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Stocks end higher as rate cut brings optimism

By Revin Mikhael D. Ochave

THE LOCAL MARKET closed the week in green territory as investors reacted positively to Thursday’s decision by the Bangko Sentral ng Pilipinas (BSP) to cut interest rates, analysts said.

The benchmark Philippine Stock Exchange index (PSEi) rose 73.58 points or 1.2% to close at 6,191.84, while the broader all-shares index went up 30.17 points or 0.83% to close at 3,631.15.

In a mobile phone message, PNB Securities, Inc. President Manuel Antonio G. Lisbona said that the market responded favorably to the unexpected rate cut by the central bank.

“The BSP’s unexpected rate cut late yesterday encouraged investors to buy into the market, as lower rates are intended to stimulate economic activity,” he said.

On Thursday, the Monetary Board cut the rates of BSP’s overnight reverse repurchase, lending, and deposit facilities by 50 basis points to 2.25%, 2.75%, and 1.75 respectively – all new record lows.

For Philstocks Financial, Inc. Research Associate Claire T. Alviar, the interest rate cut brings market optimism despite the coronavirus disease 2019 (COVID-19) pandemic.

“The rate cut of BSP spurs optimism in the market since it is helpful for the businesses as it lessens the cost of debt which could cushion the impact of COVID-19,” she said.

However, Ms. Alviar noted that the market moved sideways during intraday trading as investors assessed the decision of the central bank.

“The assessment was because further stimulus could also mean that it expects deeper contraction or more damage in the economy, amid rising COVID-19 cases in the country. Also, rate cuts can only do so much, particularly that demand remains weak,” she said.

All sectoral indices ended as gainers on Friday.

Services picked up 27.66 points or 2.02% to 1,394.5; holding firms climbed 85.84 points or 1.35% to 6,444.47; financials increased 13.89 points or 1.13% to 1,238.96; mining and oil rose 50.54 points or 0.98% to 5,169.86; industrials improved 51.55 points or 0.68% to 7,627.07; and property went up 14.48 points or 0.47% to 3,048.32.
Advancers bested decliners 99 to 91, while 54 names went unchanged.

Net foreign selling was at P862.97 million versus P662.42 million the previous day.

“Foreigners remained net sellers today, which implies that domestic participants helped keep the index afloat,” Timson Securities, Inc. Head of Online Trading and Trader Darren Blaine T. Pangan said in a mobile phone message.

Value turnover stood at P5.3 billion with 1.08 billion issues switching hands, compared with P6.75 billion with 1.34 billion on Thursday.

“Technically, the PSEi is sitting above its 100-day moving average line. We’ll have to observe if this dynamic support area is respected next week,” Mr. Pangan said.

“The market respected the 6,000 to 6,130 support levels. We expect the market to continue consolidating for the next sessions,” Mr. Lisbona said.

Altus debuts on local bourse for ‘future ventures’

By Adam J. Ang

Altus Property Ventures, Inc. (APVI), a former unit of Robinsons Land Corp. (RLC), made its debut in the local stock market on Friday by way of introduction, or without immediately offering its shares publicly.

The real estate company applied with the small, medium and emerging board of the Philippine Stock Exchange in 2019 to list its total issued and outstanding common shares of 100,000,000 by way of introduction via RLC’s declaration of a property dividend to its shareholders. The local bourse approved its listing on June 26.

“We are delighted to have this new avenue for growth. APVI’s listing allows us to pursue business opportunities, unlocking possibilities for future ventures,” APVI Chairman and President Frederick D. Go said in a statement.

The company claimed it has a “stable” cash flow providing “a solid base and a steady source of funds for potential business expansion and other investments.”

APVI, which is incorporated in 2007, currently runs the north wing of Robinsons Place Ilocos mall in San Nicolas, Ilocos Norte.

The mall’s rooftop solar installation, which is a part of its sustainability efforts, helped in rationalizing the company’s operational expenses.

