MACROECONOMICS WEEKLY UPDATE

Data from the BSP indicated that the NPL ratio of Philippine banks rose to 3.31% in February from 3.28% in January. Year-on-year, bad debts of PH banks dropped 13% to Php411.18 billion from Php472.66 bn in the same month of 2019. Over the past two months, however, this has increased from Php398.79 bn in December and Php405.14 bn in January. At the same time, past due loans decreased 10% year-on-year to reach 502.11 bn while restructured loans went down 6.8% to 320.54 bn. Banks reported an increase in loan loss reserves amounting to 431.52 bn compared to 407.03 bn a year ago, translating into a loan reserve level of 3.48% and an NPL coverage ratio of 104.95%.

At the Philippine Economic Briefing in Washington, D.C., Governor Medalla of the Bangko Sentral ng Pilipinas (BSP) suggested that the rate-hiking cycle might pause, taking into account April’s inflation figures, which appear to have dropped from 7.6% the previous month. The US Federal Reserve’s actions may still be a factor, but won’t be the main influence on BSP decisions; if inflation continues to drop in the next five months, the central bank might even lower rates.

The El Niño phenomenon is expected to negatively impact the Philippines’ rice production as farmlands dry out ahead of the anticipated drought in the second half of the year. Agriculture Assistant Secretary Rex Estoperez warns that rice inventory will suffer if farmers in rain-fed areas are unable to plant due to El Niño. The retail price of rice is expected to rise amid high farm gate prices and increasing imported rice costs. Estoperez suggests that rain-fed farms should switch to more resilient crops in preparation for the drought. The Department of Agriculture has directed regional offices to visit drought-vulnerable areas and develop support recommendations for farmers, while the government aims to increase the buffer stock to 90 days from the current 51 days to prepare for lean months

INDUSTRY UPDATE

PROPERTY & CONSTRUCTION

Cebu Landmasters Inc. (CLI) reported a net income of Php3.2 bn for FY22, up 32% YoY from Php2.4 bn, driven by higher revenues of Php15.7 bn, up 40.3% YoY. Reservation sales reached Php18.1 bn, up 10% YoY, led by the mid-market segment and economic housing. CLI is expanding its reach to areas like Davao, Butuan, and Cagayan de Oro. The company is set to launch 19 new projects in 2023, expected to deliver up to Php29.8 bn in reservation sales. Revenues for 4Q22 grew 34% YoY to Php4.7 bn.

MINING 

Nickel Asia (NIKL) announced that the Government Service Insurance System (GSIS) acquired a 1.68% stake in the company through a block trade. GSIS said the investment is positioned to support the electric vehicle industry and nation building.

TELECOMMUNICATIONS 

PLDT Inc (TEL) has disclosed that five of its officials, including Senior Vice President Anabelle L. Chua (CFO and Chief Risk Management Officer) and Mario G. Tamayo (Senior Vice President and Network Head), have voluntarily left their positions effective April 14. Three other officials, such as the Chief Procurement Officer, have resigned or opted for the manpower reduction program. These changes are likely linked to TEL’s Php48Bil capex overrun issue, and the company has previously stated it would undergo internal changes, including management reorganization.

BANKING

CTS Global (CTS) reported a 159% increase in full-year net income, reaching Php52.2 mln despite experiencing an Php18.6 mln net loss in Q4. The firm attributed its higher profits to a 46% reduction in commissions, saving over Php22 mln compared to FY21. While global trading revenue dropped by 84%, local trading revenue fell by 62%, and total revenues declined by 34%, CTS capitalized on the commodities run by investing in the Indonesian market. Additionally, the firm allocated Php1.275 bn, or 94% of the net capital raised from its IPO to low-yield fixed-income securities, primarily government bonds, which generated over 45% of its FY22 revenue from interest on these investments and other non-equity positions.

ENERGY

Aboitiz Power (AP) anticipates more renewable energy (RE) projects to be completed this year. The 94MW Cayanga solar project in Pangasinan is expected to commence commercial operations by June, while the 159MW Laoag solar project should be finished by 1Q24. Additionally, the 24MW Magat BESS project is set to begin operation in 1H24. These projects add 277MW of RE capacity, representing 6.8% of AP’s attributable capacity and aligning with AP’s goal of achieving 4,600MW of RE capacity (50% of AP’s total attributable capacity) by 2030.

AC Energy (ACEN) disclosed FY22 net income of Php14.6 bn, up 90% YoY as revenues from the sale of electricity were up 35% to Php35 bn, driven mostly by the contributions of new facilities and higher spot electricity prices. The company ended 2022 with 3.9 gigawatts (GW) in attributable capacity with 98% coming from renewable sources. The company stated that they’re on track to achieve their goal of 20 GWs of capacity by 2030.

  Local Market Update 

                                                          Photo source : PSE