DA Market Securities 
No Comments DA Market Securities Morning Brief February 1, 2013
U.S. stocks fell on disappointing earnings as investors weighed economic data ahead of tomorrow’s jobs report. Spain lifted a ban on short-selling stocks. AC, ATI, ICT. FDC, IRC, PCOR, TEL, WEB, Energy, BSP, Goldman Sachs, Nomura, Philippine Outlook.
International
U.S. stocks fell, trimming the best January gain for the Dow Jones since 1994, on disappointing earnings as investors weighed economic data ahead of tomorrow’s jobs report.
Spain lifted a ban on short-selling stocks as the benchmark IBEX 35 Index rallied and the country’s banks took steps to repair their balance sheets.
Local / News
AC aims to start construction of the Daang Hari-South Luzon Expressway Link Project within the next two months, as it expects to resolve an interconnection issue with the operator of SLEX “very soon.” Ayala requires consent from South Luzon Tollways Corp (SLTC) for the revised design before beginning construction of the project since it will connect to the SLEX. Controlled by San Miguel Corp, SLTC operates the SLEX.
ATI has alloted P4.2 billion of internally generated money in the next 3 years to finance the expansion of its port in Manila.
http://www.interaksyon.com/business/54013/ati-allots-p4-2-billion-for-3-year-capex
ATI, ICT are interested to bid for the planned privatization of Sasa Wharf in Davao City, which has a berth measuring 920 meters long and a 48,848-square-meter container yard, is “known as the most progressive conduit of trade and tourism in southern Philippines.
FDC approved a plan to float $200 million to $300 million worth of bonds in the overseas market by Q2 this year to finance capital requirements for 2013. Earlier reported, FDC was investing roughly P25 billion to jumpstart this year the construction of new power plants (“greenfield”) with a combined generation capacity of 200MW. FDC is also keen on some of the “brownfield” or existing power assets slated for privatization.
http://business.inquirer.net/105253/fdc-plans-300-m-bond-offer-this-year
IRC has secured a Php 40 million loan from Home Development Mutual Fund (Pag-IBIG) to develop the land and construct 510 houses in Sunshine Fiesta Phase 2-Fiesta Casitas Project in Brgy. Tatala, Binangonan, Rizal. Until recently, IRC had no commercial activities except for clearing and retitling of its properties in Binangonan. It used to be an oil exploration company until 1978. It owns the 896-hecatare Apo Island in Coron, Palawan.
PCOR will issue $500 million worth of debt securities starting February 6 to fund the expansion of its refinery in Bataan to expand its 180,000 barrel per day refinery. The expansion, once completed, will allow the company to convert fuel byproducts into higher margin white products (automobile and aviation fuel) and petrochemicals. The new facilities should be completed in the fourth quarter of 2014.
http://www.interaksyon.com/business/54017/petron-to-raise-500-million-from-sale-of-ious
TEL has borrowed $300 million from foreign banks which will be used for “refinancing.” No other details were disclosed.
TEL expects to spend less for expansion this year following the recent completion of its two-year network modernization program. Last year it spent P33 billion. However, the company’s top priority would still be the expansion of its high-speed wireless and fixed broadband networks. TEL spent P67 billion for the modernization of its network in 2011 and 2012. Lower spending this year would also mean better cash flows, translating into bigger dividends for shareholders.
http://business.inquirer.net/105273/pldt-sets-lower-capex-for-13
WEB net income last year reached P1.1 billion, representing a 20% hike over 2011 results. The company would soon open its first e-Games cafe in Timor Leste, marking e-Games as its regional brand for PhilWeb’s quality electronic gaming solutions. WEB noted strong demand for its business among its 277 outlets.
http://business.inquirer.net/105249/philweb-profit-up
Local / Sector
DOE: Luzon grid has enough power plant projects in the pipeline to meet the projected rise in demand in the coming years. 2012 Power Development Plan forecasts peak demand in the Luzon grid increasing at an annual average of 4.13% from 7,969MW in 2012 to 16,477MW in 2030. Based on this, the grid will require an additional 500MW by 2016 and 8,100MW by 2030.
Local / Economy
Philippine BSP Governor Amando Tetangco said he’s studying more measures to counter excessive capital inflows lured by growth, joining South Korea and Singapore in warning that policy makers need to consider more steps to reduce the impact of such funds. “Capital flows and the impact of these on the local economy and local financial markets” would be among the biggest challenges this year.”
In 2012, PHL GDP grew 6.6% better than the 6.4% est. The government expects growth to accelerate to 6-7% this year, 6.5-7.5% in 2014, 7-8% in 2015, and 7.5-8.5% in 2016.
Goldman Sachs (GS): PHL to enjoy above-trend growth through 2016 when P-NOY ends his term. GS sees GDP to grow 5.5-6% until 2016, higher than the average expansion of 5% in the last 10 years. Growth is sustained by robust domestic demand strength, may accelerate from a focus on infrastructure with education and moving up the valued-added chain. Far from overheating, because credit growth remains healthy, a “possibility of a renaissance” in manufacturing, BSP may be at the end of a rate cut cycle due to inflationary pressures from a pick-up of growth. GS sees peso appreciating to 37.50 against the US$, also it has a weak view on the US$ in the next few years. A stronger peso means more purchasing power but reduces export competitiveness; also pushes inflation down, beneficial for prolonged infrastructure investment phase. GS has issued an underweight in the PHL market because it is “one of the most expensive markets in the region.”
Nomura: PHL runs the risk of overheating if monetary policy stays loose amid strong capital inflows and equally fast economic growth rates. BSP would hike rates later this year if inflation comes under threat.
The BSP said record economic growth coupled with moderate inflation last year gives monetary authorities latitude to keep interest rates low. At present, monetary authorities are concerned more about managing capital inflows that had been growing substantially since the middle of 2010. Net inflows had averaged $1.3 billion per quarter from $0.3 billion before the global financial crisis.