“APVI will also retain its profitable position by capitalizing on environmental, economic, and social programs in the Philippines,” it said.

Listed conglomerate JG Summit Holdings, Inc. said in a stock exchange disclosure that it now owns 60.97% of APVI’s total outstanding capital stock upon receiving 60,972,361 shares.

APVI sees benefits from synergies with its affiliates, “drawing upon the expertise and experience of RLC and the JG Summit Group.”

Meanwhile, the Securities and Exchange Commission approved RLC’s plan to offer P10 billion of fixed-rate bonds with an oversubscription option for P10 billion, expecting to net up to P19.75 billion in proceeds.

The company is offering the bonds at face value and it has the discretion to offer them in two series: Series C bonds that are due in 2023 and Series D bonds that are due in 2025.

RLC expects to earn P9.87 billion from these bonds, or up to P19.75 billion should there be oversubscriptions.
The proceeds will be used to partially fund its capital expenditure budget until next year. It will also use them to repay short-term loans maturing in the latter half of 2020.

The fixed-rate bonds were rated PRS Aaa by the Philippine Rating Services Corp.

The credit rating means RLC is expected to have an “extremely strong” capacity to meet its financial commitment. The bonds were also given a stable outlook, meaning it is expected to hold for the next 12 months.
The bonds will be listed and traded on the Philippine Dealing & Exchange.

RLC tapped BDO Capital & Investment Corp., BPI Capital Corp., China Bank Capital Corp., First Metro Investment Corp. and Standard Chartered Bank as joint lead underwriters and bookrunners for the offer.

PCC sets exemption for public-private ventures from notification rules

By Arjay L. Balinbin

The Philippine Competition Commission (PCC) on Friday issued rules for the exemption of joint venture projects cleared by the National Economic and Development Authority (NEDA) from compulsory merger notification.

The antitrust body detailed in a memorandum circular the application procedures for the exemption of joint venture projects from the required merger notification.

In a statement, PCC Chairman Arsenio M. Balisacan said: “The PCC has been continuously streamlining its processes in support of the government’s push to ease doing business.”

“Significantly, PCC’s issuance of these rules is aligned with the government’s relief, recovery and resiliency efforts, which direct the speedy roll-out of critical infrastructure projects in response to the current crisis,” he added.

The competition authority noted that the joint venture guidelines of NEDA cover all agreements between private entities and government-owned or -controlled corporations, government corporate entities, government instrumentalities with corporate powers, government financial institutions, and state universities and colleges.

“Under the circular, PCC will conduct a competitive assessment of the joint venture project in parallel with the approval process of the implementing agency or NEDA’s Investment Coordination Committee. This will expedite the rollout of key development projects that would otherwise undergo the regular merger review only after they have been awarded to the private sector proponent,” the commission said.

“This, in effect, exempts the government agency and the private entity from notifying the commission of the joint venture upon signing of a definitive agreement,” it added.

The commission said further that the government agency may apply for a certificate of project exemption on behalf of the prospective bidders or proponents.

The commission said it would provide inputs on the project documents and assess how the joint venture project might affect competition in the relevant markets.

“Should competition concerns arise in the review, PCC may require the prospective bidders to undertake specific commitments to address them,” it said.

If the implementing agency adopts the commission’s inputs in the final project documents, it will issue a certificate of project exemption in favor of the prospective winning private sector participant, it added.

“Failure to follow the requirements under the circular, the government agency and the winning private sector participant are required to file their notifications under the regular merger review process,” the competition authority said.

Power utilities to cover costs of renewable energy users’ meters

The Energy Regulatory Commission (ERC) said distribution utilities should shoulder the cost of renewable energy certificate meters and its installation to qualified end-users.

In a statement on Friday, the regulator said it had passed a resolution clarifying some provisions in the amended net metering rules after stakeholders raised them.

It was made clear that power utilities will be covering the cost of meters for qualified renewable energy users, as well as their installation, while the wiring cost from the facility to the meter will be taken on by the user.

