MACROECONOMICS WEEKLY UPDATE

INDUSTRY UPDATE

MINING AND OIL

Semirara’s (SCC) 1Q23 net income declined 40% YoY to Php9.03 bn, mainly due to lower sales volume and average selling price for coal. Total revenues during 1Q23 decreased 24.2% YoY to Php23.1 bn, with coal mining segment revenues falling 39.8% to Php15.5 bn and power generation revenues rising 59.2% to Php7.65 bn. Coal sales volume dropped 31% to 3.5 mln MT, while production declined 9% to 6.1 mln MT. Domestic sales volume remained flat, while the average selling price for coal decreased 14% to Php4,427/MT. In the power generation segment, SCPC and SLPGC (Semirara’s power subsidiaries) saw higher-than-expected revenues and average selling prices, prompting an increase in 2023 earnings estimates for both.

ENERGY

AC Energy (ACEN) core net income rose 400% YoY to Php2.03 bn, primarily due to the low base effect from 1Q22 results and an increase in attributable capacity. The company is now in a marginal net seller position in the WESM, no longer suffering margin losses from spot market purchases to service its power supply contracts. However, 1Q23 performance was affected by the unplanned outage of the SLTEC. Philippine operations contributed Php1.9bn in attributable EBITDA, while international operations contributed Php2.8 bn. ACEN’s profits are expected to improve as more generation capacity is added to its portfolio. The company recently signed financing for a 600MW wind project in Laos, which will sell power to Vietnam under a 25-year power purchase agreement. ACEN will own a 24% economic interest in the project, estimated to generate around Php800 mln for ACEN annually, and is expected to begin commercial operation by the end of 2025.

PROPERTY & CONSTRUCTION

Ayala Land’s (ALI) 1Q23 net profit rose 42% YoY to Php4.5bn, driven by a rebound in economic activity. Residential development revenues grew 10.2% YoY to Php14.19 bn, while total take-up sales increased 15% YoY to Php27.7 bn. Mall revenues climbed 70.7% YoY to Php5bn, nearing pre-pandemic levels, as foot traffic and tenant sales improved. Office leasing revenues grew 8.5% YoY to Php2.92 bn due to higher GLA (Gross Leasable Area) and occupancy rates. Hotels and resorts revenues surged 164.4% YoY to Php2.18 bn, driven by increased local and international travel and higher occupancy rates.

INFRASTRUCTURE & LOGISTICS

International Container Terminal Services (ICT) 1Q23 net income rose 21.3% to USD172.6 mln, with revenues from port operations increasing 8.3% to USD572.3 mln. Throughput volume grew 9.5% to 3.1 mln TEU (Twenty-Foot Equivalent Unit), while average yield declined by 2.1% to USD179.2/TEU. EBITDA rose 4.8% to USD354.3 mln, despite cash operating costs increasing 14.5% to USD218.05 mln. The growth in volume was driven by the consolidation of Manila North Harbor, offset by the cessation of cargo handling operations in Davao and PT Makassar Terminal in Indonesia. Ports in Asia experienced a 21.6% growth in volume, while Europe/Middle East/Africa volume declined 3.5% and Americas volume rose 0.5%. The yield/TEU decline was due to the consolidation of Manila North Harbor and the unfavorable impact of currency depreciation against the US Dollar.

TELECOMMUNICATIONS

As of May 3, 67% of PLDT’s (TEL) mobile subscribers have registered their SIMs, accounting for approximately 80% of mobile revenues, which could result in an 8.7% impact on total FY23E revenues if no additional subscribers register. For Globe (GLO), 50% of end-2022 subscribers have registered their SIMs, with the majority of its revenues coming from mobile services, and in the worst-case scenario of no further registrations, this could lead to a 27% impact on FY23E revenues. The 90-day extension of the SIM registration deadline until July is expected to benefit both companies by allowing a larger capture rate of subscribers. Additionally, Globe’s (GLO) 1Q23 normalized core income remained flat YoY at Php5.1bn, with service revenues growing 2.1% YoY to Php40bn due to higher mobile and corporate data, offsetting the weaker performance of home broadband. GLO had 84.2 million mobile subscribers at the end of March, down 4% YoY and 3% quarter-over-quarter, with mobile data accounting for 80% of mobile services revenues. PLDT Inc (TEL) reported a 1Q23 telco core income of Php8.6bn, up 5.3% YoY, with service revenues rising 1.6% YoY to Php47.1bn, driven by growth in the home and enterprise segments, while home broadband revenues increased by 5.6% YoY to Php15.0bn. Mobile revenues remained flat YoY at Php19.8bn, with improved ARPUs offsetting a decline in total mobile subscribers. Furthermore, Globe’s e-wallet subsidiary, Gcash, confirmed no hacking incidents linked to wallet deductions and addressed unauthorized transactions totaling Php37 million, ensuring that all accounts were corrected and no funds were missing.

LOCAL MARKET UPDATE

The PSEI ended in red as it fell by 1.46% to close at 6,578.15.

The decline was led by top index losers MONDE (-8.26%), SMPH (-2.89%) and JGS (-2.82%).Meanwhile, today’s top index gainers were TEL (+2.24%), DMC (+1.48%) and SCC (+0.72%). Value turnover reached ~Php5.01 bn with a net foreign buying of ~Php63.43 mln.