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7-Eleven halves store openings for 2020 as virus hits business

CONVENIENCE store company Philippine Seven Corp. is holding off its capital expenditures and reducing store openings in 2020 in response to the effects of the coronavirus disease 2019 (COVID-19) on business.

“We’re holding off all capex (capital expenditure). We were supposed to build 400 stores this year. We’ll only open 200, and that’s only because we’ve broken ground on them already,” Philippine Seven President and Chief Executive Officer Jose Victor P. Paterno said in a webinar with the Philippine Franchise Association on Wednesday.

Philippine Seven is the listed company behind 7-Eleven stores in the Philippines.

The public transportation ban kept employees from being able to reach 7-Eleven stores, Mr. Paterno said.

“22% of stores are closed, although that’s mostly because of low sales. 10% are open 24-hours and 68% are open during curfew hours,” he said.

The stores are adding more shelves because they can no longer use their seating.

“My working assumption is it will be bad until we have a vaccine. The way we look at it is we need to raise enough cash to last until then,” Mr. Paterno said. He said Philippine Seven is making sure it has enough capital.

“We’re expecting that there will be burn… what we’re working on now is sharing the pain among stakeholders — franchisees, headquarters employees, suppliers, investors, staff, maybe even landlords,” he said.

Philippine Seven on April 15 reported a 5.7% decline in earnings for 2019 due to the recognition of leases after it adopted a new accounting standard.

Without this new standard, its net income for 2019 would have grown 29.8% to P1.99 billion. — Jenina P. Ibañez

SEC issues stricter rules for financial derivatives

THE Securities and Exchange Commission (SEC) has issued new guidelines for financial derivatives to be more specific on rules that guide investment companies and fund managers.

SEC Memorandum Circular No. 15 was published on Thursday outlining stricter requirements for financial derivatives. It will take effect after 15 days.

Derivatives are types of investments where an investor does not own an underlying asset, but instead makes a bet on the direction of the price movement of this underlying asset through an agreement with another party.

The new rules said if an underlying is a financial index, it must comprise eligible assets and commodities and be diversified such that the maximum weight per constituent does not exceed 30% of the index.

Investment limitations have also been set such that for a single business group, an investment company must not invest, in aggregate, more than 20% of its net assets in transferable securities, money market instruments, deposits and over-the-counter (OTC) financial derivatives.

Investments in deposits in a non-investment grade deposit-taking institution, in debt securities not dealt in an organized market, in unlisted shares, and in OTC financial derivatives with a non-investment grade counterparty, must also not exceed 15% of the net assets of the investment company.

The new rules require that the global exposure to financial derivatives should not exceed 20% of the net assets of an investment company. It likewise prohibits the fund manager of an investment company to act as counterparty to an OTC derivative invested into by the investment company.

The maximum exposure of an investment company to the counterparty of an OTC financial derivative is limited to 10% of an investment company’s net assets if a counterparty has a minimum long-term rating of investment grade. Otherwise, the limit is 5% of the net assets of the investment company.

The SEC said these rules are “designed to improve the regulatory compliance of investment companies and their fund managers and to ensure adequate protection for shareholders and unit holders.” — Denise A. Valdez

Pag-IBIG Fund grants grace period to nearly 4.8 million borrowers

Pag-IBIG Fund has offered a grace period of 30 days on loan payments during the enhanced community quarantine (ECQ), which was prompted by the need to contain the spread of the coronavirus disease 2019 (COVID-19).

Secretary Eduardo D. del Rosario, who heads both the Department of Human Settlements and Urban Development and the 11-member Pag-IBIG Fund Board of Trustees, said the agency had deferred loan payments of its 4.77 million borrowers for the duration of the quarantine.

“All of them are automatically covered by the grace period so they don’t have to apply for this anymore,” he said.

He said the move comes after the directive of President Rodrigo R. Duterte to alleviate the burden of Filipinos during the COVID-19 pandemic.