Only end-users who wish to install a renewables facility on their premises will cover the cost of the meter and its installation.

The ERC also clarified that the meters must be installed at a connection point or at least near it.

If defined qualified participants of the net-metering program with “good credit standing” as those “with no unsettled or outstanding obligation with the distribution utility at the time of the application.”

“We have clarified certain provisions in the amended net-metering rules by providing explicit definitions, conditions, or situations and to avert varying interpretations by the stakeholders,” ERC Chairperson and Chief Executive Officer Agnes VST Devanadera said.

The net-metering program was enforced in 2013, as mandated by Republic Act No. 9513 or the Renewable Energy Act. It allows ordinary electricity consumers to generate electricity for their own consumption and sell any excess generation to the distribution grid.

Last year, the regulator amended the program rules to address stakeholders’ concerns.

With the clarifications, the ERC expects more end-users to be encouraged in participating in the program.

“Qualified end-users will be empowered with the program as they are ensured of a sustainable power supply and they also help decongest the power grid,” Ms. Devanadera said. — Adam J. Ang

Axelum earnings plunge by almost half

Axelum Resources Corp. saw its net income declined by almost a half in the first quarter as disruptions caused by the global pandemic weighed down on its domestic and export businesses.

The listed coconut products manufacturer in a stock exchange disclosure on Friday said its earnings dropped by 47% in the first three months of the year to P120.9 million, compared with P226.4 million it reported in the same period in 2019.

“After posting the highest level of profitability in our history last year, our growth momentum was interrupted by the outbreak of the COVID-19 health pandemic, which caused significant economic disruptions in most parts of the world,” Axelum President and Chief Operating Officer Henry J. Raperoga said in a statement.

Axelum’s topline decreased by 6% to P1.20 billion in the January-March period from P1.28 billion in the same months a year ago.

It claimed it was able to sustain its profitability with only a “marginal” decline in sales. “While [operational] costs were elevated, this was a result of extraordinary measures that were undertaken to address the current situation,” it said.

The coconut exporter said it is seeing stability in input prices as the government further eased its quarantine policies.

Intending to proceed with targeted spending, Axelum said its long-term prospects remained “intact” as its performance is steadily improving since the start of the pandemic crisis.

For example, the company is still on course to produce and deliver at least 25 million liters of coconut water for Vita Coco this year.

“Our long-term view on the coconut industry opportunity remains intact and our business plan remains the same with enough flexibility to cushion the prolonged effects of COVID-19. We shall keep growing our business organically and selectively consider acquisitions,” Mr. Raperoga said.

Last week, the company decided to redirect P1 billion out of the P4 billion proceeds from its initial public offering to debt repayment. The portion was originally intended for its strategic acquisitions and distribution network expansions. — Adam J. Ang

Wirecard’s Marsalek in the Philippines on June 23, says Justice chief

Jan Marsalek, dismissed board member and former chief operating officer of embattled German payment company Wirecard AG, went to the country in June before going to China, Justice Secretary Menardo I. Guevarra said.

Mr. Guevarra said the central database of the Bureau of Immigration had shown that Mr. Marsalek arrived on June 23 and left for China on June 24 from Cebu International Airport.

“But CCTV (closed-circuit television) footage does not show him arriving here, and there is no record of any flight to China scheduled in the morning of June 24 from Cebu,” he told reporters via Viber.

The bureau is now investigating personnel of its management information system (MIS) division, Mr. Guevarra said.
“The results of the investigation of the MIS personnel may lead to various scenarios, including the possibility of employing diversionary tactics to mislead Marsalek’s pursuers. Let’s just wait for the report,” he said.

The Justice secretary on Wednesday said Mr. Marsalek had arrived in the country on March 3 and left on March 5.

Mr. Guevarra has ordered the National Bureau of Investigation (NBI) to probe people allegedly involved in the missing 1.9 billion euros ($2.1 billion) of Wirecard.

