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MPIC profits plunge 63% as virus disrupts operations

METRO PACIFIC Investments Corp. (MPIC) reported a 63% earnings cut in the six months to June as measures to contain the coronavirus outbreak hit the demand and operations of all its business segments.

In a statement on Wednesday, MPIC said the group’s attributable net income stood at P3.03 billion, down from P8.12 billion the same period last year.

Its core income contracted 38% to P5.34 billion as consolidated operating revenues slid 17% to P30.71 billion.

By business unit, the power segment contributed P5.22 billion in operating income, down 14% from last year. This accounts for the operations of Manila Electric Co. and Global Business Power Corp., which saw 43% and 9% lower incomes to P106 billion and P1.1 billion, respectively.

Profits from the water business fell 21% to P1.81 billion, largely coming from the contributions of Maynilad Water Services, Inc., which declined 22% to P3.6 billion.

In both the power and water businesses, profits declined due to the slowdown in commercial and industrial demand as the government implemented strict stay-at-home protocols to arrest the virus outbreak.

Contributions from the toll roads unit dropped 62% to P915 million, as volume on MPIC’s expressways were significantly reduced when nonessential travel was prohibited.

The light rail segment suffered the most as it swung to a P175-million core net loss, attributable to the forced closure of the Light Rail Transit Line 1 for more than two months.

Other investments such as in hospitals and logistics posted a consolidated net loss of P128 million.

“We have come through a difficult first half in decent financial shape… I anticipate subdued economic activity to persist for at least the rest of the year,” MPIC President and CEO Jose Ma. K. Lim said in the statement.

In a media briefing, Mr. Lim said the company remains committed to make investments that will help the Philippine economy recover, but “not to the extent that we have to take on additional leverage on MPIC.”

“With respect to new projects, we have deferred because the market is changing. We have to get some clarity as to how tourism and the hotel business can come back in the future,” Mr. Lim said. “The thrust of MPIC is to continue to conserve cash and to use it wisely.”

The reimposition of strict quarantine measures is also being observed by the company, but MPIC Chairman Manuel V Pangilinan said he remains optimistic the second half will be better than the second quarter.

“We’re reluctant to give a guidance in terms of the full year. Perhaps we could give you a better picture when we release our third-quarter results,” he said in the briefing.

Despite the first-half turnout, investors are expected to focus on the company’s outlook for the next months instead, as many have already anticipated second-quarter earnings to dip, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said.

“Given the weak economy we still have right now, and the reintroduction of (stricter quarantine) in selected areas in Luzon… earnings for the conglomerate are projected to remain challenged,” he said in a text message. “Thus, we see a downward bias with its share price.”

Shares in MPIC closed at P3.11 each on Wednesday, up four centavos or 1.30% from a day ago.

Meanwhile, MPIC said in the briefing it is helping the government-owned East Avenue Medical Center build a 220-bed facility dedicated to coronavirus disease 2019 (COVID-19) patients.

“We have been in touch with the Department of Health… for the development of a COVID facility in East Avenue Medical Center,” said Pilar Nenuca P. Almira, president and CEO of Cardinal Santos Medical Center, which is under the MPIC hospitals group.

She said the hospital will shoulder the infrastructure, while MPIC is expected to provide hospital equipment estimated to cost P35 million-P45 million.

“The list is already with us and it’s now our turn to make sure that this list is validated and provide them the support that we can afford. Our group chair, Mr. Pangilinan, has committed to help,” Ms. Almira added.

MPIC is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains interest in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

SM Investments earnings fall 69% on pandemic impact

SM INVESTMENTS CORP. (SMIC) posted a 69% profit drop in the first six months of the year as the coronavirus-related lockdown took a heavier toll on its businesses in the second quarter.

In a statement, Wednesday, SMIC said its consolidated net income shrunk to P7.1 billion from P23 billion last year. Consolidated revenues were lower by 21% to P185.5 billion, mostly due to its malls and banking businesses.

The property segment, through SM Prime Holdings, Inc., remained the biggest contributor with a net income of P10.4 billion or 61% of the pie. This is lower by 46% year on year due to the closure of SM’s mall network for most of the second quarter.

What helped spur the property business was the residential segment, which booked an 11% revenue growth to P23.7 billion.

