Quick Take: Is the BSP under pressure to hike? and 4 more market updates
Bangko Sentral ng Pilipinas (BSP) [link] under growing pressure to declare an off-cycle rate increase to help offset the degrading situation on the ground for people trying to afford food and basic necessities. The BSP had openly committed to matching the US Federal Reserve’s 75 basis point increase, but refused to do so before its regularly-scheduled meeting on November 17th. Now, some analysts are calling on the BSP to make the increase effective now, instead of waiting, since, according to BPI economist Emilio Neri, “if we continue to delay, we might end up hiking even much, much more”. Goldman Sachs increased its estimate of the “terminal rate” (the highest the rates will eventually go) to 6%, up from 5.25%.
MB Quick Take: This was always what I was expecting, and why I thought it was important to watch what sentiments would boil to the surface in the time between the US Fed raise and our own. As Mr. Neri implies, it’s not like anything is likely to get better for people or companies over the next two weeks. At least the peso hasn’t exploded (yet). Keep an eye on this.
International Container Terminal Services [ICT 190.00 6.86%] [link] Q3 profit rose 42% y/y, and grew 45% q/q, to US $187 million (P10.9 billion), driven by “volume growth, cost control and operating discipline.” ICT highlighted the 7% y/y increase in shipping container “throughput” to 8.9 million TEUs (“twenty-foot equivalent unit”; a basic shipping container), and the 20% y/y increase in sales to US $1.6 billion. EBITDA was up 25% to $1.0 billion. This marks seven consecutive quarters of “double-digit consolidated revenue growth”. ICT is a globally-diversified port operator owned by Enrique Razon.
MB Quick Take: The Razon Family has plenty of experience operating in a notoriously rough business (ports operations are legendary in this regard) in some of the roughest political and economic environments in the world. I’ll admit that ICT’s continued revenue growth is somewhat surprising to me, as I’d assumed the downturn in the Chinese economy would make it too difficult for ICT to match the performance of prior periods, but here we are: ICT is not only matching, but exceeding, what it once did, and despite the relative weakness of the Chinese market.
Megawide [MWIDE 3.42 4.27%] [link] board voted to increase the company’s authorized capital stock by P36 million, all in the form of preferred shares, raising MWIDE’s total authorized capital stock from P5.080 billion to P5.116 billion.
MB Quick Take: This move has no impact on the share price of the common shares, since this was (1) only the board authorizing the issuance of new shares, not an actual issuance, and (2) the shares are preferred shares and those are not counted when it comes to matters of equity like voting and the calculation of percentage ownership interest. The raise does give the board 36 million shares to play with, which it could turn around and sell at ?100/each to raise up to ?3.6 billion. While it’s not free money (MWIDE would need to pay dividends on the preferred shares), it’s still good money that MWIDE can apply to any number of big infrastructure opportunities around the country.
ACEN [ACEN 6.05 1.14%] [link] decides to proceed with the 400 MW Stubbo Solar project in Australia, located near Wollar and Wellington. The project is scheduled to commence construction later this year, and cost approximately US $513 million (P30 billion) to construct from start to commissioning. This is ACEN’s second 400 MW solar project in Australia. ACEN is a subsidiary of Ayala Corp [AC 657.00 4.95%] and a component of the Zobel Family’s diversified holdings.
MB Quick Take: Putting all the nice PR talk aside (400 jobs created, 185k homes powered, etc etc etc), 400 MW is a serious amount of power generation capacity. ACEN is really leaning into Australia as a home away from home for its solar energy development pipeline, with Australia as a major pillar of ACEN’s strategy to achieve its goal of 20 GW of renewable capacity by 2030.
SM Prime Holdings [SMPH 34.00 5.26%] [link] Q3 profit up 97.5% y/y to P7.9 billion. Mall revenues were up 114%. Residential property development revenues were up 32%.
MB Quick Take: That’s a really impressive headline, but the better context is that SMPH’s Q3 profit is about 7% higher than its Q2 profit this year. Even better context: SMPH made P8.3 billion in profit back in Q3 of 2019. That was still 5% higher than this year’s result. Three years later and the company still hasn’t stepped out of its 2019 shadow. It’s easy (sometimes) to forget just how much time and money was lost during the pandemic.
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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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