Philippines Microeconomic Weekly Update #38

MACROECONOMICS WEEKLY UPDATE

The NEW Bangko Sentral ng Pilipinas (BSP) chief stated during the turnover ceremony and the BSP’s 30th anniversary event  that Inflation has finally started to come down, and if our models are right, we should be back in our target range even by the end of this year which is around 2-4% range. Of course this is subject to change as it all depends if there are any shocks or unforeseen circumstances that may potentially occur before the year ends.

The Department of Labor and Employment (DOLE) announced the approval of Wage Order No. NCR-24, granting a 7% increase in minimum wages. The new rates are from P570 to P610 for the non-agricultural sector and P533 to P573 for the agriculture sector, service, and retail establishments with 15 or fewer workers, as well as manufacturing establishments with fewer than 10 workers. The increase was in response to petitions from labor groups citing the rising prices of basic goods and commodities.

INDUSTRY UPDATE

HOLDING COMPANIES

Metro Pacific Investments (MPI), led by Manny V. Pangilinan, has raised its tender offer price for minority shareholders to P5.20, representing a 37% premium over the stock’s one-year volume weighted average price. This offer price surpasses the upper range set by Unicapital, the third-party assessor, by 10 centavos. Additionally, a special stockholders’ meeting has been scheduled for August 8 to seek approval for the delisting of MPI. In other news, Cosco Capital (COSCO), the parent company of Puregold (PGOLD), has confirmed its intention to allocate ₱12 billion for capital expenditures in 2023. Of this amount, approximately ₱3.5 billion will be allocated to logistics capex for the Puregold Group. The majority of the capex budget, ₱4.1 billion, will be used to construct four S&R warehouses and 10 S&R branches.

ENERGY

Repower Energy Development (REDC) has confirmed its IPO’s final offer price at ₱5.00 per share, matching the preliminary prospectus. The IPO consists of 200 million primary common shares and 30 million secondary common shares, aiming to raise ₱1.15 billion. ₱1 billion will be allocated to REDC’s renewable energy business, while around ₱150 million will go to selling shareholders for the over-allotment/stabilization fund. The offer period began on June 28 and will end on July 14, with the IPO scheduled for July 24. In related news, SM Investment, through its subsidiary Philippine Geothermal Production Company, plans to double its geothermal capacity from 300 MW to 600 MW. This expansion will involve exploration projects in Northern Luzon and Bicol and will require an annual investment of approximately ₱3 billion.

RETAIL

 Anglo Philippine Holdings Corp., owned by the Ramos family, has stepped in to provide short-term funding to support the operations of National Book Store Inc. (NBS) and its subsidiary, Abacus Book and Card Corp. A P300 million credit line has been extended with a 90-day term and an eight percent per annum interest rate, according to a regulatory filing.

AIRLINES

After the recent Senate hearing wherein lawmakers called for the suspension of the franchise (CEB) amid mounting customer complaints on flight cancellations and overbooking,  Cebu Pacific expressed eagerness to share the positive changes it has made and stated its commitment to safe, accessible, and affordable flights. Moreover the airline is working on improving its service in response to mounting customer complaints.

FOOD AND BEVERAGES 

San Miguel (SMC) has confirmed signing a ₱100-billion syndicated loan for the MRT-7 project. The loan will support the ongoing construction, which is currently 62% complete. SMC expects the additional funds to accelerate the construction process. The loan was signed by SMC’s subsidiary, SMC Mass Rail Transit 7 Inc.

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