The banking segment made up the second biggest chunk of SMIC’s net income, contributing 34% of the total.

BDO Unibank, Inc. posted profits of P4.3 billion, 79% down from last year due to some P22.4 billion in total provisions. This was offset by the 24% growth in profits from China Banking Corp., which stood at P5.2 billion at the end of June.

SMIC’s retail arm accounted for the balance of the pie, posting a net income of P522 million, lower by 91% from last year. It took most of its revenues from food stores located close to residential communities, which recorded a 15% growth in revenues.

“Our half-year financial results are within our overall expectations, given the context of the lockdown due to the COVID-19 (coronavirus disease 2019) outbreak, which had a greater impact in the second quarter,” SMIC President and CEO Frederic C. DyBuncio said in the statement.

“The current environment has been most challenging for our non-food retail and mall operations, which have adapted quickly to new customer needs and critical safety considerations. All our businesses will continue to prioritize health and safety as well as convenience for our customers and stakeholders,” he added.

As the decline in SMIC’s first-half performance is anticipated, investors simply wanted to ask, “How bad is it going to be?,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

“SM’s portfolio is exposed to the industries hit hard by the pandemic. The reported drop in net income will cause the stock price to adjust downward as investors extrapolate these results into the future,” Mr. Lisbona said. “Any recovery will really depend on how quickly a vaccine can be developed and released to the public.”

Shares in SMIC gained P5 or 0.58% to P870 each on Wednesday. — Denise A. Valdez

Century Pacific Food net income up 31% 

CANNED FOOD manufacturer Century Pacific Food, Inc. (CNPF) posted a 31% increase in its net income to P2.25 billion in the first six months of the year, due to the company’s higher consolidated revenues.

In a disclosure to the stock exchange on Wednesday, the company said its consolidated revenues rose 28% to P25.12 billion during the first half of the year while its second-quarter net income recorded a 32% increase.

CNPF said its milk brand, Birch Tree, together with its other products such as Century Tuna, Argentina and 555 sardines, continue to account for the majority of its sales, adding that its total branded businesses made up 82% of total consolidated revenues.

“Total branded saw sales grew by 35% year on year during the first six months of 2020, faster than the company’s consolidated top-line growth. In the second quarter alone, branded revenues jumped by 39% year on year,” CNPF said.

The company added that the revenues from its commodity-linked export business saw a 5% increase in the first half, and accounted for 18% of its consolidated sales.

However, CNPF said its operating expenses for the first half rose 36% to P3.24 billion due to additional funds allocated to sustain its operations despite the coronavirus disease 2019 (COVID-19) pandemic.

The company said some of the costs it incurred during the period include financial assistance to employees, provision of health and safety measures, and adjustments made to keep the unhampered flow of goods, among others.

“Though we see the pace of growth starting to ease relative to the month of March, demand continues to exceed pre-COVID levels. At this point, we are likely to end the year exceeding 10% to 15% growth — our typical growth target during more normal times,” CNPF Chief Finance Officer Oscar A. Pobre said.

But he said the company’s priorities remain, such as keeping employees safe, offering assistance to communities, and making products readily available and accessible to consumers.

“We continued to see heightened demand for our shelf-stable products through the months of April, May and June as quarantine measures and fear of going out persisted leading consumers spending more time at home and cooking their own meals,” Mr. Pobre said.

Looking ahead, Mr. Pobre said the company is planning to expand its brand portfolio that can deliver steady growth and can produce profit, as well as emerging categories that will benefit from long-term increases in income and consumption per capita.

“We are now setting our sights on more medium- to long-term plans, on how we can maximize our positioning as we invest in both our existing set of products and a robust pipeline of innovations,” he said.

On Wednesday, shares of CNPF rose 1.10% or P0.16 to close at P14.64 per share. — Revin Mikhael D. Ochave

D&L sees earnings reaching up to P1B in 2nd half

EARNINGS of D&L Industries, Inc. is expected to recover to P900 million-P1 billion in the second half of the year, picking up after hitting its “lowest” in the second quarter when it fell 57% to P287 million.

In a media briefing, Wednesday, D&L President and CEO Alvin D. Lao said the company expects improved resilience in the next six months, regardless if the coronavirus crisis is solved or not.

