MACROECONOMICS WEEKLY UPDATE

The Philippine economy is expected to expand by 4.1% this year, as external headwinds and elevated inflation are seen to dampen domestic demand, according to Oxford Economics. This is slower than the 7.6% the country saw in 2022. Oxford Economics’ GDP projection is also well below the government’s target of 6-7%. Meanwhile, it expects the Philippine GDP to expand by 4.5% in 2024, slower than the 6.5-8% target set by the government.

According to BSP Governor Medalla, the central bank will likely hike the benchmark interest rate by 25bps next month amid signs of slower inflation in February. Noting that inflation possibly peaked in January, the BSP Governor said that one more rate hike is the likely scenario. Nonetheless, a higher m on m increase could prompt a bigger move at the Monetary Board’s next meeting on March 23.

According to socioeconomic planning Secretary Arsenio Balisacan, inflation could begin to plateau in March as food supply improves with the start of the harvest season in February and given the lack of typhoons in the last few months. This comes after the BSP revised its average inflation forecast upward to 6.1% for FY23 from 4.5% previously.

ENERGY    

    Excluding non-recurring items, MER’s 4Q22 core profits rose 14.6% to Php7.5Bil. This brought FY22 core profits to Php27.1Bil, up 10.1% y/y. FY22 sales volume increased 6.2% to 48,916 Gwh, FY22 sales volume is 4.4% above pre-pandemic level in FY19. All of the 3 major customer segments posted an increase in sales volume.

AGRICULTURE

Agrinurture inc (ANI Revealed plans to raise ₱280 million through a ₱1.00/share stock rights offering (SRO), which ANI expects to sell at a ratio of one SRO share for every 2.5 existing ANI shares owned. ANI also plans to sell ₱2.7 billion in green bonds, which was a plan that has been delayed by COVID-19. ANI’s owner, Antonio Tiu, said that the SRO raise would be a part of a larger raise of some ₱5 billion that will be needed to fund ANI’s ambitious expansion plans.

TELECOMMUNICATION  

Construction of Converge’s (CNVRG) cable landing station of the trans-Pacific subsea Bifrost Cable System project has already commenced. Converge will invest USD 100 mil into the project, which will give them access to upwards of 15 TBps of additional capacity. The Bifrost Cable System is expected to be completed in 2024, and is the world’s first subsea cable system directly connecting Singapore to the west coast of North America

PLDT’s (TEL) shares dropped by over 7% after the local government of Makati City closed down SMART Communications HQ and branches within the city, for operating without a business permit since 2019 and owing ₱3.2 billion in unpaid franchise tax.

According to the LGU, Smart’s HQ violated the Revised Makati Revenue Code, noting that the company was ordered to submit a breakdown of revenues and business taxes paid in all branches nationwide, but it allegedly refused to present the documents.Smart filed a petition for review in 2018, seeking to nullify the Office of City Treasurer’s notice of assessment, which stated that the company did not pay the franchise tax. It argued that the city has no jurisdiction to audit the company’s financial statements in other branches nationwide. It also stressed that it had submitted all records related to its operations within the city and paid the necessary taxes. However, the local court denied Smart’s petition in 2022 and has yet to elevate the case to the Supreme Court.

 Space Exploration Technologies Corp’s (SpaceX) satellite internet provider, known as Starlink, will now be serving the Philippines. SpaceX partnered with Data Lake Inc., a data Philippine-based data company owned by Henry Sy., Jr. and Anthony L. Almeda, for the distribution of the satellite internet services. Data Lake previously said that subscription costs consist of an initial US$599 per unit and a monthly fee of US$99 for the connectivity service with download speeds up to 200Mbps.

ENERGY 

Excluding non-recurring items, MER’s 4Q22 core profits rose 14.6% to Php7.5Bil. This brought FY22 core profits to Php27.1Bil, up 10.1% y/y. FY22 sales volume increased 6.2% to 48,916 Gwh, FY22 sales volume is 4.4% above pre-pandemic level in FY19. All of the 3 major customer segments posted an increase in sales volume.