He also cited Republic Act No. 11469 or the Bayahinan to Heal as One Act, which provides under its implementing rules and regulations that borrowers of all lenders, which include Pag-IBIG Fund, a 30-day extension for loan payments which can be further extended until the end of the ECQ period.

With the grace period, Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti said the agency had allowed the deferment of loan payments amounting to more than P15 billion from 713,225 housing loan borrowers and over 4 million cash loan borrowers.

“Pag-IBIG Fund has always put sustainability over profitability. And for us, sustainability starts with taking care of our members given that the Pag-IBIG Fund is owned by its members. Pag-IBIG is always ready to help whatever the situation, and this pandemic is no exception,” he said.

Under the Pag-IBIG Fund moratorium program, qualified borrowers are given a longer loan payment reprieve of three months, with all penalties and interests waived.

Members eligible to apply are borrowers of Pag-IBIG housing loan, multi-purpose loan, or calamity loan, whose incomes have been impaired by the ECQ or by the loss of jobs or closure of businesses as a result of the declarations of state of calamity or state of public health emergency in their area.

Holcim earnings decline 29% as Luzon locks down

EARNINGS of cement manufacturer Holcim Philippines, Inc. dropped 29% in the first quarter, dragged by operational disruptions brought by lockdown measures against the coronavirus disease 2019 (COVID-19) outbreak.

The listed firm said in a statement yesterday its net profit in the January to March period fell to P501.54 million from P703.86 million a year ago.

Net sales were down by 10% to P7.27 billion due to softer prices and lower volumes, especially in the month of March.

“Like the rest of the country, our company was significantly affected by the COVID-19 pandemic and the government’s efforts to address it,” Holcim Philippines President and Chief Executive Officer John Stull said in the statement.

The company closed all its sites and facilities in Luzon when the government imposed an enhanced community quarantine in mid-March. Holcim Philippines’ Davao plant also shut down in April due to a government-imposed quarantine.

To address the slowdown in the first quarter, the company said it is strictly controlling costs and spending until revenue levels recover. It is also drafting plans for the resumption of operations once allowed by the government.

“Once the government eases the quarantine measures, we are confident that our strong health and safety culture will enable us to protect our people’s well-being in our sites and safely resume operations to support our customers and re-start building activity in the country,” Mr. Stull said.

Holcim Philippines operates two integrated cement plants, one cement grinding plant and one dry mix plant in Luzon; and two integrated cement plants in Mindanao.

The company is currently in the process of being acquired by diversified conglomerate San Miguel Corp. for $2.15 billion. It is the local arm of Switzerland-based LafargeHolcim, Ltd.

Shares in Holcim Philippines at the stock exchange gained 30 centavos or 2.68% to P11.50 each on Thursday. — Denise A. Valdez

Megaworld profits up 18% to nearly P18B

PROPERTY developer Megaworld Corp. (Megaworld) reported an 18% increase in its earnings last year, lifted by a double-digit growth across its core business segments.

In a statement on Thursday, the Andrew L. Tan-led firm said its attributable net income grew to P17.9 billion in 2019 from P15.2 billion in 2018.

Reported net income rose 22% to P19.3 billion, while net income minus non-recurring gains reached a record P18.6 billion to improve 18% from the previous year.

Consolidated revenues stood at P67.3 billion, a 17% increase on the back of strong returns across Megaworld’s key units.

By business segment, real estate sales posted the biggest contribution, amounting to P42.6 billion or a growth of 12% from a year ago. A record-level sales reservation of P149 billion was also seen last year, driven by the launch of P85-billion worth of new projects.

The rental business added P16.8 billion to rise 18% from the previous year. Office leasing comprised P10.5 billion, which came from opening around 192,300 square meters (sq. m.) of new leasable office spaces last year. The company now has a total of 1.3 million sq. m. of leasable space in its portfolio.

