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Fitch Solutions: Revived PPP focus to help lure investors to flagship projects, but risks remain

THE GOVERNMENT’s recent decision to include more public-private partnership (PPP) projects on its revised “Build, Build, Build” (BBB) flagship infrastructure list should make this development centerpiece of the Duterte administration more attractive to private capital, Fitch Solutions Group Ltd said in a Nov. 12 note, even as it acknowledged that investors “continue to face a high degree of risk in the Philippines” due to deep-seated “bureaucratic inefficiencies” as well as “a high level of corruption.”

Fitch Solutions said it sees PPP playing “an increasingly important role in President Rodrigo (R.) Duterte’s flagship ‘Build, Build, Build’ infrastructure plan,” after this funding mode was downplayed in the first half of his term for purportedly taking longer than state- and foreign aid-funded modes to start projects.

A number of foreign business groups and local infrastructure firms had expressed concern over the government’s shift in funding preference, saying it is a model also being tapped abroad and that they had gotten used to.

The government had announced earlier this month that it is increasing it flagship infrastructure projects to 100 from 75, and the number of PPP projects on that list to 26 from nine, thus raising the proportion of PPP projects to a total to 26% from 12%.

The flagship projects cover transport and mobility, which is the top priority; power, water, information and communications technology as well as urban development and renewal.

“The move marks a shift back to a PPP-friendly stance which was previously adopted by the administration under President Benigno (S.C.) Aquino III and will offer the potential for more opportunities for private sector participation in the BBB,” Fitch Solutions said, noting that the current administration will still not allow provisions deemed “detrimental” to public interest such as automatic rate increases, commitment of government non-interference and non-compete clauses.

“The increase in the number of PPP projects suggests the government’s eagerness to tap private capital for infrastructure investment, as its ambitious infrastructure plans face fiscal constraints.”

Fitch Solutions also noted that “[t]he Philippines’ relatively well-structured PPP framework gives it an edge over its regional peers in attracting private capital,” including Malaysia and Vietnam.

RISKS
At the same time, the group expects investors to continue facing “a high degree of risk in the Philippines.”

“Despite having one of the most comprehensive PPP frameworks in the region, slow reforms to tackle root issues such as bureaucratic inefficiencies will continue to be a source of risk for investors,” Fitch Solutions said.

“These inefficiencies have often resulted in delayed project timelines and cost overruns, but we highlight that this issue is not unique to the Philippines, but a recurring theme in the infrastructure sector of many emerging markets” like India and Indonesia.

Fitch Solutions also noted that the country’s general operating environment remains risky as well, due mainly to “high levels of petty, violent and organized crime” as well as its vulnerability to “terrorist attacks”, as exemplified by the five-month siege of Marawi City in 2017 by Islamic State-inspired militants.

“Besides that, a high level of corruption undermines the effectiveness of laws and regulation in place.” — Beatrice M. Laforga

DMCI nets P2.8 billion in Q3

DMCI Holdings, Inc. on Wednesday said it booked a net income of P2.8 billion in the third quarter, 47% higher year-on-year, which was attributed to “normalized coal operations” of Semirara Mining and Power Corp. (SMPC).

In a statement, DMCI said core earnings in the third quarter went up 24% to P2.6 billion, excluding the P164-million non-recurring loss from the company’s shares in accelerated depreciation of two units of Sem-Calaca Power Corp. and the P249-million one-time gain from its share in insurance proceeds of Southwest Luzon Power Generation Corp.

However, DMCI Holdings Chairman and President Isidro A. Consunji said the quarterly improvement may not be enough to help the company recover from the impact of shutting the two Calaca units, as well as the slump in coal prices.

“We had a strong third quarter but we still expect negative growth for the full-year because of the scheduled shutdown of Calaca Units 1 and 2, low coal prices and lower construction accomplishments in our real estate business,” he was quoted in the statement as saying.

In the nine months to September, DMCI Holdings’ net income went down 11% to P9.31 billion due to declines in its mining and construction businesses. Core net income likewise fell 10% to P9.31 billion during the three-quarter period.

