MACROECONOMICS WEEKLY UPDATE

The Philippines’ gross international reserves (GIR) experienced a slight increase to USD100.2 bn at the end of March, up 2% MoM, due to the government’s foreign currency deposits with the central bank and a rise in gold prices. It’s important to note, though, that the current dollar reserve level remains 6.6% lower than the USD107.3 bn reported a year earlier. 

The Bangko Sentral ng Pilipinas (BSP) states that the GIR at the end of March is sufficient to cover 7.5 months of the nation’s imports of goods and payments for services and primary income. Furthermore, it is approximately six times the country’s short-term external debt based on original maturity and 4.2 times based on residual maturity.

In February, the unemployment rate remained steady MoM at 4.8%, but it was lower than the 6.4% rate recorded in February 2022. According to preliminary data from the Labor Force Survey, there were 2.48 mln unemployed Filipinos in February, which was higher than the 2.37 mln in January.

Concurrently, the labor force experienced a 3.1% MoM increase to 51.3 mln, raising the labor force participation rate to 66.6% from 64.5% in January.

INDUSTRY UPDATE

CONSUMER DISCRETIONARY

Jollibee Foods Corp (JFC) is set to obtain a majority share in Meko Holdings, Ltd., the primary franchisee of JFC’s brands in Hong Kong. JFC will acquire a 60% stake in Meko for USD16.08 mln (approximately Php880 mln), while the remaining 40% will be retained by Meko’s shareholders. This acquisition aligns with JFC’s strategy to expand its presence in the Hong Kong and China markets. Following the completion of the transaction, JFC will hold a 60% ownership in what was previously a completely franchised market.

HOLDING COMPANIES 

LT Group (LTG) saw a 54.1% YoY decrease in 4Q22 net income to Php4.7 bn, primarily due to a high base in 4Q21 from PNB’s significant reversal in provisioning, while 4Q22 had Php6.5 bn provisioning. Tobacco segment (PMFTC) profit contribution fell 21.3% YoY to Php3.3 bn due to lower shipment volumes. Meanwhile, contributions from the distilled spirits (TDI) and beverage (ABI) businesses grew by 155% YoY to Php0.6 bn and 138% YoY to Php0.15 bn, respectively, driven by revenue growth. Consequently, LTG’s full-year net income reached Php25.1 bn, a 24.2% YoY increase.

 JG Summit Holdings (JGS) reported FY22 core net income of Php6.2 bn, up 100% YoY, driven by improvement in URC, RLC, and MER’s results, and a narrower net loss for CEB. URC’s core operating performance was in line with expectations, with FY22 core income at Php14.7 bn. CEB’s net loss declined by 44% to Php14 bn, but the operating loss exceeded expectations. RLC posted a 20.9% YoY increase in net income to Php9.75 bn. JGSPC reported a net loss of Php14.9bn in FY22, worse than expected. MER’s FY22 core profits reached Php27.1bn, up 10.1% YoY, driven by a 358% jump in MGEN’s core net income.

BANKING

Security Bank (SECB) has been awarded a three-year mandate by the state-run Social Security System (SSS) to manage Php2.5 bn in funds. The funds consist of Php1.5 bn under a balanced fund mandate and Php1 bn under a pure fixed-income funds mandate. Security Bank’s Trust and Asset Management Group (TAMG) won the mandate after a three-month bidding process that saw various domestic fund managers participate.

ENERGY

AC Energy (ACEN) announced that it has signed a subscription agreement with its wholly owned subsidiary, Bayog Wind Power Corp. (BWPC), to provide funding for the ongoing construction of the unit’s 160 MW wind project in Pagudpud, Ilocos Norte. Under the agreement, ACEN will subscribe to a total of 6.8 mln redeemable preferred shares, equivalent to an 8.06% stake, at Php100 per share, with an initial payment of Php182.7 mln.

 First Gen (FGEN) reported that its FY22 recurring net income was USD265 mln, up 5.2% YoY. Excluding one-off items, 4Q22 recurring net income rose 67.3% to USD77.4 mln. While the earnings contribution of FGEN’s gas plants (Sta. Rita, San Lorenzo, San Gabriel, and Avion) declined 4% to USD 190mln, EDC’s FY22 recurring earnings rose 20% to Php11.2 bn. The Pantabangan-Masiway hydro plant’s FY22 net income rose 35.6% to Php520 mln. San Gabriel’s earnings rose 19.8% to USD10.9 mln. Meanwhile, the Avion gas plant reported higher earnings of Php834 mln, up due to higher WESM prices during the period.

  Philippine Stock Exchange

                                                          Photo source : PSE