“Undoubtedly, our strongest rental business still comes from our leases of prime office spaces across the Philippines,” Megaworld Chief Strategy Officer Kevin L. Tan said in the statement.

“I would like to point out the growth in the demand for office spaces outside of Metro Manila, in which we are in the best position to provide to space seekers because of our adequate office inventory in the provinces including those that are still in our pipeline,” he added.

Malls contributed P6.3 billion to rental revenues after adding around 20,600 sq. m. of leasable space last year. Megaworld now has 453,000 sq. m. of total leasable space in its portfolio.

Revenues from the hotel segment stood at P2.5 billion, higher by 67% from in 2018. This is fueled by the opening of three new hotel properties in Manila, Boracay and Cebu, which had 93 rooms, 442 rooms and 547 rooms, respectively.

“Megaworld still has the lowest financial gearing among the major listed property companies. We ended 2019 with a net debt-to-equity ratio of 26%, even lower than its 2018 level of 31% as gross debts stood unchanged during the year. This should give us more elbow room to lever up once the situation improves, likely by next year,” Mr. Tan said.

Shares in Megaworld at the stock exchange saw a one centavo uptick to P2.58 on Thursday. — Denise A. Valdez

IMI losses swell as virus disrupts business

LOSSES of Ayala-led Integrated Micro-Electronics, Inc. (IMI) ballooned to $4.62 million in the first quarter due to the global impact of the coronavirus disease 2019 (COVID-19) pandemic.

The global electronics manufacturing firm reported yesterday the exponential growth of its attributable net loss to close to $5 million from $335,000 last year. Its revenues contracted 21% to $255.82 million, and gross profit slumped 33% to $19.47 million. Revenues from wholly-owned businesses fell 19% to $209 million.

IMI’s operating units in Asia posted a revenue decline of 20% to $105 million, reflecting the effect of closing facilities in China in February and in Luzon, Philippines in mid-March.

While plants in Europe and North America remained fully operational during the three-month period, revenues still dropped 15% due to market disruptions in the global chain.

The combined revenues of Via Optronics and STI Enterprises, Ltd. also went down 27% to $47 million.

Despite the sour turnout in the first quarter, IMI Chief Executive Officer Arthur R. Tan said the company is hopeful that its geographic diversity will help lift its performance in the coming months.

“The company’s wide geographical footprint gives us the flexibility to shift and address demands across all our regions as the pandemic situation continues to affect global markets,” Mr. Tan was quoted in a statement as saying.

IMI has 21 manufacturing plants across 10 different countries, namely the Philippines, China, Bulgaria, Czech Republic, Germany, Japan, Mexico, Serbia, United Kingdom and the United States.

The company also said it is adapting to the challenges by “controlling overhead costs, reducing raw material expenses, and securing ongoing support from various governments including Bulgaria, China, Czech Republic, Germany, Serbia and Singapore.”

“Despite these turbulent times, we firmly believe that the strategies we set forth in building towards a sustainable, interconnected future continue to be very relevant,” Mr. Tan said.

Shares in IMI at the stock exchange in up six centavos or 1.03% to P5.91 each on Thursday. — Denise A. Valdez

Money Heist: A show that connects to the periphery of the world

WHEN it first aired on Spanish television channel Antena 3, La Casa de Papel, also known as Money Heist, was a failure: it had falling viewership and its creator álex Pina, the cast, and the crew thought it was over, that there was no hope for the series. But then it was picked up by Netflix and suddenly it became one of the most-streamed titles on the service globally and even won an Emmy award for Best Drama series in 2018.

“[The series was a failure.] It was like a zombie. [Viewership fell from] 4 million to 2 million. We were going to put an end to it. I couldn’t even convince my friends to watch it. And then Netflix bought it June 2017 and some months after, in December, they uploaded it,” Javier Goméz Santander, the show’s screenwriter and co-executive producer, said in a webinar organized by Instituto de Cervantes Manila on April 28.