“We don’t think second-half things will be as bad as they were in the second quarter, particularly in April,” he said. “Even if the pandemic doesn’t go away entirely, I think everyone has already accepted this is going to stay with us, and trying to find ways to adapt.”

The company disclosed its second-quarter financial performance on Wednesday, which showed a 13% sales decline to P4.5 billion.

This brought D&L’s year-to-date net income down 43% to P802 million. Net sales for the six months slid 8% to P10.17 billion.

Almost all its business segments posted lower net income, primarily its food business, which fell 60% year on year.

Mr. Lao attributed this to the closure of several restaurants in the early days of the lockdown from late March to April, as businesses were trying to figure out how to operate despite mobility restrictions.

The oleochemicals and specialty plastics businesses also posted a 35% and 37% drop in net income, respectively. Only the aerosols business grew for the period, with net income increasing 20% as demand for disinfectants grew due to the virus concern.

“The alcohol business didn’t exist at the beginning of the year. We only started selling just before the lockdown started… Definitely we had to increase capacity,” Mr. Lao said.

Despite the challenges, D&L still intends to pursue the expansion of its 26-hectare plant in Batangas, which will support the expected recovery of demand for the company’s products. Mr. Lao said work in the facility might finish by end-2021.

He added the company expects that people will continue putting greater emphasis on health, safety and cleanliness, which will further lift D&L’s sales even after the pandemic.

Shares in D&L at the stock exchange slid two centavos or 0.44% to P4.50 each on Wednesday. — Denise A. Valdez

A (farewell) Chocolate Kiss

The UP restaurant was about more than just the food

THE Chocolate Kiss Café, a restaurant just as beloved and as respected as any other institution in the UP Diliman campus, is closing — another casualty of the pandemic. The announcement was made via its website earlier this week.

“The Chocolate Kiss Café, our family’s 23-year-old restaurant at the second floor of the Ang Bahay ng Alumni Building in the UP Diliman Campus, will remain permanently closed even after the community quarantine,” said Ina Flores Pahati, owner, and daughter of Chocolate Kiss Café co-founder Maline Flores in the statement.

“We didn’t know our lives would be changed when my family opened The Chocolate Kiss Café. I was a grade-schooler then, and the year was 1997. From going home directly after school (or work, for my elder sister), our family suddenly had this point of convergence, an unplanned extension of our home,” the statement continued. “My mom and aunt, founders of the Café and both UP alumni, decided to take the leap with their home-based cake business with the humble intention of giving the UP community a new dining experience, and an alternative to college canteens.”

For a long time, it was the nicest restaurant around. It was inevitable that many people in the community would attach memories to it, usually ones that were more special than the mundanity of readings and coffee.

“I remember going there around first year or second year college,” reminisced Patricia Carranza, a lecturer at the UP College of Music, and a blogger through her own channel, Mama, At Iba Pa. “It was the first posh restaurant in TBA (Bahay ng Alumni), being there before ROC and Art Circle Cafe. I usually have my lunch and merienda in Area 2 and college canteens because that’s what my budget usually allowed. Stepping in Choc Kiss or other restos in Katipunan or SM North meant I had saved enough money from my baon (allowance), scholarship, or teaching sideline.”

“It is usually a first stop for me when I meet friends, or when I happen to be somewhere on campus for meetings. For breakfast, for lunch, or for coffee and cakes, it was always Choco Kiss,” said Ivy Lisa Mendoza, a senior lecturer at the UP College of Mass Communication, and managing director of PR firm Mediasense.

Both reminisced about their favorite dishes at the restaurant (this reporter remembers the ribs). “I am a creature of habit so I only order three things — the thick and creamy mushroom soup for starters, the savory Kalbi Chim for main course, and my beloved Dayap Cake for dessert,” said Ms. Mendoza. “These I order as in ALL THE TIME (emphasis hers).”

“I love their Devil’s Food Cake, not because of the taste per se,” remembered Ms. Carranza. “I like dissecting the cake. Eating the cake part, the white icing part, the middle chocolate cream part, and then all at once. It lets me stay longer than usual in the restaurant nang hindi nagiguilty (without feeling guilty), because I still have food. Eating through the layers makes my stay longer. I can space out in a public space longer.”