SMPC’s net income during the nine months fell 14% to P4.66 billion, coming from a 17% drop in power generation and a 22% reduction in coal prices.

DMCI Project Developers, Inc., which operates DMCI Homes, posted flat earnings during the period at P1.8 billion due to the slow pace of completion of ongoing projects.

Contributions from its affiliate Maynilad Water Services, Inc. improved 6% to P1.57 billion during the nine months as it saw a 2% uptick in billed volume, a 2.7% increase in basic charge and lower inflation rate during the period.

Construction unit D.M. Consunji, Inc. saw earnings slump 30% to P664 million during the nine months to September. The company said this is due to delays in right-of-way acquisitions and unrealized variation orders from near-completion projects.

Earnings from DMCI Power Corp. inched up 1% to P341 million at the end of the nine-month period. Lower electricity dispatch in Oriental Mindoro in the third quarter and the expiration of its supply contract in Sultan Kudarat last December weighed on its bottom line.

DMCI Mining Corp.’s income contribution declined by 35% in the nine-month period to end at P87 billion, as it shopped lower-grade nickel that generated smaller sales due to lower average prices.

Contributions of the parent company and its investments went up 8% to P185 million during the three-quarter period, attributed to higher interest income.

Shares in DMCI shed 0.16 points or 1.99% to close at P7.90 each on Wednesday. — Denise A. Valdez

LT Group profit soars in Q3

LT Group, Inc.’s income soared 52% in the third quarter as its banking, beverage and property development businesses showed strong growth.

The holding company of business tycoon Lucio C. Tan, Sr. reported an attributable net income of P5.48 billion in the July to September period, up from P3.61 billion in the same period last year. Consolidated revenues during the quarter grew 24% to P23.5 billion.

The banking segment added the biggest chunk of revenues at P14.7 billion, 45% higher year-on-year.

Revenues from the distilled spirits business, which include Tanduay Distillers, Inc., Absolut Distillers and Asian Alcohol Corp., fell 10% to P4.31 billion.

However, revenues from the beverage business under Asia Brewery, Inc. rose 6% to P3.55 billion, while the property development business which include Eton Properties Philippines, Inc. saw a 60% jump in revenues to P943.93 million.

Year to date, LT Group’s attributable net income climbed 17% to P14.72 billion, as total revenues jumped 27% to P68.86 billion.

The company said in a regulatory filing the better performance in the nine-month period is due to the “improvement in the operating results of the tobacco and property development segments, which more than offset the lower net income of the banking, distilled spirits and beverage segments.”

The tobacco business of the company, which comprises 65% of total revenues, posted a net income of P9.6 billion in the nine-month period or about 39% higher from last year. The company said the improvement is due to the increase of about 40% to P9.4 billion in equity in net earnings from PMFTC, Inc., where LT Group holds a 49.6% stake.

The banking business saw a net income of P6.5 billion in the three quarters, 14.5% lower from last year, largely due to the 133.1% rise in interest expenses to P13.7 billion. PNB contributed P3.64 billion or 25% of the LT Group’s attributable net income.

The property development segment more than doubled its earnings in the nine-month period to P629 million from P314 million last year. This was driven by the 53% increase in revenues to P1.2 billion from higher rates for business process outsourcing offices and newly opened spaces in Eton Square Ortigas.

Eton Properties accounted for 4% of LT Group’s attributable net income at P626 million during the nine-month period.

The distilled spirits business generated a net income of P518 million in the three-quarter period, declining 28.3% from last year, as the 2.4% increase in cost of sales to P11.5 billion outpaced the 1.2% growth in net revenues to P13.8 billion. Tanduay contributed P509 million in LT Group’s attributable net income to comprise 3% of the total.

Net income of the beverage segment operated by Asia Brewery dropped 12.7% to P254 million during the nine months to September. Revenues rose 9.4% to P12 billion due to higher demand for energy drinks, bottled water and soy milk. But operating expenses also grew 9.2% to P1.9 billion due to bigger spending for advertising and promotions.