The NBI will coordinate with the Anti-Money Laundering Council in the initial phase of the investigation, he said.
Benjamin E. Diokno, governor of the Philippine central bank, on Sunday said none of the $2.1 billion missing from Wirecard had entered the country’s financial system.

Local lenders BDO Unibank, Inc. and Bank of the Philippine Islands denied that they had any business relationship with Wirecard in separate statements issued last Friday. — Vann Marlo Villegas

Alorica seeks workforce expansion by 4,000

Alorica, Inc. is looking to increase its workforce by close to 4,000 by end-July as it attracts job seekers with flexible working options.

Amid the global pandemic, the business process outsourcing (BPO) firm said it continues to provide customer services, from fulfillment to financial transactions, and to assist in internet and telecommunications services.

“As we continue to grow and service some of the biggest brands in the world, we’re pleased to be able to help support the local economy and provide thousands of jobs, especially to many who have become unemployed as a result of this health crisis,” Reinerio “Bong” M. Borja, president of Alorica’s Asia-Pacific operations, said in a statement.

The BPO company is currently hiring at its sites in Alabang, Cebu, Centris, Clark, Cubao, Davao, Fort, Ilocos Norte, Lipa, Makati, Marikina, Pasay, and Sta. Mesa.

Potential employees can opt to work from home and are provided with an option to join a free virtual English proficiency training.

Besides “competitive” pay, Alorica also offers medical consultations over the phone and home delivery of medicines through its partner health maintenance organization Intellicare.

It also boasts of growth and development opportunities, citing its record of over 2,800 employees who were promoted or moved laterally in 2019.

Alorica is implementing comprehensive safety and sanitation measures at its offices to protect employees amid the global pandemic. — Adam J. Ang

Emperador income down 16% as pandemic disrupts business

BRANDY COMPANY Emperador Inc. reported a 16% decline in its first-quarter net income attributable to equity holders to P1.5 billion, citing disruption in its operations caused by the coronavirus disease 2019 (COVID-19) pandemic.

In a disclosure to the stock exchange on Friday, the company reported a 3% drop in its revenues to P10.7 billion during the three-month period compared with P11 billion in the same period last year.

“Coming from a spirit tax increase, the brandy segment was performing well in the first two months but was cut short particularly in mid-March when the entire Luzon Island was placed under quarantine,” said Emperador President Winston S. Co in a statement.

He said the lockdown coupled with the liquor ban disrupted the company’s operations and flow of products.

“We hope the velocity of sales to resume when the country returns to normal. We know that we will celebrate again soon,” Mr. Co said.

Emperador is the Philippines-listed owner of Emperador Distillers, Inc., Scotch whisky maker Whyte and Mackay Group, and Bodegas Fundador in Spain.

On Friday, shares in Emperador rose 0.50% or P0.04 to close at P8.04 per share. — Revin Mikhael D. Ochave

GMA Network’s digital TV receiver targets ‘millions’ of customers

Aiming to further expand its reach, GMA Network, Inc. on Friday officially introduced its digital television receiver called the GMA Affordabox.

In a statement, the network said it “aspires to enable every Filipino home to enjoy digital TV viewing experience.”
It said the GMA Affordabox was developed to be made accessible to “millions” of Filipino households nationwide.

“In celebration of this milestone of reaching seven colorful decades in the industry, we are more than grateful for the Filipinos’ continued trust in GMA Network as we reaffirm our commitment to deliver excellence in news and entertainment,” GMA Network Chairman and Chief Executive Officer Felipe L. Gozon was quoted as saying in a news release.

He said the company is offering its “high-quality” and “abot-kayang (affordable)” digital TV receiver in time for the 70th anniversay of the “Kapuso Network.”

The GMA Affordabox allows users to watch GMA, GMA News TV, and other free-to-air digital TV channels available in their communities.

The network said its product comes with a built-in multimedia player, allowing users to play compatible video files, view photos, and listen to music using a USB drive.

