DA Market Securities 
No Comments DA Market Securities Morning Brief January 29, 2013
U.S. stocks were little changed as a drop in pending home sales offset a rise in durable goods orders while investors watched earnings. BCOR, BDO, GTCAP, Toyota, ICT, JFC, MEG, MER, GBPC, PX, PXP, RFM, TA, PPP, GDP, credit rating, Peso.
International
U.S. stocks were little changed, following the longest rally for the Standard & Poor’s 500 Index since 2004, as a drop in pending home sales offset a rise in durable goods orders while investors watched earnings.
Local / News
BCOR to buy back its shares from the market to increase shareholder value, setting aside P100 million from unrestricted earnings. In Dec. 2011, the board approved a purchase of up to P400 million. The share repurchase program will commence “anytime after the disclosure.”
Note: Earnings in the first half of its fiscal year ending April grew 27% to P637.29 million from the previous year’s P503.07 million on the back of stronger lottery and hotel operations.
http://www.interaksyon.com/business/53754/berjaya-to-buy-back-shares
BDO board approved the declaration of P340.33 million in cash dividends to holders of Series A preferred shares. The amount represents an annual yield of 6.5% for shareholders. BDO reported a net income of P10.5 billion for the first nine months of the year, targets 19% growth for 2012 to P12.5 billion, an all-time high.
http://business.inquirer.net/104837/bdo-oks-dividends-to-preferred-share-holders
GTCAP auto unit Toyota Motors Philippines Corp. (TMPC) auto parts exports rose to a record. Total Automotive Exports last year rose to $963 million in 2012, and the Toyota group exports accounted for around 30% of total.
Note: Toyota is once again the world’s top automaker as Japanese firm released its tally for global vehicle sales for last year Monday at 9.748 million vehicles, higher than the 9.7 million last month, dethroning General Motors Co. which sold 9.29 million.
http://www.interaksyon.com/motoring/toyota-parts-exports-hit-a-record-in-2012/
http://business.inquirer.net/104785/toyota-sold-nearly-9-75-million-vehicles-last-year
ICT yesterday raised $100 million, representing the second tranche of a $750-million fund-raising program; matching the same terms as $300 million first tranche issued last Jan. 10, which had a 10-year maturity and 4.625% per annum coupon rate. Demand was at $1.5 billion, translating to 15-fold oversubscription. Proceeds will be used to refinance and extend the duration of our liabilities and pre-fund our capex program.
Note: Last year, ICT had programmed $550 million in capex, more than double its 2011 budget for “greenfield projects” in Argentina, Mexico and Colombia.
JFC wants network to reach 900 stores from about 850 currently, target 1000 as it expands its footprint in the provinces and overseas. Next destinations for expansion – Singapore, Indonesia and several areas in the Middle East. JFC will also capitalize on a surprising strong reception by the Vietnamese by increasing the food chain’s presence in Vietnam. The co. is set to open one in Singapore and 7 are being planned for opening in Jeddah, then Qatar and Kuwait.
MEG home sales rose by 71% to P63.5 billion or about 550,000 square meters as it expanded in more areas across the country. The company will launch 10 projects in the first half of the year, and set a record capex at P35 billion. MEG is also expanding its reach to the Visayas with its ongoing township projects such as The Mactan Newtown in Cebu and Iloilo Business Park in Iloilo.
http://business.inquirer.net/104833/megaworld-posts-71-growth-in-home-sales
MER board approved:
- Execution of a memorandum of understanding with GTCAP power unit GBPC to jointly pursue and evaluate certain potential power generation projects in the Philippines.
- “Execution of a tripartite agreement” with Trans-Asia Oil and Energy Development Corp. and the Philippine Economic Zone Authority “for the supply of power to Cavite Economic zone and its locators.”
- Registration of Meralco’s retail electricity supply business segment as trading participant “and/or” as a direct member of the Wholesale Electricity Spot Market.