(The webinar was done in Spanish with simultaneous English translation.)

He said they noticed that the series was getting traction in February when, during a football match in Saudi Arabia, the bleachers transformed into the show’s Salvador Dalí mask. Then the same mask sold out in Rio de Janeiro. There were also a few copycat crimes.

“It was more popular outside Spain,” Mr. Goméz Santander said.

Money Heist is, as its name suggests, a heist film, but it’s distinctive Spanish sensibilities made it different: from having the film told through a female perspective, to a focus on the emotional dynamics and passionate scenes distinctive of telenovelas, and dark comedy. Mr. Goméz Santander noted that the beauty of the series is it was told from “the periphery of the Anglo-Saxon world.”

“[The series is] more emotional… and we found ourselves an incredible platform which is our language. We discover that the periphery of the world… have a common vision,” he said before adding that it’s time to have more stories coming from the periphery (outside Hollywood) because “we’ve exhausted the Anglo-Saxon narrative.”

If there was one thing that he thinks Money Heist has successfully done is that he thinks the world will be seeing more “products from all the peripheries.”

Money Heist’s plot is fairly simple: the first season revolved around a plan to rob the Royal Mint of Spain, which involved the thieves taking 67 hostages, printing 2.4 billion euros, and then escaping. The entire plan was orchestrated and controlled by the Professor (álvaro Morte) from an external location. Each person in the group wore a red jumpsuit and a Salvador Dalí mask and went by a code name using cities (Tokyo, Moscow, Nairobi, etc).

The show was supposed to end there — its creator, álex Pina, initially planned for it to be a limited series. But then Netflix asked them to write another season, Mr. Pina said in the documentary Money Heist: The Phenomenon. He said it took them two months to get back to Netflix and make a second season.

(Each Money Heist season is divided into two parts. The most recent release was the second half of the second season on April.)

“The biggest decision was to decide to come back or not to come back. After the Mint, it was dead and it was done. But Netflix said if you want to reopen it then we’re game. We didn’t want to destroy that myth. It was very difficult,” Mr. Goméz Santander said in the webinar.

“You don’t write stories about people in paradise,” he added.

At the end of Season 1, the group managed to escape and celebrate their spoils. The Professor chose to vacation in Palawan. In the second season, he finds refuge in an undisclosed location in Mindanao. The second season also introduced a character who goes by the name Manila (played by Belén Cuesta), a transwoman who is the godchild of Moscow (Paco Tous) and Denver’s (Jaime Lorente) childhood friend.

The idea of including the Philippines in the show was sentimental, said Mr. Goméz Santander as Mr. Pina had been to the Philippines and had gone to Mindanao and loved it. It should be noted that the scenes which are supposedly set in Mindanao were actually shot in Madrid, though Mr. Goméz Santander said they did shoot a few scenes in the Philippines.

In the second season, the gang’s target is the Bank of Spain.

With much of the world currently under varying degrees of quarantine due to the COVID-19 pandemic — Spain has the second-most number of cases after the US at 236,899 so far — Mr. Goméz Santander said that much like the characters of Money Heist, “we need to accept a more intense world.”

“We put the characters [under so much pressure] — in jail and in a ship. Why we resort to this is to elevate the emotions with characters and viewers. [It’s like being in a] pressure cooker, everything is magnified. We now find ourselves in a very similar situation,” he said.

“And that has affected our mental health… it’s important that we are aware that we’re subject to this pressure and to be able to do as best [as we possibly can] to manage the situation,” he added. — Zsarlene B. Chua

SEC eases rules for company registration

THE Securities and Exchange Commission (SEC) will now allow companies to register without having their articles of incorporation notarized.

The commission approved on Wednesday a new memorandum circular allowing domestic corporations to register using articles of incorporation accompanied by a certificate of authentication signed by all incorporators.

Both these documents will be accepted without having them notarized or consularized.

