Quick takes from around the market
Universal Robina [URC 111.00 0.18%] [link] Q2 profit down 46% y/y, down 21% q/q... Q2/22 profit of P2.7 billion, down 46% from Q2/21 profit of P5.0 billion, and down 21% from Q1/22 profit of P3.5 billion. All aspects of the business appear to be stronger and healthier in H1/22 as compared to H1/21, but those improvements are masked by the “high-bar effect” of URC’s sale of “idle fixed assets” for more than P2 billion in Q2/21, which makes this quarter’s results look inferior. URC also announced a P3 billion stock buy-back program in Q2/21, but despite that artificial support, the stock is still down over 17% over the past 12 months (since that announcement). URC just announced an extension of that buy-back program, with an additional P5 billion of budget.
PSE [PSE 169.00 0.59%] [link] rebalanced the PSEi index, kicking Security Bank [SECB 90.55 0.61%] to the curb, and replacing it with Semirara Mining and Power [SCC 41.50 unch]. The change will take effect on August 8. The PSE said that this will be the last rebalancing where companies with a public float of less than 20% will be considered. This means that huge companies like San Miguel [SMC 105.50 0.67%], AC Energy [ACEN 8.37 0.95%], and Emperador [EMI 18.88 0.32%], will need to sell considerable chunks of their businesses to the public, soon, to avoid deletion from the PSEi Index.
AyalaLand Logistics [ALLHC 3.10 0.64%] [link] provided a really brief, high-level preview of its Q2 and H1 results that was just 7 sentences long, and exceedingly light on comparables to previous periods. Checking ALLHC’s Q2/21 report, it seems like their H1/22 consolidated revenues are flat, at around P1.6 billion, but their H1/22 net income was up 38% y/y to P339 million. Without more detail, it’s hard to see exactly where that improvement came from, but we’ll do a much deeper dive once ALLHC gives us more than a tweet’s worth of text on the quarter.
AbaCore [ABA 2.09 unch] [link] “President’s Report” touts benefits of new coal agreement, but laments hefty market price discount to book value of P3.89/share. According to the report, ABA is pleased with the prospects of the new agreement with Oriental Vision Mining Philippines (OVMP) to bring ABA hefty royalty fees on the coal that OVMP rips from the ground, which ABA says will continue to benefit from the “elevated” commodity prices that we’ve seen for a while now. ABA also likes that this royalty will diversify its income stream. ABA’s president noted the strong performance of the stock (up 126% year-to-date), but said the 46% discount to book value means that the management team needs to make “more progress to deliver results”. ABA has come to life, and its stock has done great, but it seems like the market still isn’t 100% sure about ABA’s ability to monetize its considerable assets in the Batangas region.
JG Summit [JGS 51.50 6.36%] [link] sold a big chunk of its minority stake in Meralco [MER 340.00 7.10%], in a private placement deal worth P12.4 billion to JGS. They sold about 36 million shares, for P344/share, which was at a 6% discount to Thursday’s closing price. News of the sale pushed MER’s price down over 7% to P340/share. JGS said that it was selling the shares at a “good price”, and that the rationale behind the sale was “financial conservatism and balance sheet management”. JGS is (still) MER’s second-largest shareholder. This feels a lot like how Converge [CNVRG 19.00 3.55%] was side-swiped by the sudden block sale of its shares by Coherent Cloud: sentiment on the stock dipped hard.
Bank of Commerce [BNCOM 8.39 3.97%] [link] raised ?7.5 billion from a well-received sale of bonds that were 3x over-subscribed. The demand allowed BNCOM to increase the size of the sale from P3 billion to P7.5 billion, and to close the offer period early. The bonds were listed on the PDEx (our fixed-income version of the PSE) on Friday. BNCOM hopes that the proceeds will help it reduce interest rate risk.
Prime Infra [PFR pre-SEC] [link] on-track to completely acquire one half of Dennis Uy’s Malampaya stake by the end of 2022. PFR will acquire Shell Philippines Exploration B.V.’s (SPEX) 45% stake in the Malampaya Project from Udenna Corporation. When the deal is completed later this year, PFR will assume total control of SPEX’s old stake, while (so far) Dennis Uy will retain control of the 45% stake that he purchased from Chevron. The state-run Philippine National Oil Co., which was instrumental in blocking Udenna’s takeover of the project, will retain its 10% stake when the deal is done. All the news surrounding this deal makes it sound like everyone just assumes Enrique Razon and PFR will run the operations. Maybe the concerns that the Senate had over Dennis Uy’s operational competence with respect to this high-quality “asset of strategic importance” were well-founded. The potential for PFR to increase its stake should Dennis Uy’s financial situation continue to degrade could make PFR’s IPO later this year even more tantalizing. Malampaya’s lifespan is coming to an end, but there are some incredible infrastructure components to the project that could be incredibly valuable well beyond the life of the well.
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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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