AGRICULTURE

Agrinurture inc (ANI Revealed plans to raise ₱280 million through a ₱1.00/share stock rights offering (SRO), which ANI expects to sell at a ratio of one SRO share for every 2.5 existing ANI shares owned. ANI also plans to sell ₱2.7 billion in green bonds, which was a plan that has been delayed by COVID-19. ANI’s owner, Antonio Tiu, said that the SRO raise would be a part of a larger raise of some ₱5 billion that will be needed to fund ANI’s ambitious expansion plans. 

BANKING 

    BDO reported Php17Bil in net income for the fourth quarter of 2022, up 64.8% y/y on revenue growth and lower provisions. The bank saw net interest income growth of 21.7% y/y, driven by higher loans and net interest margin expansion. Non-interest income also increased by 8.6% y/y, led by higher trading and foreign exchange gains. Provisions, on the other hand, declined by 36.5% y/y, amid improving asset quality. With that, the bank’s FY22 results came to Php57Bil, up 33.3% y/y.

MBT reported net income of Php9.3Bil for the fourth quarter of 2022. This is up by 54.8% y/y, driven by strong revenue growth. The bank saw net interest income rise by 25% y/y, on the back of a growing loan portfolio (+14.7% y/y) and higher net interest margins. An increase of 33% y/y in non-interest income also contributed to strong earnings growth in the fourth quarter, offsetting a 33% y/y increase in provisions. The bank’s full-year net income amounted to Php32.8Bil, up 47.9% from last year.

PNB continues to ramp up the sale of various assets, as it aims to generate close to P4bn next month via the sale of commercial and real estate properties nationwide. Among the properties it plans to sell are a 200,000 sqm commercial lot in Bacolod worth Php 2.3 bn, 510,000 sqme of restidtntial land in Tagatay City valued  at Php 1.6 bn and a unit at Pacific Plaza Condminium worth Php58.2 mn

PROPERTY

SMPH is reportedly considering the revival of an initial public offering (IPO) of a real estate investment trust (REIT) that could raise as much as US$1Bil. According to an unnamed source, the company has restarted discussions with advisors on listing its shopping mall portfolio through the REIT, and a first-time share sale could take place as soon as the fourth quarter this year. 

LOGISTICS

2GO Group (2GO) teased its FY22 net income of Php312 mn, which it referred to as a “turnaround profit” after years of net losses. Revenues grew by 25% to P19.3bn as the company benefited from the reopening of the economy and the lifting of movement restrictions.

 

Shipping revenues surged by 67%

Passenger travel soared by 217%

Sea freight revenues grew by 48% YoY

REAL ESTATE INVESTMENT TRUST 

AREIT announced a 55% jump in its net income to P3.4bn last year on the back of strong revenues. Occupancy rate reached 98% with robust collection performance driving a 53% YoY climb in revenues.

AREIT exceeded its P60bn goal for assets under management (AUM) and ended 2022 with P64bn in AUM after acquiring six office buildings in Cebu

AREIT plans to expand its asset portfolio by an average of 100,000 square meters of GLA from 2023 to 2025. This is expected to result in an annual increase of P10-15bn in AUM during the same period.

Philippine Stock Exchange 

The PSEi rose 15.75pts (+0.24%) to close at 6,671.12 ahead of PH February CPI to come out tomorrow (median estimates of 8.9%).

Trading ended mixed for the sectoral indices, with advances by Mining & Oil (+0.36%), Services (+1.27%), Industrials (+0.20%) and Property (+0.54%) while Financials and Holdings were flat.

Value turnover dropped to P4.3Bn while foreign funds were net buyers (+P5.7Mn). Top index gainer was ICT (+3.50%) after reporting better-than-expected results while top index decliner was BPI (-1.95%).