“By easing the requirements for company registration, we hope to further encourage the formation of businesses and attract more investments that will subsequently generate more employment opportunities and support our economy’s overall growth,” SEC Chairperson Emilio B. Aquino said in a statement.

If a company’s articles of incorporation is executed abroad, it must be apostilled or authenticated by a Philippine diplomatic officer. The same would apply for a company that has more than 40% foreign equity, which must register as an investment of a non-Philippine national.

The SEC warned that if a corporation is found to have committed fraud in the process of registering, its certificate of registration will be revoked by the commission. Persons that assisted in the fraud will also be fined P200,000 to P2 million. If the violation is found detrimental to the public, the fine will be P400,000 to P5 million. — Denise A. Valdez

Gavel&Block to hold online benefit auction

SALCEDO Auctions’ subsidiary Gavel&Block will hold an online benefit auction on its official website on May 23, 2 p.m., to support communities affected by the COVID-19 enhanced community quarantine. The fundraising auction will be for the benefit of the international hunger relief organization Rise Against Hunger (RAH) Philippines.

For sale at the benefit auction are more than 200 lots of fine and decorative art, furniture, jewelry, and timepieces, as well as fashion pieces.

Highlighted in the upcoming auction is an oil painting titled Tianzi Mountain 1341 (2013) by portraitist and landscape artist Besty Westendorp. The painting depicts Tian Zi mountain located in China’s Hunan province.

“There was an art lover who wanted a painting done by me, but requested to put some mountains in the painting. I was surprised because I never painted mountains,” Ms. Westendorp said during the Gavel&Block community call via Zoom on April 26.

Ms. Westendorp recalled scanning images of mountains online when she was amazed by photos of Tian Zi mountain. “It’s very nice that we get to reach the world in our hands. When I saw that site, I got carried away.”

Other works to go on the block are National Artist Benedicto “BenCab” Cabrera’s 2013 digital print of (Untitled) Lady with Fan, conceptual artist Roberto Chabet’s House 1979 (1985), fine prints by National Artist Arturo Luz, as well as works by Fernando Zobel, Carlos “Botong” Francisco, Anita Magsaysay-Ho, and Nena Saguil. Contemporary art pieces by Rod Paras Perez, Lilo Gutierrez, Lynyrd Paras, Ronyel Compra, and Medicom Jean-Michel Basquiat will also go under the gavel.

Modern Filipiniana pieces were donated by fashion designers Jojie Lloren, Len Cabili, and Joey Samson, while photographs by Veejay Villafranca, Paco Guerrero, Denise Weldon, and Sonny Thakur are also for sale. The auction will also feature fashion accessories from designers such as Bea Valdes, Aranaz, Joanique, and FINO.

“Art enables us to get together for a good cause,” Salcedo Auctions director Richie Lerma said in the community call.

A substantial portion of the proceeds from the auction will be allocated for RAH Philippines’ food distribution and aid to communities affected by the quarantine. Adhering to dietary and food safety standards, RAH Philippines ensures that each family member receives 1,500 to 2,000 calories per day. As of April 26, the organization has reached 19,687 families, 200 people with disabilities, 400 homeless people, and 30 hospitals.

Consignments for the fundraising auction are still being accepted. Those interested in supporting this fundraiser can send pictures of their fine and decorative art to info@salcedoauctions.com or contact (0917-825-7449 or 0917-107-5581). For more information, visit https://salcedoauctions.com/. — Michelle Anne P. Soliman

Robinsons Land gets top rating for P20-B bonds

ROBINSONS Land Corp. (RLC) has received the highest credit rating from a local debt watcher for its planned bond issuance of up to P20 billion.

In a disclosure to the stock exchange on Thursday, the Gokongwei-led real estate company said it had been given a “PRS Aaa” credit rating by the Philippine Rating Services Corp. (PhilRatings) for its proposed bond issuance.

The company is looking to issue P10 billion bonds with an oversubscription option of up to P10 billion.

