Philippines Microeconomic Weekly Update #42

MACROECONOMICS WEEKLY UPDATE

In July, Philippine inflation likely dropped below five percent for the first time in 16 months, attributed to a strong peso and lower prices of specific foods and liquefied petroleum gas. The Central Bank projects the month’s Consumer Price Index (CPI) in the 4.1 to 4.9 percent range, although potential upward pressures come from increased rice and vegetable costs and higher domestic oil prices. The Maharlika Investment Fund’s potential impact on infrastructure investments contrasts with the government’s hopes, as Pantheon Macroeconomics warns it’s not a comprehensive solution for capital outlays and reforms, with pending implementing rules. Government entities jointly established regulations for night shift differential pay for employees, while the Bureau of Internal Revenue pursued tax evaders, filing 192 complaints and recovering P332.5 million. The manufacturing sector displayed a modest Q3 start, as S&P Global’s PMI rose to 51.9 from June’s low, and under the Marcos Jr. administration, Fiscal Incentives Review Board granted tax perks to 25 projects, costing around P29.97 billion in foregone revenue according to the Department of Finance.

INDUSTRY UPDATE

GAMING

PH Resorts Group (PHR), a casino resort developer in Dennis Uy’s portfolio, is in advanced discussions to divest unprofitable assets and finalizing negotiations with foreign and local investors to secure funds for completing the Emerald Bay integrated resort. Meanwhile, Suntrust Resort Holdings, a Philippine subsidiary of Suncity group, has obtained a $5 million loan from LET Group Holdings to finance its casino project in Parañaque City, repayable within 10 years, extendable or adjustable based on circumstances.

 

ENERGY

AboitizPower (AP) reported a robust Q2 net income of ₱10.3 billion, marking a 46% increase from Q2/22, driven by a 69% YoY rise in core net income attributed to GNPower’s contributions and enhanced power generation availability. H1 net income surged by 79%, with core H1 net income up by an impressive 95%. AP accomplished a 25% growth in capacity sales, reaching 4,718 MW, and recorded a 29% increase in actual electricity sales to 17,736 gigawatt-hours during H1/23 compared to H1/22. CEO Emmanuel Rubio aims to establish AP as a pivotal force in the country’s energy sector. In the meantime, Repower Energy (REDC) returned to its IPO price of ₱5.00 per share on the fourth trading day, but significant upward potential remains uncertain as the stabilization fund remains inactive. Additionally, AyalaLand Logistics (ALLHC), the industrial lot sales division of Ayala Land (ALI), witnessed a sudden 35% stock price surge during the final moments of trading, soaring to ₱3.04 from a three-day narrow trading range, with a notable trading volume of 4.5 million shares. Notably, ALLHC has been removed from the PSE’s MidCap index, effective August 7.

RETAIL 

Wilcon Depot (WLCON) posted an H1 net income of ₱1.818 billion, a slight 2.1% decrease from H1/22, despite a 7.6% net sales rise attributed to new stores, while same-store sales grew modestly by 0.2%. The average ticket size increased by 4.3%, yet foot traffic declined in older stores; nevertheless, WLCON intends to maintain its expansion strategy to enhance customer accessibility when demand improves. On the other hand, Balai Ni Frutas (BALAI) achieved a robust H1/23 net income of ₱25 million, marking a substantial 68% increase from H1/22, driven by a 72% revenue surge to ₱249 million due to business expansion and store performance enhancement. BALAI added 17 new stores in H1/23, totaling 115 stores, with Q2 results equally positive—a net income of ₱16 million, up 78% YoY and 60% QoQ.

LOGISTICS

AyalaLand Logistics (ALLHC), the industrial lot sales arm of Ayala Land (ALI), experienced a sudden 35% surge in its stock price in the final moments of trading. After trading in a narrow range for three days, ALLHC jumped to ₱3.04 with a significant trading volume of 4.5 million shares. The PSE previously announced ALLHC’s removal from its MidCap index, effective August 7.

BANKING

BDO posted a Q2/23 profit of ₱18.7 billion, marking a 53% increase from Q2/22’s ₱12.3 billion and a 13% rise from Q1/23’s ₱16.5 billion, citing “broad-based growth across its core businesses” as the driving factor. Metropolitan Bank & Trust Co. (Metrobank), affiliated with the Ty family, reported a strong 34.1% net income surge in H1/23, reaching PHP20.9 billion compared to the previous year.

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