MACROECONOMICS WEEKLY UPDATE

Philippines reported a positive 7% growth in exports last September. This growth broke a two-month losing streak, with export contraction in terms of year-on-year growth, but no sustained rally in external trade as a global recession loom can be seen.

   Gross domestic product rose 7.6%, beating expectations of 6.3%, due to the increase in household spending as people get back to “pre-pandemic life”.

   The Department of Transportation expects to start operating the 11.7-kilometer LRT-1 Cavite Extension by September 2024. Construction of the rail line is in full swing, and operations will start as scheduled.

INDUSTRY UPDATE  

POWER AND UTILITIES  

 ACEN 3Q net income was up 23% YoY to Php 1.9B, bringing 9M22 net income to P4.1B or 4% lower than the previous year. This was lower-than-expected, with 9M22 income accounting for only 69% of 2022 full-year consensus estimates. Weak performance in 9M22 was attributable to: 1) high cost of power as ACEN is in a net buying position, 2) coal exposure where a portion of supply is from the spot market and the 3) Visayas curtailment. Including a one-time hit of P1B expected in 4Q due to the SC’s ruling on an issue dated 2013, ACEN expects the full-year impact of the aforementioned factors to hit Php 3.5 billion.

 FGEN’s 9M22 revenues grew 24.3% to US$ 1,995 million from US$1,605 million in the same period last year on higher electricity sales and higher prices. The company’s natural gas plants (Sta. Rita, San Lorenzo, San Gabriel and Avion) accounted for 65% of the revenues while the remaining 31% came from EDC’s GWS (Geothermal, Wind and Solar) portfolio.

HOLDINGS 

 DMC 3Q consolidated core net income was up 84% YoY to Php 7.4 billion on higher contribution from its coal, power and real estate business, bringing 9M22 consolidated core net income to record-high of Php 27.6B, up 124% YoY. For 3Q, SCC’s net income contribution was up 152% YoY due to the strong performance of its coal mining and power segment.

  SM 9M22 consolidated net income hit P42.9B, up 50% YoY and implying 3Q22 net income of P17.4B, up 143%. Results were better-than-expected, as 9M22 earnings accounted for 89% of 2022 full-year consensus estimates of P48.4B.

JGS’ core net income hit P6.5B in 9M22, more than 10x 9M21 core net income of P0.6B and implying 3Q core net income of P4.4B (+63% QoQ). Growth was driven by the strong performance of its food (URC), property (RLC) and banking businesses (Robinsons Bank). Top-line growth for 9M22 increased 34% YoY from 9M21, tempered by the shutdown of its petrochemical plants from May to August 2022 and the rapid depreciation of the Peso.

MPI 9M22 core net income grew 25% to P11.8B, up 25% YoY and implying 3QQ core net income of P4.3B, up 23%. Results were better-than-expected, as 9M22 core earnings accounted for 84% of 2022 full-year consensus estimates to P14B, which is in-line with management’s guidance for the year.

GTCAP 3Q22 core income grew 45% YoY to P3.3B, bringing 9M22 core income to P11.3B, up 41% YoY. Reported net income (including one-offs) amounted to P6.6B in 3Q22 (+223% YoY) and P15B in 9M22 (+72% YoY). Strong performance was driven by better-than-expected results of MBT and Federal Land.

AGI 3Q normalized net income (excluding the P5B one-time gain of Travellers in 2Q22) grew 9% YoY to P3.7B, bringing 9M22 normalized net income to P11.9B, up 29% YoY. Growth in 3Q was attributable to the strong performance of Golden Arches (+65% YoY), EMP (+0.6% YoY) and lower net loss of Travellers, as these companies continue to benefit from economic reopening.

 SMC reported net income of P12.95B for 9M2022, down 62% YoY. Excluding the impact of FX and the CREATE law, 9M22 core net income increased 25% YoY to P43.6B. For its subsidiaries, FB net income reached P16.1B for 9M2022 (+15% YoY) as a result of underlying volume growth across its different divisions and for implementing price increases across various products.

REAL ESTATE AND PROPERTIES  

ALI’s net income jumped 107% YoY from PHP 5.3 Bn a year ago and now accounts for 81% of FY22 consensus estimates.

MEG’s attributable net income hit P8.4B in 9M, implying that 3Q net income reached P2.5B. Top-line for 9M amounted to P42.5 Bn attracted to the growth in real estate sales and rental income.

RLC disclosed an attributable net income of P2.05 Bn (-38% QoQ, +130% YoY) this 3Q due to the boost from commercial leasing, and improved sales of residential projects.

CLI’s normalized earnings to parent of P2.2B boosted by its topline of P10.96B (+43% YoY), due to the sale of real estate units and the strong recovery of its other businesses. For 3Q, earnings reached P649.9M (-12% QoQ, +21% YoY).

GAMING 

 BLOOM’s 3Q GGR grew to PHP 13.4 Bn (+89% YoY) due to the resilient local discretionary consumption and the recovery of the VIP segment. Consolidated net income dropped by 14% QoQ to PHP 1.5 Bn, yet still a turnaround from the PHP 1.1 Bn net loss in 3Q21.

PHILIPPINE STOCK MARKET 

The PSEi ended 26.85pts lower (-0.42%) despite trading deeper in the red in the afternoon session to close at 6,392.09 while the broader All Shares index lost 0.10%.

Trading ended mixed for the sectoral indices as the gain from Mining & Oil (+0.96%) was offset by the decline in Holdings (-0.94%).

Value turnover improved to P6.7B (vs. only P4.9B in the previous trading session) while net foreign flows were positive (+P1B) for the ninth consecutive day. Top index gainer was ACEN (+8.53%) while top index decliner was AEV (-4.25%).