Quick Take: Dennis Uy is consolidating his food biz and 4 more market updates
Solar Philippines [SPNEC 1.4 3.0%] [link] announced that it has “secured” over 2,000 hectares for the “world’s largest solar farm”, the Terra Solar Philippines, Inc. joint venture that SPNEC is developing with a subsidiary of Enrique Razon’s Prime InfraCapital. SPNEC said that the land would show up in its next quarterly report, and hoped that would give its shareholders “a better appreciation of the assets in SPNEC”. SPNEC also said it has been executing on whatever project it thought had the highest value, “since the SRO”. SPNEC's stock is up 14% over the past week, and up 19% over the past month.
MB Quick Take: SPNEC sounds like it feels misunderstood, that “public shareholders” haven’t figured out just how valuable these projects really are. The land still needs to be “perfected” (documentation for the 100s of parcels that make up the giant plot), but this is a significant step toward a groundbreaking for this massive project.
PH Resorts Group [PHR 0.8] [link] announced the additional listing of 2,038,750,523 common shares that were purchased through private placements bUdenna Corp, PHR’s parent company and Dennis Uy’s private holdco. This listing is the final step for two transactions with Udenna which started in 2020 and 2021. The first was a traditional private placement where Udenna bought 1,686,309,523 shares at P1.68/share. The second was less traditional, where Udenna did a sale/re-buy of 352,441,000 shares at P1.70/share.
MB Quick Take: PHR is worth just P0.84/share now, so Udenna’s investments from 2020 and 2021 are down 50% and 51%, respectively. PHR has already sold off some assets to Enrique Razon to make ends meet, and with PHR’s losses continuing to mount (P500 million so far this year), and Udenna’s debt problems forcing weekly stories about additional asset sales, it’s kind of hard to see where this one is going. I mean, it’s going “down”, but what exactly will happen as this unfolds is unclear.
Bangko Sentral ng Pilipinas (BSP) [link] Governor, Felipe Medalla, said that the issue for the Philippines in 2023 is “not recession but the extent to which growth declines,” noting that the IMF thinks GDP will fall to 5% while the Government thinks that it will fall to 6%. Mr. Medalla said that if things are actually worse than they seem now, the Government might have to revise its 2023 estimate to 5%, and that the IMF would likely do the same to 4%.
MB Quick Take: The US is clearly planning for a difficult 2023, with signals of recession appearing (10Y bond yield curve inversion) and tech firms cutting workforce as fast as possible. The majority of the factors that could impact our GDP are external, so Mr. Medalla is just watching the news coming out of China, Europe, and North America just like everyone else.
San Miguel [SMC 98.0 0.1%] [link] is scheduled to open the Bulacan-based “New Manila International Airport” in 2027, according to the Department of Transportation (DOTr). The DOTr said that SMC’s land development for the airport was 42% complete, and will be finished in December of 2024. After that, construction on the buildings and infrastructure is expected to start and then complete sometime in 2027.
MB Quick Take: We needed more airports to service Metro Manila decades ago, so SMC’s 50-year concession to build and operate this massive airport is better late than never for travelers that are tired of the congestion and inconvenient placement of NAIA. Still, for SMC shareholders, this has got to be a bit of a bitter-sweet thing seeing as how the Marcos administration scrapped SMC’s greater “Aerocity” plan that would have attempted to create an SMC version of Udenna’s Clark Global City development.
Dennis Uy (DAU) [link] is consolidating ownership of his food businesses under Udenna subsidiary Eight-
MB Quick Take: It would certainly be ballsy for DAU to push forward with an IPO under these market conditions. It’s not like he’s known as a savvy business operator, and a lot has changed since these assets were acquired from their original owners pre-COVID. What kind of valuation will investors seek for these assets? For Udenna to use an IPO as a means to raise money, it would need to sell a good chunk of secondary shares, which is usually not a great signal for an IPO, especially an IPO of fast food restaurants. Investors in this space are chasing growth, and a secondary-heavy IPO woudn’t fit so neatly into that profile. That said, I’m always interested to read a prospectus and see if DAU and his group have any ideas of what to do. Both brands are solid and respected. Both have potential, but neither will succeed without a competent hand at the helm.
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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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