Ms. Carranza noted that Chocolate Kiss was one of the few places in the UP campus where one would dress up. At the College of Music, as a student, she would have to dress up for performance examinations, and she and her friends would treat themselves to a meal at the cafe after performances, still dressed up in their examination clothes. The farewell statement of Ms. Pahati noted this, saying, “It always amused us how a couple all tidied-up for a date would be in the same dining room as folks (who just lived around the corner) dressed in their pambahay and tsinelas (house clothes and slippers). People felt comfortable to come as they were, and we loved how it was that way. We will miss how on some hours, the Café can be quiet and feel like a respite; then on other occasions, someone can suddenly sit at the piano and serenade everyone in the room, or members of the UP Singing Ambassadors will just break into a song.”

“It was a place where we enjoyed not only the food but just being merely there. It was a place where you saw people of all sorts, from the so-called intellectual superstars to the UP Maroons basketball players, from your former teachers and classmates to your own students. It was a place where everybody seemed to know everyone, even the servers knew the regulars,” said Ms. Mendoza. “The day after my wedding — which was held at UP Chapel — I dragged my newly minted husband to a rally at the administration building, and then to a good lunch at Choco Kiss. I wanted to show him too how exciting life on the Diliman campus could be!”

It’s interesting to note that the favorite memories of the cafe of the two faculty members we interviewed had something to do with scholars, perhaps owing to the fact that it was one of the few buttoned-up places within the university’s radius. “My favorite memory of it was when we had a lunch meeting with our scholarship benefactor, UP Music Ed alumna Olivia Reyes-Rocha,” said Ms. Carranza in a mixture of Tagalog and English. “I belong to the last batch of students who had a tuition of P300 per unit. My parents could afford it, but I had two younger siblings who were still in school. The scholarship helped cover other costs.”

“It is where we first met our (meaning I and my college barkada Purisans) scholar Gerald Roxas, a UP Tacloban transferee who was affected by Yolanda and who had to relocate to Diliman to be able to continue his studies. We gave him a first glimpse of Diliman life and treated him to Choco Kiss treats,” said Ms. Mendoza. “When he finally graduated, and to show his gratitude to us who sent him to school, Gerald then treated us to lunch — in Choco Kiss of course,” she said with a smile.

Due to the gentrification of nearby Maginhawa St. in Teachers Village and Katipunan Ave., one can simply shrug off the closure of Chocolate Kiss (it had a second branch in the Ayala-operated UP Town Center), because there are now restaurants of the same, if not a higher caliber as Chocolate Kiss. Asked about what UP loses in Chocolate Kiss’ closing — well, it turns out it isn’t just a restaurant after all. “Hindi masakit sa bulsa ng undergrad (it doesn’t hurt an undergrad’s pockets),” said Ms. Carranza. “The scholars who now have great jobs and have achieved something might feel happy whenever they go back there.

“Now that I’m a bit okay financially, whenever me and my husband would bring my family — parents, children — to UP, one of the places we go to is Choc Kiss: for implicitly sharing our identity through food, in the midst of momentary comfort within the university.”

“Chocolate Kiss was UP’s own, it was UP’s best kept secret, so losing it grates. In fact, when it opened a branch in UP Town Center, many people did not warm up to the idea, because that would mean sharing that secret to people outside the campus. Really, it was a UP thing much like the Oblation or the Carillon,” said Ms. Mendoza.

The Chocolate Kiss, now only a memory, will share its fate with other beloved UP institutions: CASAA, the Faculty Center, and the UP Shopping Center (all three lost to fires). “Every time this happens, a part of your UP memories goes with them too. I guess it will be the same with Choco Kiss closing down,” said Ms. Mendoza.

Though the restaurant will be permanently closed effective Aug. 24, customers may continue to order The Chocolate Kiss cakes and pastries from its Fairview, Quezon City Commissary through www.thechocolatekiss.com. — Joseph L. Garcia

Philodrill’s losses widen on crude price crash

THE Philodrill Corp. recorded P44.3 million in after-tax loss in the first semester as its revenues from petroleum plunged on the collapse of crude prices and drying production.

In a regulatory filing to the stock exchange, the listed oil exploration firm said its total revenues went down 54% to P60.1 million between January and June.

Its petroleum earnings declined by three-fifths to P40 million, mainly due to price slump and lower output volume in the period. By end-June, its crude oil inventory declined by P4.1 million.