The beverage segment made up 2% of LT Group’s attributable net income during the period. Victorias Milling Co., Inc., where LT Group has a 30.9% stake, added P148 million in attributable net income.

Shares in LT Group ended flat at P12.42 apiece at the stock exchange on Wednesday. — Denise A. Valdez

Cosco generates P11.46-B income in nine months

EARNINGS of Cosco Capital, Inc. shot up 193% during the January to September period, mainly due to the one-time gain from the sale of its liquefied petroleum gas (LPG) business.

The Lucio L. Co-led retail holding firm said in a statement yesterday its net income attributable to equity holders of the parent company stood at P11.46 billion during the nine months to September.

Cosco completed its divestment from Liquigaz Philippines Corp. in January 2019. The company did not disclose the value of the deal.

Excluding the gains from the sale of Liquigaz, core net income attributable to equity holders grew 14% to P4.25 billion, while consolidated core net income hit P6.51 billion or a 13.1% jump from last year.

Revenues were flat at P118.53 billion, coming from four major revenue streams: grocery retailing, liquor distribution, specialty retail and real estate.

The grocery retailing segment through Puregold Price Club, Inc. and S&R Membership Shopping Club increased its consolidated revenues by 10.3% to P109.8 billion, and its net profit by 2.9% to P4.55 billion. The company opened 17 new Puregold stores and one new S&R warehouse during the first nine months of the year.

Excluding the one-time gain from selling the company’s equity investment in Lawson convenience stores last year, the grocery retailing segment grew its core net income 12.1% during the period.

The liquor distribution business of Cosco posted a 28% increase in revenues to P7.35 billion, driven by the 42% higher volume of cases it was able to sell during the nine-month period.

Revenues from the commercial real estate segment climbed 4.3% to P1.92 billion, while net profit grew 9.2% to P940 million.

The company was able to record a 98% average occupancy rate in its 55 commercial properties during the period, driving the growth on the top line. It also opened a new community mall in the first quarter in Aurora and acquired a new property in the first half of the year in Iloilo.

The specialty retailing segment, operated by Office Warehouse, Inc., posted a 19.1% jump in revenues to P1.88 billion. Same-store sales growth of 13.5% was the main driver of revenue growth. Office Warehouse opened four new stores during the period to have a total of 91 stores as of September.

Cosco is looking to spend P5.8 billion in capital expenditures until the end of the year, of which P5.2 billion will go to the Puregold Group, P500 million to the real estate group and P75 million to Office Warehouse.

Shares in Cosco inched up 0.02 points or 0.29% to P6.92 each, while shares in Puregold gained 0.10 points or 0.26% to P38.50 each on Wednesday. — Denise A. Valdez

Arthaland’s green bonds get 2nd highest credit rating

ARTHALAND Corp. has been given the second highest credit rating by a local debt watcher for its planned issuance of fixed-rate green bonds worth P3 billion.

Philippine Rating Services Corp. (PhilRatings) said in a statement Wednesday its has awarded Arthaland a “PRS Aa minus” rating for its plan to issue ASEAN green bonds with a three-year shelf registration of up to P6 billion.

The PRS Aa credit rating means Arthaland has a strong capacity to meet its financial commitments versus other local corporations.

The company’s bonds were also given a stable outlook, which means it is likely to stay for the next 12 months.

PhilRatings said the rating and outlook were based on Arthaland’s recognition as a dual certified developer of green projects; sustained property market growth; and “relatively conservative” approach in managing debt and costs. It also cited Arthaland’s growth prospects backed by its pipeline of projects.

Arthaland’s proposed ASEAN green bonds is the first green issuance rated by the debt watcher. The P3 billion initial tranche is part of the company’s three-year shelf registration of up to P6 billion.

It will use the proceeds to fund eligible green projects, such as certified green buildings, as well as acquisitions.

Meanwhile, Arthaland reported its attributable net income surged to P201.07 million in the three-month period ending September, from P41.089 million it booked in the same period last year.