GMA Network President and Chief Operating Officer Gilberto R. Duavit, Jr. said: “GMA Affordabox stays true to its name as we make it available in the market at an affordable price, without compromising quality.”

“GMA Network has teamed up with the best product developers and engineers to give you a device built with additional features and high-quality materials at an accessible price. Now, more Filipino homes can start enjoying digital TV viewing,” he added. — Arjay L. Balinbin

Shakey’s taps Unilab unit for workplace safety

Shakey’s Pizza Asia Ventures, Inc. has tied up with a unit of United Laboraties, Inc. to ensure the safety of its employees reporting back to work while the global pandemic persists.

RelianceUnited recently partnered with Century Pacific Food, Inc., an affiliated firm of the pizza chain operator, for the same coronavirus disease 2019 (COVID-19) infection control program which adopts long-term occupational safety and health measures.

“Our philosophy is that guests must know, feel, and see that they are safe. A crucial component of that is ensuring that our employees are safe as well,” Shakey’s President and Chief Executive Officer Vicente L. Gregorio was quoted as saying in a stock exchange disclosure on Friday.

The comprehensive program by ActiveOne, RelianceUnited’s corporate clinic services provider, offers a telemedicine hotline service to Shakey’s employees, including telephone-based medical consultation and triaging, diagnostic testing, and daily monitoring of employee’s health condition.

Individual testing, medical assessments, and treatment will also be made available, the company said. For high-risk employees, a personal health protection plan will also be provided.

The lockdown measures mounted to arrest the spread of the global coronavirus disease 2019 (COVID-19) pandemic caused the temporary closure of its store chain. This led to a 35% drop in its first-quarter earnings to P114 million.

Resuming operations upon easing of quarantine policies, Shakey’s said its interaction with guests is now “mostly” contactless. It has enforced stringent health and safety protocols set forth by the government and international health bodies in its stores. — Adam J. Ang

Dentsu One Manila prepares for market’s post-pandemic creative needs

Creative and digital-led agency Dentsu One Manila has launched this month to offer business solutions and provide integrated marketing services that meet market needs in time for the post-pandemic period.

“Challenging times give birth to expertise, agility and speed,” it said about Dentsu Aegis Network’s big move to introduce Dentsu One Manila, which is formerly known as ASPAC.

It said the agency was designed to answer the changing needs of clients during the market’s move toward normalcy.
Merlee Jayme, global co-president of dentsumcgarrybowen who also chairs for the country’s creative line, will oversee the business and creative growth of the agency along with sister agency Dentsu Jayme Syfu.

Dentsu One Manila will be led by Ez Abero as chief strategy officer and acting managing director. He is joined by Jerry Hizon as chief creative officer. Rey Leuterio, executive planning and business development director, completes the management team.

Leading the Japanese accounts are Masako Okamura as executive creative director, and Yuki Koga as regional account director.

Dentsu One Manila has a content, activations and design division called DOJO, which offers different skill sets and capabilities. DOJO is headed by Joey Ong as managing director and executive creative director, and Rissa De Guzman as general manager.

Dentsu Jayme Syfu’s former strategic planning director, Mr. Abero has more than 12 years of strategic planning experience across multinational and independent agencies. He played a key role in boosting the agency’s portfolio through significant pitch wins for the Coca-Cola Sparkling business, SariMonde and Nestle Cerelac’s local and regional campaigns.

In 2018, Mr. Abero moved to Ho Chi Minh City to lead Leo Burnett Vietnam’s planning team. His team successfully worked on the agency’s biggest accounts: Samsung Digital & Corporate and Friesland Campina.

Mr. Hizon, chief creative officer, held the role of Dentsu Jayme Syfu ECD since 2016. His 25-year advertising career includes winning various international and local awards for clients like Belo Essentials, Uber Philippines, Jollibee, Unilever, PLDT SME Nation, BPI, Adidas and Gabriela, making him consistently among Adobo Magazine’s top-ranked ECDs of the Philippines.

