MACROECONOMICS WEEKLY UPDATE

Soured loans held by banks increased to Php405 bn in January, up 1.6% from Php399B bn in December amid elevated inflation and rising interest rates. Still, this was lower than the Php462 bn in January 2022. With that, the banks’ NPL ratio came to 3.28%, inching up from the 3.16% in December, but lower than the 4.14% in January 2022. Meanwhile, loan loss reserves increased 6.8% YoY to Php430 bn in January, and the industry’s NPL coverage ratio rose to 106.26% from 87.27% last year.

Data from the PSA showed that the unemployment rate hit 4.8% in January amid the loss of temporary holiday jobs, equivalent to 2.37 mln jobless Filipinos. This was the highest since the 5% seen in September 2022 but lower than 6.4% a year ago. Meanwhile, job quality worsened MoM as underemployment reached 14.1% from 12.6% in December, but improved YoY from 14.9%. January’s labor force shrank to 49.7 mln from 51.2 mln, which lowered the labor force participation rate to 64.5% from 66.4% in December

The Marcos Jr. administration bared its Php9 tln flagship infrastructure program on Thursday, announcing that the government is planning to build 194 infrastructure projects. According to the National Economic and Development Authority, of the 194 projects, 123 were conceptualized by the current administration, while 71 were carried over from the Duterte administration. Furthermore, 45 of the projects will be financed with help from the private sector.

Data from the Chamber of Automotive Manufacturers of the Philippines (CAMPI) and Truck Manufacturers Association (TMA) showed that new vehicle sales grew 27% YoY to 30,905 units in February. This was driven by the growth in commercial vehicle sales of 29% to 23,716 units. Commercial vehicle sales also accounted for 76.74% of the industry’s total sales. The remaining 23.26% of sales consisted of passenger car sales, which grew 21.6% to 7,189 units. YTD, vehicle sales have grown 34% YoY to 60,404 units sold.

INDUSTRY UPDATE

HOLDING COMPANIES

Metro Pacific Inc’s (MPI) 4Q22 core net income declined 17.2% to Php2.36 bn. This brought FY22 core net income to Php14.2 bn, up 15.1% YoY. Overall earnings contribution of subsidiaries rose 3.4% to Php18.9 bn. Net loss contribution of MPI’s oil storage and farm businesses contributed Php1.77 bn in net loss, 142% wider than the net loss contributed during FY21. Management said the net loss contribution included cost associated with its legacy logistics business, as well as the business development cost of its agriculture business.

                       1.Meralco (MER) core profits increased to Php27.1Bil, up 10.1% YoY in FY22.

                      2.Water distribution subsidiary Maynilad reported core earnings declined 7% to Php6.05Bil in FY22.

                     3. MPI’s toll road subsidiary MPTC core income increased 47% to Php5.68 bn.Revenues rose 31% to Php22.9 bn in FY22.

Aboitiz Equity Ventures (AEV) 4Q22 core earnings declined 28.9% to Php5.2 bn. This brought FY22 core earnings to Php21.3 bn, down 21% YoY. The decline in earnings was mainly due to the sale of a 25% stake in Aboitiz Power (AP) last year, as well as the net loss contribution of Pilmico Foods and Republic Cement. AEV’s earnings trailed analyst forecasts despite the higher than expected earnings contribution from AP, mainly on the disappointing performance of Pilmico Food and Republic Cement.

                      1.Unionbank of the Philippines (UBP) FY22 net income was increased 1.2% YoY to Php 12.7 bn. Earnings trailed analyst forecasts primarily due to the banks acquisition of Citi’s consumer business, which garnered higher than expected operating expenses.

 

                      2. Pilmico Foods, posted an FY22 net loss of Php14 mln, a reversal from the Php 2.2 bn net income the year before.Decline was primarily due to one-off losses relating to the divestment of their Sri Lanka business,Thailand business’ goodwill impairment and FX losses related to their PH agribusiness, which in total amounted to Php1.5 bn.

 

                   3.Republic Cement posted a net loss of Php300 mln in FY22, which according to AEV was led primarily by a contraction in sales volume due  to slower construction activities

PROPERTY & CONSTRUCTION

Robinsons Land Corps (RLC) net profit for 4Q22 surged 76.6% YoY to Php3.01 bn as revenues climbed 74.5% on strong mall and residential revenues. Mall revenues significantly improved as the Philippines had its first normal holiday season since the pandemic. Meanwhile, the residential segment saw a 434% increase to Php2.79 bn owing to the low base last year due to sales cancellations. For the full year 2022, net income was up 20.9% YoY to Php9.75 bn

ENERGY

Ayala Energy Corp (ACEN) reported that 4Q22 net income rose 810.7% YoY to Php8.9 bn, bringing FY22 net income to Php13.1 bn, up 149% YoY. Earnings exceeded analyst forecasts mainly due to the Php8.6 bn of net impact in revaluation gains from ACEN’s full acquisition of its Australian operations (roughly Php10.7 bn in gains), offset by one-off provisions for the Supreme Court’s decision voiding the Philippine Electricity Market Corporation (PEMC)’s Administered/Regulated Pricing (ARP) regime (Php1.1 bn in provision) and for impairment provision for the Lac Hoa & Hoa Dong Wind project in Vietnam (Php1 bn). Excluding the one-offs, we estimate that FY22 net income would have declined by 15.2% to Php4.5 bn.

Ayala Energy Corp (ACEN) announced that it has signed a partnership with US-based renewable power company, BrightNight, to develop, construct and operate large-scale hybrid wind-solar and round-the-clock renewable power projects in India. ACEN said it is looking to invest USD250 mln equity in this partnership with BrightNight. ACEN, through its subsidiaries, ACEN will support the accelerated buildout of BrightNight’s existing development pipeline of over 1.2 GW of hybrid portfolio in India, including a differentiated 100 MW co-located, wind-solar project in the resource-rich state of Maharashtra.

  Philippine Stock Exchange

The PSEi inched up 64.81pts (+1.01%) to close at 6,469.72 on bargain hunting, but still down 1.8% WoW.

The broader All Shares and sectoral indices also closed in the green.

Value turnover improved to P7Bn, while net foreign selling persisted (-P15Mn). Top index gainer was JGS (+6.12%) while top index decliner was SMC (-3.15%).