Revenues also grew by 7% to P409.474 million in the same period. The company also recorded P281.2 million gain on change in the fair value of investment properties.

For the first three quarters, Arthaland posted a P647.361 million attributable net income, surging 755% from P75.639 million a year ago.

Shares in Arthaland went down 0.01 points or 1.08% to P0.92 each in the stock exchange on Wednesday. — Vincent Mariel P. Galang

ABS-CBN earnings rise 5% in 3rd quarter

MEDIA GIANT ABS-CBN Corp. on Wednesday reported its earnings grew by 4.65% in the third quarter, as advertising revenues continued to increase.

In a regulatory filing, the Lopez-led company said its attributable net income stood at P813.3 million in the third quarter, versus P776.9 million in the same period last year. This was driven by the 6% increase in revenues to P11.22 billion.

For the first nine months of the year, ABS-CBN’s attributable net income soared 45% to P2.36 billion, on the back of an 8.6% rise in revenues to P32 billion.

The bulk of revenues came from advertising revenues, which went up 15% to P17.11 billion.

“Excluding political placements, regular advertising increased by P828 million or 5.6% higher year-on-year,” the media giant said.

Consumer sales inched up 2.1% to P14.9 billion during the nine-month period, which ABS-CBN attributed to higher sales of TVPlus Boxes and increased subscription revenues from Sky Cable.

ABS-CBN said its costs and expenses jumped 2.8% to P29 billion. It noted that production costs rose by 4.7% due to “costs related to original Iwant produced content and Halalan expenses amounting to P249 million and P68 million, respectively.”

By business segment, ABS-CBN said its media and studio entertainment business generated a net income of P2.83 billion on P23.28 billion in operating revenues as of end-September.

Cable, satellite and broadband business reduced its losses to P6 million from P182 million, as Sky’s revenues went up 7.4% due to the increase in broadband and direct-to-home subscribers.

However, losses from its digital and interactive media unit expanded to P393 million from P380 million a year ago, while losses from its consumer product and experiences segment increased to P170 million as of end-September, from P119 million.

ABS-CBN is still awaiting the renewal of its legislative franchise, which expires by end-March 2020. A bill has been filed at the House of Representatives.

Shares in ABS-CBN were unchanged at P18 each on Wednesday.

Homecoming: How a restaurant defines the word

By Joseph L. Garcia
Reporter

WHAT DOES the word “home” mean? In a world of constant movement, it could mean many things: something as simple as having somewhere to lay your feet on after a long day, or else a place where you can belong, either out of guilt or by love. A new restaurant by chef Myke “Tatung” Sarthou gives a diner a taste of what another person thinks is home, and in the process, perhaps finding the meaning for themselves too.

Mr. Sarthou has been active in the culinary scene for almost 10 years, opening his namesake restaurant in Quezon City in 2011. Now closed, it stood around two blocks away from his new restaurant, Talisay (named after his Cebu hometown), which opened around a month ago. The journey to go back home has been long: in the space between, he has opened multiple restaurants (now since closed, with him saying that it was due to conflicts with his previous partners), spoke at Madrid Fusion Manila in 2016, and represented the country at Madrid Fusion in Spain in 2017. He has also appeared almost daily on morning TV for a cooking segment, came out with a documentary about salt in the Philippines, and for a time, his face appeared on a line of sauces. He has three cookbooks to his name, to wit: Philippine Cookery: From Heart to Platter (which won first prize at the Gourmand World Cookbook Awards in 2017), Rice to the Occasion, and Dish Karte sa Kusina. He’s quite a busy man, but he said, “I was coasting, doing books and all that.”

Talisay now serves as one of two restaurants under his belt at present (he has another venture in La Union).

The venture is part of his welcoming his brother back to the Philippines after a 30-year stay in Germany. They found an old house and decorated it in a span of three months. Speaking about his partnership with his brother, Mr. Sarthou said, “We had to find a point of convergence, something that both of us relate to, so we chose Talisay, where we grew up; the dinners, the food we had, and all that.”