Philodrill reported a lower combined gross production volume of 350,957 barrels with an average price of $33.64 per barrel, compared with $64.46 per barrel in the same period last year.

The company also reported an additional P2.4 million in deferred oil exploration costs. In the period, the plug and abandonment activities in two oil wells in Palawan’s Nido block under Service Contract (SC) 14 were suspended due to quarantine restrictions. Together with Galoc Production Company, it raised the budget for the operations, which will resume in September.

Meanwhile, Philodrill is pushing through a quantitative interpretation/reservoir characterization study of the Octon block in northwest Palawan under SC 6-A, which it operates, after a proof of concept study was done in March.

It transmitted the block’s data under a confidentiality deal with NWP Ventures Ltd., an affiliate of British firm Manta Oil Co. Ltd., which expressed interest in exploring the field.

Shares in Philodrill rose by 10.34% to close at P0.0096 each on Wednesday. — Adam J. Ang

Why Pinoy food is not as famous as other Asian cuisines

THAI, Chinese, Japanese — their cuisine, or at least iterations and versions of them, have already made themselves known to the world. The West has adapted some of these dishes for their own repertoire. If California Maki and Orange Chicken exists, well, why haven’t we heard of, say, a San Francisco adobo?

Mikey del Rosario, Chef Consultant at Mabini’s in Malate, shares its space with another icon, Tesoro’s. Both serve the same goal: Tesoro’s shows the refinement of our craft and native dress; and so does Mabini’s with our food, with such creations as a pancit with hand-pulled noodles, or else balut (fertilized duck egg) in crab fat and butter.

Mr. Del Rosario appeared on the second episode of Manila Storytellers, an educational series by curated tour organizers WanderManila. Here, host Benjamin Canapi picked Mr. Del Rosario’s brain about the Manila food scene and why Filipino food hasn’t reached the heights of our neighbor’s cuisines.

“Up until lately, it’s always been just your homegrown kind of cooking…,” he said of the restaurant scene. “ That’s always been the food scene in the Philippines, and even abroad. People abroad, [the] restaurants they put up, they’re not very high-end,” he said in a mix of Tagalog and English. “It’s just basically catered to the Filipino people,” he said.

But he noted that in the last five years, things have changed. “These restaurants that have elevated the cuisine started popping up.” He cited Toyo Eatery, which bagged 43rd on the Asia’s 50 Best Restaurants List for 2019. “Slowly but surely, it’s starting to get there man. It’s slowly inching its way into the global scene. Not as fast as we would want, but it’s getting there; there are steps.”

He pointed to a survey by YouGov last year, which had 25,000 respondents from 24 countries, where Filipino food rated as the fourth least popular. “Not many people know about it, not many people like the cuisine,” he said.

“I think one of the hurdles is, well, Filipino ingredients are kind of hard to come by abroad,” he said. “I’ve cooked Filipino food also abroad. The ingredients I get; they feel too clean, almost. Everything’s so polished; the eggplants look so nice.”

Then there is the diversity in the country, spread as we are across a few thousand islands: sometimes a treat, sometimes a threat. “Another problem I think I feel [with] Filipino food in general is that… as a country, we’re kalat (spread out),” he said. “The cohesiveness of the food is not there. It’s very hard for me, for you, to define filipino food in one sentence. There are too many things going on.” He cites for example, the many recipes of adobo, or even the different souring agents of sinigang soup. “There’s way too many factions for you to be able to say, this is Filipino food.”

As for restaurants abroad, he mentions that a certain mentality blocks restaurants from reaching meteoric heights. We do however, have to cite the fame of Bad Saints in Washington, DC, and Bib Gourmand awardee Purple Yam in New York, two Filipino restaurants, in two main cities of the United States. There was also Aux Iles Philippines by Nora Daza in the 1960s in one of the world’s culinary capitals, Paris. Of course, for three success stories, there are other hundreds that didn’t make it.

“The people that left at the time were not chefs or cooks, they weren’t even businessmen,” he said. “Filipinos really weren’t bred to be entrepreneurs. We’re always pigeonholed into thinking we’ll be great employees.”

“That’s what happened when we went abroad. The people that wanted to put up Filipino restaurants didn’t do it well,” he argues. By that, he doesn’t mean the food, but a lack of business skills such as in costing and accounting, and the more boring matters in the restaurant business. “Hopefully, we can get that good food out there without compromise.”