PEC/B is seeking joint-venture partners to speed up the construction of two critical coal-fired power plants (requiring investment of roughly P16 billion) that can add a combined 200MW to the Luzon and Mindanao grids. The co. intends to bid out within the first quarter this year majority stakes in the two power projects while it keeps a minority share of between 30 and 49% in each project.
http://business.inquirer.net/104829/pnoc-ec-seeks-jv-partners-for-2-plants
(PX, PXP) Forum Energy Plc. has secured a two-year extension (until Aug 14, 2015) for its work program under Service Contract 72 (SC 72) as the consortium faces delays due to sovereign claims issues. Forum Energy (owns 70% of the SC 72 license) and Monte Oro Resources Energy (owns remaining 30%) were supposed to start drilling the first of the two appraisal wells within the highly prospective Sampaguita prospect by March this year. The group, however, has yet to secure approval to proceed with the geotechnical survey needed prior to drilling. The SC 72 consortium has sought for the permits from the Department of Energy in July 2011.
http://business.inquirer.net/104849/oil-drilling-group-gets-2-year-extension
RFM will prepay roughly P1 billion in loans a year ahead of schedule, enabled by “stronger cash flows” and after profits grew by over a third annually in 2012. Then a balance of P100 million may be paid off shortly. Net Income for 2012 grew 34.17% to P682 million on “stronger overall sales of its high-margin businesses.” The company says it is poised for further growth due to “a bullish macro environment” that is buoyed by election-related spending and an expected credit rating upgrade on the country’s debt, as well as “through possible acquisitions and strategic partnerships.”
http://www.bworldonline.com/content.php?section=Corporate&title=RFM-prepaying-P1-B-debt&id=64993
TA said its 54MW wind power project in Guimaras will not take off unless the government is able to issue guidelines for the feed-in tariff (FiT) system for renewable energy. The co. is currently working on the P4 billion financing deal, pending issuance of the FIT scheme.
Note: TA said it is on track to energize its 270-MW coal-fired power plant in Calaca, Batangas; up for commissioning in the third quarter of 2014, having secured full funding.
Local / Sector
PPP Center to pursue four big-ticket projects in the transport and energy sectors to start off 2013:
- Plaridel Bypass Toll Road Project of the Department of Public Works and Highways (DPWH);
- Manila-Makati-Pasay-Paranaque Mass Transit System of the Department of Transportation and Communications (DOTC);
- Philippine National Railways (PNR) North and South Lines Development and Extension also of the DOTC;
- Batangas-Manila Natural Gas Pipeline Project 1 (Batman 1) of the Philippine National Oil Co (PNOC).
http://www.interaksyon.com/business/53762/ppp-center-identifies-4-big-ticket-projects-for-2013
Local / Economy
Moody’s: 6.5% PHL GDP growth expected to have been maintained in Q4, remaining as one of the fastest-growing economies in the region. For 2012, the government’s official economic growth target was 5 to 6%. The government will release the official gross domestic product (GDP) growth figure for Q4 and the full year of 2012 on Jan. 31, Thursday.
http://business.inquirer.net/104845/6-5-gdp-growth-seen-in-4th-quarter-of-2012
Assessment team from Fitch ratings will arrive in Manila this quarter. PHL officials hope they would find some good developments worthy of an upgrade. During its last visit to the Philippines last year, Fitch merely maintained the country’s rating and outlook. Its last upgrade of our credit worthiness was in June 2011, which put the Philippines a notch short of investment-grade level. Later on, Standard & Poor’s Ratings Services (S&P) and Moody’s Investors Service were able to catch up.
http://m.philstar.com/315469/show/5ba1280e8f7b7c87b8ab3013d746aaa6&t=f9aa297vn0shrcv9tusrsuth51
The Philippines should get an upgrade to investment grade in 2013 as it economic, fiscal, financial & policy fundamentals are much improved – Nouriel Roubini.
https://twitter.com/Nouriel/statuses/295829261321895936
The Philippine Peso declined the most in four months on concern the BSP will curb appreciation to support exports and shore up the value of remittances from overseas workers. Governor Amando Tetangco said last week the monetary authority will participate in the foreign-exchange market to smooth sharp movements in the peso.
Read more at itrade.ph