So Mr. Tatung answered how he built the restaurant, but he had not yet answered why. Despite being burnt out and exhausted from the restaurant game, he said, “You always go back to your core. Nami-miss ng kaluluwa mo (your soul misses it). It’s where I’m most happy.” So there, dear reader, maybe he has answered what home might mean, though really, he was talking about work. “It’s being able to serve food with integrity again.”

LUNCH AT TALISAY
Mr. Sarthou sat down to lunch with BusinessWorld earlier this week, serving first a goat cheese salad. Its freshness was unparalleled, and somehow reminded one of Rapunzel’s mother, pilfering vegetables from a neighbor’s garden. With every bite of fresh greens, homemade Caesar dressing, and crunchy buttered croutons (we were going to pass on this one, but after a bite, we realized it wasn’t of the supermarket variety), we were this close to trading in a firstborn to whichever witch prepared this. Next came a Pancit Molo (soft wantons in soup), with a chicken bone broth prepared for hours. The broth almost made the spoon bend with its weight, its rich nuanced taste reflecting the time it took to make it.

Next came the Paella Mixta, a silky mélange of heirloom Benguet rice, chicken, chorizos, and seafood. In Spain, apparently, a good paella is a praise to the rice in it, not the seafood or everything else on top or mixed into it. My notes, laced with multiple swear words extolling its taste, was centered on the rice, as it should be: silky with a bit of bite at the end, while proud seafood, good by themselves, stand by as backup singers. Now that’s skill, to make a simple staple sing. This paired with his adobo, which looks nothing like you would expect it to be: crisp, almost like a chicharron. It’s been cooked multiple times: stewed, baked, then deep-fried to achieve that texture (it goes back the adobo of his childhood, which was dried). In my notes again, a line of curses precedes my praise: it’s noisy, it gives what one thinks is a boring dish life. Furthermore, beyond its crispy exterior, the flavor of adobo remains intact.

As we’ve mentioned, Mr. Sarthou has since trimmed his deals, working on basically two restaurants, and then prepared for a cookbook launch last year. In slowing and scaling down, he says, “I don’t have as much energy as I used to before.” He also looks back on the last 10 or so years: the tours, the restaurants, the licensing deals. “I have very few memories of it. Sunod-sunod eh (they came one right after the other). I didn’t have time to sit down, to enjoy that,” he said in a mixture of Tagalog and English. “Half of it was a blur.”

Talisay then, begins to truly feel like home. “It’s good that I can sit down, I can have a bit more time with friends… watch TV,” he said. “I’m still busy now, but I’m out of the rat race.”

Finally, BusinessWorld asked Mr. Sarthou what home really means for him: “Home is where you decide to make a home,” he said. “At a certain age, when you’re in control of your life, you determine how you put things (in it). It’s not an accident. Having a home is not dependent with other people. It’s really a conscious choice of building a home… wherever you are. There’s no stopping you.”

“It feels like home, because we made it a home.”

Malware attacks on IoT, Android devices in the country increase

By Arjay L. Balinbin
Reporter

ATTACKS on smart devices in the Philippines ballooned 192.24% in the first half, Kaspersky said.

The Philippines also placed third among Southeast Asian countries with the highest Android mobile malware (malicious software) attacks in the January to September period this year, maintaining its spot since 2017, according to the cybersecurity firm’s latest report released on Monday.

In an emailed reply to questions on Oct. 25, Kaspersky told BusinessWorld it detected 339 attacks on Internet of Things (IoT) devices in the Philippines like routers or DVR security cameras in the first six months of the year.

The latest figure is 192.24% higher than the 116 attacks detected in the first half of 2018.

“The increase was mainly due to an increase in the overall pool of honeypot IP addresses,” Kaspersky added.

In its latest “IoT: a malware story” report, Kaspersky said it detected 105 million attacks on smart devices worldwide. Such attacks came from 276,000 unique IP addresses, around nine times higher than the 12 million attacks recorded in the first six months of 2018.

