget proposal from the company to follow, the Ayala-led firm told the stock exchange, Friday.

To recall, the deep-water block project led by Palawan55, the operator of DoE’s Service Contract 55, entered the appraisal period on April 26 following its discovery report on the Hawkeye-1 well within the area.

After finding a “significant” volume of movable natural gas from the well, the DoE classified the project as a non-associated gas discovery.

The 9,580-feet well was first drilled in 2015 when Australia-based exploration firm Otto Energy, Ltd. still operated the service contract.

The ACE Enexor unit has raised its stake in SC 55 to 75% after a co-contractor, Singaporean firm Century Red Pte. Ltd., transferred its 37.5% interest share to the company after exiting from the project. Pryce Gases, Inc. owns the remaining interest.

On Friday, shares in ACE Enexor went up 3.70% to close at P5.60 apiece. — Adam J. Ang

DFNN affiliate in talks to acquire casino operator

August 28, 2020 | 4:40 pm

An affiliate of gaming and technology firm DFNN, Inc. is looking to enter the Australian Stock Exchange through a AUD530,000 (about P18.74 million) deal with an Australia-listed gaming operator.

In a statement to the Philippine Stock Exchange on Friday, DFNN said its affiliate HatchAsia, Inc. is arranging a deal to take control of Silver Heritage Group, Ltd.

Silver Heritage is a gaming operator in Asia with two casinos in Nepal, but is listed at the Australian Stock Exchange. Based on DFNN’s disclosure, Silver Heritage has been asked to execute a deed of company arrangement for the transaction, which will then be approved by HatchAsia.

The DFNN affiliate would need to acquire 92% of Silver Heritage’s issued share capital through the consolidation of existing shareholders, and a new issuance of ordinary shares by a new subsidiary, to be called Hatch Australia Holdings Pty Ltd.

Other details have not been finalized yet, except that the consideration for the transaction is AUD530,000 in cash and 3% of the issued shares in Silver Heritage.

“The successful conclusion would eventually result in the HatchAsia shareholder-controlled entity being listed on the Australian Stock Exchange and DFNN owning part of the ASX Listed Entity,” it said.

DFNN said the transaction would essentially provide it better access to a wider capital base and open new business streams for a larger audience reach.

“As a shareholder, we welcome and look forward to the foray of HatchAsia in the international market… Tapping the Australian capital market for this provides a conducive environment for the nature of our businesses and allows DFNN to fully value its early investments in HatchAsia,” DFNN President and CEO Calvin Lim said in the statement.

DFNN has an 18.98% ownership stake in HatchAsia. The company is engaged in business management outsourcing services, gaming outlet operations, financial technology and office leasing.

In the first six months of 2020, DFNN swung to an P83.49 million attributable net loss due to the shutdown of gaming operations amid the lockdown. Its revenues were cut 48% to P333.2 million during the period.

Shares in DFNN at the stock exchange closed flat on Friday at P3.06 each. — Denise A. Valdez

Del Monte swings to $81-M loss

August 28, 2020 | 4:36 pm

Del Monte Pacific Ltd. swung to an $81.39-million attributable net loss in its fiscal year ending April 2020 due to one-off expenses from plant closures and retirement of loans.

But excluding the one-off items, Del Monte posted a recurring net profit of $32.2 million in the 12 months, more than double its $15.8 million recurring net profit in the same period last year.

In a regulatory filing on Friday, the listed canned fruits manufacturer said revenues grew 9% to $2.13 billion from operations in the United States, the Philippines, S&W Asia and Europe.

Sales from US subsidiary Del Monte Foods, Inc. went up 8% to $1.5 billion, from the Philippines up 10% to $338.9 million, and from S&W in Asia and the Middle East up 9% to $109.8 million.

“Del Monte’s results had been favorably impacted by the pandemic. As consumers stayed home, prepared more meals and consumed more snacks, they purchased trusted brand names and consumed healthier, shelf-stable culinary products,” it said.

The bottomline loss is a result of the company’s efforts to reduce costs by divesting in four facilities in the US. Del Monte Managing Director and CEO Joselito D Campos, Jr. had said previously that the restructuring was a “necessary step” to remain competitive.

Shares in Del Monte at the stock exchange dipped three centavos or 0.61% to close at P4.86 each on Friday.

Camella celebrates 43rd anniversary, brings favorite home

August 28, 2020 | 4:32 pm

Brands best integrate themselves into the consumers’ lives by becoming symbols of their ideals. For Camella, this connection with their homeowners is forged by embodying the aspirations of every Filipino family. On its 43rd anniversary, the brand continues to prove its status as the country’s favorite in house-and-lot development by giving more surprises for investors and end-users to look forward to.

New Investor Incentives

From flexed payment timelines to discounts, Camella gives an expanded list of incentives to investors this August. For those who prefer constructed homes, the developer grants up to a 5% down payment discount on its For Immediate Turnover (F.I.T.) homes, making move-in faster for new homebuyers. Offering the most favorable investment at present, Camella also makes its available lot only properties payable within 24 months at zero interest.

Improved Digital Innovations

The brand doubles its effort to go digital and stay connected with digital innovations. Camella has been tirelessly working on its digital upgrades, starting with the AR3D app (AR3D), which makes use of augmented reality to create an interactive mobile showroom.

The onset of the pandemic additionally streamlined Camella’s processes, beginning with the full digitization of its online reservation feature. These efforts are paired with other improvements in areas that are crucial for homebuyers, such as virtual tours to replace site visits and online payment instead of over-the-counter deposits. By partnering with banks and payment platforms like AllBank and AllEasy, Camella completes the seamless adaptation of its entire buying process and bridges the physical gap brought by the pandemic with digital solutions.

The Future of Healthy Homes

Camella considers itself as a pioneer in masterplanned townships that provide a holistic lifestyle experience, and the brand carries this leadership over to its digital innovations. The brand is best known for its premium-spaced houses that are convertible into safe sanctuaries. Camella, however, does not stop there and unlocks more potential directions for healthy homes with technology.

With the addition of its new series of smart homes, the brand ups the meaning of a healthy home to include energy-saving, secure, sensitive, and touchless, giving homeowners more power to control their homes based on their preference. By setting its sights on the future and anchoring on technology to address the dynamic needs of its families, Camella keeps itself ahead.

Camella, the pioneer in masterplanned townships, has undoubtedly risen from its humble beginnings in 1977 and established itself as the country’s favorite housing brand. Now, with projects in 49 provinces and 147 towns and cities, the brand brings nearly 500,000 families home to their favorites. Find your place where you could feel safe and bloom in one of these townships; visit www.camella.com.ph.