“It’s very hard to rally around a single cause, more so food. I’m not giving up hope, obviously. Maybe in the future, Filipino food will get its due.” — Joseph L. Garcia

Get that shot

AS health workers call for stricter protocols to lighten their load in an overwhelmed healthcare system, there is one thing you can do to help: get vaccinated.

A webinar last week called Protect the Elderly by the Philippine Foundation for Vaccination (PFV) called to continue immunization during the community quarantine and prioritize the elderly. The webinar focused on the administration of influenza (or flu) vaccines to the elderly, a particularly vulnerable sector.

“Among the vulnerable populations that can benefit the most from these vaccines are the elderly,” said Dr. Liza Gonzales, president of the PFV. “These vaccines protect against infectious diseases that have the potential to weaken the immune system and increase susceptibility to COVID-19. Many studies have documented that a previous viral infection like flu can precede the development of severe bacterial pneumonia leading to hospitalization, and even death.”

Internist and Infectious Disease Specialist Dr. Arthur Dessi Roman gave various reasons on why the elderly are particularly susceptible to the flu, and thus more in need of the flu vaccine. “As we grow older, our immune system also grows old. Unfortunately, the capability of the immune system to respond is not as good anymore as when we are young,” he said. Among the other reasons he listed are the presence of comorbid illnesses such as heart and lung disease and diabetes. “People with diabetes experience more serious outcomes following a flu infection.” He presented data saying that diabetic patients have three to six times higher risks of being hospitalized due to flu-related causes, four times as high the risk to be admitted to the ICU, and six times as high the risk for death. Other reasons he gave include physical changes such as a weaker cough and gag reflex (the cough response is to prevent contaminants from entering the respiratory tract), poor nutrition, impaired understanding and self-care, increased contact with medical facilities, and use of medical devices. “All of these things contribute to the reasons why the elderly population are actually at risk of getting infected with a lot of bacteria, viruses, and fungal infections,” said Dr. Roman.

He then highlighted why getting vaccinated against the flu during a pandemic of another sort is still important. “I want to remind everyone that flu vaccination matters even more during this time,” he said.  According to him, being protected against the flu will prevent getting an infection with symptoms similar to those of COVID-19 (coronavirus disease 2019), avoiding anxiety and stress. The flu can also weaken the immune system, thus opening the door for a possible COVID-19 infection. He also said that a co-infection with COVID-19 and the flu is possible, which leads to more serious complications.

Finally, he noted that it avoids additional hospitalization and consultations when hospitals are already overwhelmed. He said that in the US, the flu vaccine decreased consultation for flu-related causes by up to 60%.

“Staying healthy is your best shot against preventing COVID-19 infections,” he said.

“Receiving the flu vaccine is not just about ourselves,” he said in a mix of Tagalog and English. “Also remember that getting vaccinated yourself may also protect people around you.”

As the COVID-19 pandemic rages, contact a doctor to administer the flu shot at your home or some other location, instead of setting up an appointment at the hospital. — Joseph L. Garcia

Megaworld invests $5 million in tech startup

MEGAWORLD CORP. is investing $5 million (about P250 million) in its own start-up brand that will build the country’s first homegrown lifestyle delivery mobile application.

In a statement on Wednesday, the Andrew L. Tan-led property company said it is forming a digital innovations subsidiary, AGILE Digital Ventures, Inc., which will invest in startups geared towards food, retail and hospitality industries.

The $5-million investment will go to a three-year start-up project called PICK.A.ROO, a mobile app that will gather more than 300 local and international merchants to sell food, gadgets, hardware, personal care and other items on the platform.

The app is scheduled to launch within the month.

“Our main goal is to help retailers smoothly migrate to the digital platform especially during this challenging time,” said Kevin L. Tan, chief strategy officer of Megaworld, who is also president of AGILE Digital Ventures.

“Since 2018, we have been looking for investment opportunities on an app that will enable our retail partners sell and deliver their products online and on-demand. We have talked to several potential partners, but eventually, we decided to build our own,” he added.

The company is currently scouting other investment opportunities related to boosting its technology platforms.

Megaworld operates 20 lifestyle malls across the country which were hit by the coronavirus-related lockdown. It also has over 700 residential developments, over 60 office towers and 11 hotels in its portfolio.