The detection was carried out through the use of the honeypot technology.

Honeypots, according Kaspersky, are decoy devices “used to attract the attention of cybercriminals and analyze their activities.”

The internet security firm noted that cybercriminals have been capitalizing on “weak security” of IoT products.

“Cybercriminals are intensifying their attempts to create and monetize IoT botnets,” it added.

Kaspersky said despite the increase in the number of organizations and people who buy smart devices like routers or DVR security cameras, not many of them consider such devices worth protecting.

“Cybercriminals, however, are seeing more and more financial opportunities in exploiting such gadgets. They use networks of infected smart devices to conduct DDoS attacks or as a proxy for other types of malicious actions,” it added.

Top sources of infections during the said period are China, with 30% of all cyberattacks taking place from this country, second is Brazil with 19%, followed by Egypt with 12%, Kaspersky said.

During the first half of 2018, 28% of infections detected came from Brazil, 14% from China, and 11% from Japan.

For users to keep their devices protected from such attacks, Kaspersky said they may install updates for the firmware they use as soon as possible; constantly change and use complicated passwords; and keep the access to smart devices restricted by a local VPN, among others.

ANDROID MOBILE MALWARE
Kaspersky also detected 134,556 malware attempts in the Philippines from January to September this year, placing third in the region. The country has maintained its spot since 2017 when 519,119 attempts were recorded followed by 280,248 last year. The internet security firm said the country is next to list-toppers Indonesia and Malaysia, respectively.

Android mobile users who use banking and shopping apps are at high risk as 98% of malware designed for the Android operating system, Kaspersky said, adding that banking and ransomware Trojans are the top malware detected in the ASEAN region.

“Banking Trojans steal money from mobile users’ bank accounts that are linked to their bank cards and apps. These malware are popular with hackers because they provide a direct route into other people’s accounts,” it said.

Filipinos have also been targets of the Hiddapp mobile malware, which uses advertising as a monetization method.

This kind of malware “secretly downloads ads on to the infected device, displaying as many ads as possible to the Android device user. These Trojans can hide in the system folder which makes them difficult to remove. If the user detects the adware app, the Trojan will prevent the app from being deleted and instead re-install it at the first opportunity,” Kaspersky said.

Such attacks can be avoided if users download apps only from official stores like Google Play.

“It won’t provide a full security guarantee, but the risk of encountering a Trojan will be considerably lower. Apps from third party marketplaces are exactly where hackers plant their malware-ridden apps,” Kaspersky said.

Megaworld Q3 profit up 11%

MEGAWORLD Corp. recorded an 11% rise in earnings in the third quarter, as it sustained growth across its business segments.

In a regulatory filing, the listed property developer led by tycoon Andrew L. Tan said its attributable net income reached P4.49 billion in the July to September period, driven by a 15% increase in consolidated revenues to P16.4 billion. Expenses, on the other hand, grew 15% to P11.58 billion.

By business segment, real estate sales accounted for the biggest chunk of revenues at P10.56 billion, up 11% year-on-year. Rental income during the third quarter grew by 16% to P4.26 billion.

Hotel operations saw the biggest growth in revenues during the period, posting an 86% surge to P587.28 million, as the company increased room capacity across its hotel brands which include Belmont and Savoy.

Equity in net earnings of associates declined 86% to P18.7 million as interest and other income climbed 20% to P969.84 million.

For the nine months ending September, Megaworld’s attributable net income went up 14% to P12.8 billion, as revenues rose 17% to P48.12 billion. Expenses increased by 17% to P34.43 billion.

The bulk or 64% of revenues came from sale of condominium units, condotels and residential and commercial lots totalling P30.72 billion, up 12%. Leasing revenues jumped 19% to P12.41 billion, while hotel operations soared 82% to P1.87 billion.

“Megaworld’s consistent growth across all business segments is a clear indicator of where the company is going, and we are very optimistic to finish the year strong,” Megaworld Chief Strategy Officer Kevin L. Tan was quoted as saying in a statement yesterday.