A PRS Aaa credit rating means RLC is expected to have an “extremely strong” capacity to meet its financial commitment. The rating was also given a stable outlook, meaning it is expected to hold for the next 12 months.

PhilRatings said the issue rating was based on RLC’s solid competitive position, healthy liquidity, sound capitalization and solid fundamentals amid the coronavirus pandemic.

“PhilRatings based its assessment on available information and projections at the time that the rating review was performed. PhilRatings shall continuously monitor developments relating to RLC and may change the ratings at any time, should circumstances warrant a change,” it said.

RLC’s net earnings in 2019 climbed 6% to P8.69 billion, driven by a P1.02-billion increase in revenues to P30.58 billion. Its shares at the stock exchange stood at P15.04 each on Thursday, down 44 centavos or 2.84% from a day ago. — Denise A. Valdez

Rising through adversity with a song

Filipina alternative R&B singer August Wahh has released a new single titled “Elated” described as a song about recovering one’s self.

“I wrote ‘Elated’ as a reminder to myself and to others that no matter what you’ve been through, the goal is to rise above situations that made you feel small — by accepting where you’ve been and the journey you’re on, even if you don’t know where you’re going,” Ms. Wahh said in the release.

“It’s a reminder to own yourself and live life to the fullest,” she added.

Ms. Wahh released her first single, “Know What I Want,” in December 2019. Her newest single is said to make for “both easy casual listening and soulful rumination.”

The song was produced by King Puentespina, better known by the moniker crwn.

“The song was basically written on the spot. crwn had a beat he played, and I wrote along it. On the same day, we recorded ‘Elated,’” Ms. Wahh said.

This isn’t the first time the two artists collaborated as Ms. Wahh and Mr. Puentespina worked together on the song “Gaslight” last year.

Ms. Wahh’s music is known for promoting self-worth which is part of her personal mantra.

“She asks rhetorically ‘does it matter where I go?’ while also guaranteeing to own every decision she makes, tackling the age-old question with emotional openness and introspection,” the statement read.

August Wahh’s new single “Elated” is out on streaming and digital platforms worldwide. The YouTube lyric video can be viewed here: https://www.youtube.com/watch?v=zYgsI1-2518

Cathay Pacific readies more passenger flights to Manila

The Hong Kong-based Cathay Pacific Group (Cathay Pacific) is planning to augment the number of its flights to Manila in June.

In a recent advisory posted on its website, the group said Cathay Pacific intends to operate three flights per week in May to Manila, Tokyo (Narita), Taipei, Bangkok, Jakarta, Ho Chi Minh City and Singapore.

From June 21 to 30, the group said Cathay Pacific will operate “daily flights” to Manila, Tokyo (Narita), Osaka, Seoul, Taipei, Bangkok, Jakarta, Ho Chi Minh City and Singapore.

It said the additional passenger flights in June will increase its passenger network’s operating capacity by approximately 5%.

Also in May, Cathay Pacific plans to operate two flights per week to London (Heathrow), Los Angeles, Vancouver, Sydney and Delhi.

In the same month, Cathay Dragon, a wholly owned subsidiary of Cathay Pacific, will be operating three flights per week to Beijing, Shanghai (Pudong) and Kuala Lumpur.

The group said further that Cathay Pacific intends to operate five flights per week from June 21 to 30 to London (Heathrow), Los Angeles, Vancouver, Sydney; and three flights per week to Amsterdam, Frankfurt, San Francisco, Melbourne, Mumbai and Delhi.

It said Cathay Pacific or Cathay Dragon will be operating daily flights to Beijing and Shanghai (Pudong) during the same period.

Cathay Dragon also plans to operate daily passenger flights to Kuala Lumpur from June 21 to 30.

The group said the planned flight sules are still subject to government travel restrictions.

“We will continue to monitor the developing situation and further adjustments may be made as necessary,” it said. — Arjay L. Balinbin

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