The company’s attributable net income fell 9% to P3.5 billion in the first quarter of 2020. Its shares at the stock exchange ended flat at P2.99 each on Wednesday. — Denise A. Valdez

Yields on BSP’s term deposits inch higher on faster inflation

BSP
RATES of the central bank’s term deposits inched up as bids declined. — BW FILE PHOTO

YIELDS ON THE term deposits offered by the Bangko Sentral ng Pilipinas (BSP) rose slightly on Wednesday as bids declined following the release of the July inflation data.

Tenders for the BSP’s term deposit facility (TDF) amounted to P526.49 billion on Wednesday, well beyond the P380-billion offering. However, this was lower than the P549.345 billion in bids seen last week for the P360 billion up for grabs.

The one-week papers attracted bids amounting to P196.23 billion, surpassing the P140-billion offering and the P214.785 billion in bids seen last week.

Accepted yields for the seven-day tenor ranged from 1.75% to 1.756%, a slightly slimmer margin than the 1.75% to 1.7564% band logged on July 29. With this, the average rate for the papers settled at 1.7542%, inching up by 0.07 basis point (bp) from last week’s 1.7535%.

For the 14-day term deposits, tenders totaled P247.365 billion, higher than the P180 billion auctioned off and also the P210.68 billion in bids last week for the P140 billion offered by the central bank.

Lenders asked for returns ranging from 1.75% to 1.77%, a wider margin than the 1.75% to 1.762% logged a week ago. This caused the average rate for the two-week deposits to settle at 1.7566%, rising by 0.23 bp from the 1.7543% recorded in the previous auction.

Meanwhile, bids for the 28-day tenor reached P82.895 billion, above the P80-billion offering but down from the P123.88 billion in tenders seen the previous week for the P80 billion on the auction block.

Yields on the one-month deposits ranged from 1.75% to 1.799%, a tad wider than the 1.75% to 1.798% band last week, bringing the average rate to 1.7655%, up by 0.61 bp from the 1.7594% recorded a week ago, central bank data showed.

The TDF is the central bank’s primary tool to mop up excess liquidity in the financial system to better guide market interest rates.

Yields were marginally higher after “faster-than-expected inflation data,” said Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort.

Headline inflation picked up to 2.7% in July from the 2.5% in June and the 2.4% in the same month last year, the Philippine Statistics Authority reported on Wednesday. The faster rise in prices was mainly on the back of higher transport costs.

The 2.7% headline print was closer to the upper end of the 2.2-3% estimate given by the BSP and a tad faster than the 2.6% median in a BusinessWorld poll of 16 analysts last week.

The July rate put the year-to-date average at 2.5%, within the central bank’s 2% to 4% target and 2.3% forecast for 2020. — L.W.T. Noble

Sony’s end-June profit tops estimates

SONY CORP. reported profit that outpaced estimates on strong demand for its games products, but offered a measured forecast for the fiscal year due to uncertainty from the coronavirus pandemic.

The Tokyo-based company said operating profit for the quarter ended in June was ¥228 billion ($2.15 billion), compared with average analyst estimates of ¥137 billion. The company forecast operating profit for the year ending in March of ¥620 billion, compared with projections for 654 billion yen. Sony also said it would buy back as much as 1.64% of its shares for ¥100 billion.

The Japanese tech giant is preparing to launch the latest generation of its PlayStation gaming console this holiday season, which has undercut sales of existing hardware. Still, Sony anticipates strong sales for the PlayStation 5, recently asking suppliers to double production, and the last quarter made clear the coronavirus is fueling demand for games as many people are stuck at home.

The PlayStation Plus subscription service added 3.4 million users, the biggest single-quarter addition since Sony began reporting quarterly figures for it in March 2018. The membership is essential for playing games with others over the internet and Sony now has 44.9 million subscribers.

“The PlayStation unit’s result, which showed superb software sales that even exceeded momentum during the recent yearend holiday season, is clearly a big positive surprise,” said Hideki Yasuda, an analyst at Ace Research Institute. “People’s hesitation to go outside will likely persist for months, a strong tailwind for Sony’s game unit that will last at least throughout this fiscal year.”

PS4 SLUMP
In a call with investors, Sony’s top executives made clear the environment is challenging and they will have to adjust to the fallout from the COVID-19 (coronavirus disease 2019) outbreak.