His training in DDB Amsterdam as an exchange creative gave him a strong digital background.

Last year, he was part of a global creative workshop held in Los Angeles, California for the Tokyo 2020 Olympics.
“Ez, Jerry and I have been powerful partners. Their thinking and creative work bear strong business results. Their agile work process helps solve business problems efficiently and effectively. The change in leadership from the top aligns with the global vision of providing idea-led, data-driven and tech-enabled creativity in our line of business,” said Ms. Jayme about how they have worked through the years.

JC Catibog, chief executive of Dentsu Aegis Network Philippines, said: “I am thrilled for this new chapter of the agency and I am confident that Ez and Jerry will drive the innovation agenda ingrained in the Dentsu brand, fueled by their proven strategic and creative strengths.”

Alex Syfu, the managing partner who oversees the agency’s transformation, said: “Ez and Jerry’s work disciplines coupled with their strategic and creative capabilities will help them drive Dentsu One Manila’s business growth and creativity.”

Philippine economy may shrink by 3% on lockdown — S&P

The Philippine economy could shrink by 3% this year, the price to pay for having one of the toughest lockdowns in the world, according to S&P Global Ratings.

The latest estimate is much worse than the 0.2% contraction expected by the rating company in April and the 6% growth forecast it gave in December.

“We expect the permanent costs of COVID-19 to be highest in India and the Philippines, due mainly to the severity of lockdowns, and in Thailand given its high exposure to international travel,” S&P said in a note on Friday.

President Rodrigo R. Duterte locked down the main Philippine island of Luzon in mid-March, suspending work, classes and public transportation to contain a novel coronavirus pandemic that has sickened more than 34,000 and killed about 1,200 people in the Philippines. People should stay home except to buy food and other basic goods, he said.

The President extended the so-called enhanced community quarantine twice for the island and thrice for Manila, the capital and nearby cities where infections have been mostly concentrated.

The lockdown in many parts of the country including Metro Manila has since been relaxed, but mass gatherings remained banned.

S&P’s outlook for the country was better than the expected contractions in Thailand this year at 5.1%, India, Singapore and New Zealand at 5% each and Japan at 4.9%.

But it was worse than the expected contractions in Malaysia at 2%, South Korea at 1.5%, and the projected growth in Indonesia at 0.7%, Taiwan at 0.6% and Vietnam at 1.2%. The contraction for the Asia-Pacific region was estimated at 1.3% this year.

The debt watcher noted that despite a strict lockdown, coronavirus infections in the country “remain stubbornly high.”

“Economies that flattened COVID-19 curves quickly (China, Korea, and Taiwan) and launched substantial and well-targeted stimulus (Australia, Japan, New Zealand and Singapore) are expected to escape with less permanent damage, ranging from 0.5% to 3%,” it added.

The local service sector will bear the brunt of the lockdown because it depends on face-to-face interactions, S&P economist Vincent Conti said.

Consumption was expected to suffer because majority of Filipinos are employed in the service sector, he said in an e-mail.

“That nexus between weaker labor markets, balance sheets and consumption will mean a much more difficult return to the economy’s pre-COVID-19 trend level of output,” he added.

The country’s unemployment rate quickened to 17.7% — equivalent to 7.25 million jobless Filipinos and the fastest since 2005 — from 5.1% a year earlier, according to the local statistics agency.

More than 54,000 overseas Filipino workers have come home, which could worsen the joblessness. The country’s consumption-driven economy shrank by 0.2% in the first quarter.

S&P expects the Philippine economy to grow by 9.4% next year as economic activities resume.

“Risks to the recovery path include the persistent spread of the coronavirus and weakened balance sheets in the private sector due to the length and magnitude of the downturn,” according to the report.

Mr. Conti said the depth of this year’s recession provides such a low base that even a gradual reopening of the economy would generate very high growth rates next year. “Growth numbers will hide the fact that the economy will still be operating far below pre-COVID-19 trend levels.” — Luz Wendy T. Noble

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