He said the rental business is expected to remain a key driver of growth for Megaworld, and in the long term, the hotel business will transform to become a major revenue contributor too.

“With over 3,500 hotel room keys, Megaworld is not just making its presence felt, but more notably, complementing the government’s thrust to attract 12 million international tourists by 2022,” Mr. Tan said.

Megaworld ended the nine-month period with 25 master-planned townships and integrated lifestyle communities in its portfolio, some of which are Eastwood City, Newport City, McKinley Hill, Uptown Bonifacio, Forbes Town, Iloilo Business Park, The Hamptons Caliraya and Westside City in the Entertainment City.

Shares in Megaworld at the stock exchange added 0.04 points or 0.82% to P4.89 each on Wednesday. — Denise A. Valdez

Apple working on VR, AR headset, glasses

APPLE INC. is working on a range of augmented and virtual-reality devices underpinned by a new 3-D sensor system, according to people familiar with the plans.

A new iPad Pro for release as early as the first half of 2020 will feature a new module with two camera sensors, up from one on the current model, and a small hole for the 3-D system, letting people create three-dimensional reconstructions of rooms, objects and people. The Cupertino, California-based technology giant also plans to add the sensor to new high-end iPhones later in 2020, along with 5G networking capabilities, said the people, who asked not to be identified discussing unannounced products.

In 2021 or 2022, Apple aims to release a combined VR and AR headset with a focus on gaming, watching video and virtual meetings. The company intends to roll out a lightweight pair of AR glasses as early as 2023, one of the people familiar with the plans said. Apple had originally intended to have the technology for its initial headset ready in 2019 for a release in 2020, but recently decided to push that back, the person added. The Information earlier reported that Apple told employees it is aiming to launch its first headset by 2022 and the glasses a year later.

Chief Executive Officer Tim Cook has talked up AR for some time, and the technology is the core of Apple’s next big hardware push beyond the iPhone, iPad and Apple Watch. The new 3-D sensor system will be the centerpiece of this. It has been in development inside Apple for several years, and is a more advanced version of the Face ID sensor on the front of Apple’s latest mobile devices, said the people.

Augmented reality mixes the real world with the virtual world, letting a user interact with other people while also seeing digital information such as text messages and directions in a maps app. Virtual reality is all-encompassing, gluing humans to headsets, like the HTC Vive or Oculus Rift with high-resolution lenses used for gaming and video.

Engineering teams for the iPhone and iPad have begun work on connecting important applications and software features to a new operating system, dubbed “rOS” internally, that will let current devices work with the future headset and glasses.

Apple has about 1,000 engineers working on the AR and VR initiative, which is led by vice president Mike Rockwell, Bloomberg News has reported. The multi-disciplinary team is part of Apple’s hardware engineering division, but has its own leadership with executives who have worked on Apple’s gaming software system, earlier iPhone hardware, software engineering and manufacturing. The team also has ex-NASA engineers, former game developers and graphics experts. It is based in a nondescript area of Sunnyvale, California, not far from Apple’s main campus in Cupertino.

When the devices launch, they will likely become part of Apple’s growing wearable devices segment, which currently includes the Watch, AirPods and Beats headphones. This is one of Apple’s fastest growing businesses, and has helped offset a slowdown in iPhone unit sales and revenue. — Bloomberg

Want to try ube, pili, and lambanog chocolates?

SPECIALTY Filipino chocolate brand Manila Chocolatier, known for its penchant for combining Filipino flavors with Filipino chocolate, is now available in select Kultura branches nationwide.

Manila Chocolatier started in 2012 when chocolatier Raul Matias decided to create another brand that was distinctly Filipino and separate from his Machiavelli Chocolatier brand which he founded in 2009.

“I thought about the brand when I was still abroad studying chocolates. I was always disappointed coming home and going back only bringing shirts as souvenirs because my foreign friends don’t get the Filipino experience,” Mr. Matias told BusinesWorld during the launch on Nov. 5 at the Kultura store in SM Megamall, Mandaluyong City.