“This fiscal year will be important not just for how we recover from the COVID-19 impact, but also for how we change our strategy to better fit a post-corona world,” said Hiroki Totoki, the company’s chief financial officer. “The ones to survive will not be the strongest, but those who are willing to make changes.”

An official at the PlayStation unit, who asked not to be identified because the plan is not yet public, said Sony’s next announcement regarding the PlayStation 5 is tentatively scheduled for this month. The company intends to release two versions of the console, one with a Blu-ray disc drive and one without, though it has yet to disclose the pricing for either model.

“I think the core of Sony PlayStation early-adopters will snap up the first several million units quickly,” said Macquarie Capital analyst Damian Thong. “With backward compatibility, their existing game library will work with the new console, so the new machine would be usable right away.”

Mr. Thong said he expects the standard PlayStation 5 unit would be priced at $500 and the disc drive-less version would be sold for $400. Altogether, he said, Sony would sell more than 6 million units of the PlayStation 5 consoles by the end of March next year.

Games software was a highlight for Sony in the quarter, with subsidiary Naughty Dog releasing The Last of Us Part II in June. The game racked up more than 4 million sales in its first three days, making it the fastest-selling first-party exclusive on the PlayStation 4. Ghost of Tsushima, released on July 17, sold 2.4 million copies in its first three days, the company said.

PANDEMIC EFFECT
Underscoring its commitment to the games business, Sony recently invested $250 million in Epic Games, Inc., the proprietor of Fortnite and the Unreal game development engine. The latter is set to play an important role in the creation of PlayStation 5 titles to come.

Sony projected lower results for its image sensor business, a traditionally fast-growing division that supplies camera technology to the likes of Apple, Inc. It forecast the unit’s operating profit for the current fiscal year would be about ¥130 billion, compared with ¥235.6 billion a year earlier, because of weak demand related to the coronavirus.

“The global economic slowdown stemming from COVID-19 is damaging demand for high-end smartphones, and thus our image sensor product lineups optimized for these customers,” said Mr. Totoki. “Over the long term, we still believe demand for high-end smartphone and image sensors will come back, but for this year and next we would need to align our strategy to more mid- to low-end smartphones.” — Bloomberg

San Miguel-PNCC joint venture pushing for two new toll road projects

THE Transportation department on Tuesday said the joint venture of the Philippine National Construction Corp. (PNCC) and San Miguel Holdings Corp. (SMHC) is in talks with the government for the construction of the South Luzon Expressway Toll Road 5 and the Pasig River Expressway.

“In a TRB (Toll Regulatory Board) resolution dated 29 June 2020, the two road projects were declared as toll roads upon the request of, and based on the proposal submitted by the joint venture of PNCC and SMHC,” the Department of Transportation (DoTr) said in a statement.

It said the PNCC-SMHC joint venture is in discussions with officials from the technical working group of the TRB, composed of DoTr,  Department of Public Works and Highways, Department of Finance, National Economic and Development Authority, and representatives from the private sector.

The four-lane South Luzon Expressway Toll Road 5 will start from Barangay Mayao, Lucena City in Quezon, and end in Matnog, Sorsogon, near the Matnog Ferry Terminal.

The 420-kilometer toll road has eight segments, namely: Lucena to Gumaca, Gumaca to Tagkawayan, Tagkawayan to Sipocot, Sipocot to Naga City, Naga City to Polangui, Polangui to Legazpi City, Legazpi City to Sorsogon, and Sorsogon to Matnog.

The Transportation department said the first segment alone will cost about P22.6 billion and will take 24 months to complete.

The six-lane Pasig River Expressway will connect Manila to Rizal province.

The 19.37-kilometer elevated expressway will start from Radial Road 10 (R10) in Manila and end at a connection to the South East Metro Manila Expressway at Circumferential Road 6 (C6), the Transportation department said.

The P95.41-billion project has three segments, namely: R10 to Plaza Azul, Plaza Azul to San Juan River, San Juan River to C5 Intersection, and C5 Intersection to C6 Intersection.

The project has an estimated implementation period of 36 months.

“Construction of the two projects is being eyed to start within the remaining two years of the Duterte administration,” TRB Executive Director Abraham P. Sales was quoted as saying. — Arjay L. Balinbin

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