Quick Take: MPI's foray into agri and 3 more market updates

Agence France-Presse
Quick Take: MPI's foray into agri and 3 more market updates
So much of our annual harvest is wasted each year due to lack of infrastructure to transport, process, and store the vegetables. It’s staggering.
Merkado Barkada

Metro Pacific [MPI 4.21 0.7%] [link] announced plans to build a 22-hectare greenhouse facility in San Rafael, Bulacan. MPI will team-up with LR Group, its Israeli partner, to build the complex that is designed to dramatically improve crop yields through improvements in land efficiency, water efficiency, sustainable practices, shorter crop cycles, and reduced crop loss due to spoilage. Once completed, this will be the largest greenhouse facility in the country.

MB Quick Take: As I’ve said before, I like to see a conglomerate putting its capital, expertise, and deal-making ability to sectors that have a chance to benefit more than just the company and its shareholders. Sure, MPI exists to maximize shareholder value through profits that it hopes to generate from this project, but if this works as MPI plans, the benefits will flow to regular consumers as well. So much of our annual harvest is wasted each year due to lack of infrastructure to transport, process, and store the vegetables. It’s staggering. I’m interested to see if there are any other components to this massive headline that we just don’t know yet. Based on other reporting, it sounds like MPI is still out in the market with marching orders to go big in the agri sector. 

Citicore Energy REIT [CREIT 2.46 0.8%] [link] shares will come out of mandatory 365-day lockup on Thursday morning. Approximately 4 billion shares (representing 61.7% of CREIT’s outstanding shares) that are owned by corporations in the Edgar Saavedra extended universe will be “active” and available for trading.

MB Quick Take: These lockups are to help protect the public from potential “rug pull” situations, where a parent company conducts an IPO and then, once the IPO is complete, dumps a pile of stock on the open market to harvest the premium and tank the price for the IPO buyers. Once the lockup ends, however, the stock owners are allowed to do whatever they want with their shares. I don’t see any risk to CREIT holders of any selling pressure. Corporate owners usually like to retain control. It’s the individual owners, especially when ownership is divided between family members, that really get me wondering.

SM Prime [SMPH 36.90 0.3%] [link] teases FY22 net income increase of 38% to P30.1 billion. SMPH attributes the performance to “robust consumer spending”, especially during Q4. SMPH said that it was looking to “expand its footprint” in 2023 “in key areas in the country”, but will be monitoring the consumer spending trends very closely for weakness or disruption caused by inflation, higher rates, or supply chain issues.

MB Quick Take: Malls are roaring back to life, but the big question (that doesn’t really have an answer yet) is whether or not this is due to pent-up demand (so-called “revenge spending”) or if this is a real representation of the level of consumer spending that we should expect going forward. Isn’t it crazy to know that SMPH only started to charge its full rental fees to mall leasing clients in H2/22? My feeling is that, like with most pandemic-related junk, whether or not a spending spike is “revenge”-based will probably be on a segment-by-segment basis. Some things will exhibit revenge-spending symptoms (travel, electronics), while others are probably just the natural result of millions of people slowly getting back to regular life that was, before the pandemic, largely built around doing our shopping in malls. I’ll wait for the full annual report to really dig in.

PetroEnergy Resources [PERC 4.59 0.2%] [link] clarified that it is seeking ERC approval for a P257 million power line to connect its 13.2 MW Nabas 2 wind project to the National Grid Corp of the Philippines [SGP 11.30 0.3%] transmission line, but that it doesn’t expect commercial operations to start for Nabas 2 until Q2/24. The article mentioned September of this year.

MB Quick Take: Transmission is a huge component of renewable energy project planning, and one that is often not appreciated for the complexity of the challenges that it presents. You might have the best wind resources in the world, but if the location is too distant from a trunk line, or there are mountains between the project and the line, or there is a patchwork of hostile land-owners or meddlesome LGUs, things can get really expensive, really quick. There’s nothing here that indicates that the commercial start is delayed by permitting or construction issues of the transmission line, though. Just something to keep in mind. The proximity of SP New Energy’s [SPNEC 1.56 0.7%] solar assets to transmission lines is one of the biggest value-drivers for those properties. It’s a big deal.



Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

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