It took him six months to develop the flavors of his pralines, some of which include local Filipino ingredients and flavors like ube (purple yam), lambanog (coconut wine), kalamansi (local lime), mango, salabat (ginger tea), and bukayo (sweetened coconut strips) among others.

The flavors are all included in a box of 12 assorted pralines, which is the most popular item of the brand, according to Mr. Matias as balikbayans buy this for their trips abroad.

Each piece of chocolate is also decorated with Filipino images like the bahay-kubo (nipa hut), coconut trees, and the Philippine archipelago, among others.

“[But] the most important thing is to source your chocolates from the Philippines. When I came out with Manila Chocolatier, I didn’t feel right using other chocolates from abroad when we’re after presenting Filipino flavors,” he said.

His chocolate comes from select farms in the Davao region, which has become popular for being the source for other Filipino chocolate brands like Theo and Filo, Malagos, and Auro.

One of the farms producing cacao for Auro Chocolates was hailed for producing some of the Top 20 Cacao Beans in the World at the recently concluded International Cocoa Awards given by the Salon Du Chocolat in Paris.

“I’m very happy [Filipino chocolates are getting recognition] because my supplier supplies Europe. The chocolate school I attended uses Filipino cacao beans,” he said.

During the launch, attendees were treated to Manila Chocolatier chocolates and this writer, at the expense of her blood sugar levels, found that her favorites were the salabat pralines (which hits you with the rich chocolate flavors then calms down with the heat of the ginger at the back of your tongue) and the ube pralines (which has a gooey ube center and a good balance between the sweetness of the chocolate and the ube).

Other attendees went crazy over the mango chocolates which has bits of dried mango encased in rich chocolate. The tropical sweetness of the dried mango is offset by the bittersweet flavors of the chocolate.

But my absolute favorite was not a praline. It came in the form of sweetened pili nuts covered in chocolate and dusted with chocolate powder. Unlike other popular chocolate-covered nuts like almonds and macadamia, pili nuts are softer and creamier with just a hint of sweetness. The nuts are also covered in caramelized sugar so there’s a crunchy texture when biting into a piece.

The flavors in the pralines are also available as chocolate bars.

Currently, Manila Chocolatier is available in Duty-Free Shops across the country and now in select Kultura stores. Mr. Matias said there are plans to enter a supermarket but no date has been set.

Aside from Manila Chocolatier, select Kultura stores also carry the aforementioned Filipino chocolate brands: Auro, Malagos, and Theo and Filo. — Zsarlene B. Chua

Global Ferronickel earnings up 19% in third quarter

GLOBAL Ferronickel Holdings, Inc. (GFNI) posted a 19% increase in its attributable net income in the three-month period ending September, as it benefitted from the increase in nickel ore prices and shipped higher-grade nickel ore.

In a regulatory filing, the listed mining company said its attributable net income went up to P706.554 million in the third quarter, despite a 3% drop in revenues to P3.012 billion.

For the nine-month period, attributable net income increased 36% to P812.540 million from P595.43 million booked in the same period last year.

Revenues went up 5% to P4.786 billion amid lower volume of nickel production by 1.5% to 4.642 million wet metric tons (WMT) or 85 vessels, year-on-year. The increase was brought about by increased shipments of medium-grade ore, which accounted for 58% or 2.689 million WMT of total production. The remaining 42% or 1.953 million WMT accounted for low-grade ore. All shipments were sold solely to its Chinese market.

“We are counting on the price of nickel to continue its upward momentum,” GFNI President Dante R. Bravo said in a statement.

In the first three quarters, the average realized price of nickel ore was up 9.3% to $19.88 per wet metric ton, year-on-year. Average realized exchange rate for the company’s export revenues was P51.88, 2.2% lower than the P53.04 it reported the same period last year.

The company also hopes to take advantage of Indonesia ban on exportation of nickel in the future. Indonesia’s ban is part of its efforts to boost expansion of local smelting industry. — Vincent Mariel P. Galang

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