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Stock Commentary

Quick takes from around the market

Merkado Barkada
Quick takes from around the market

1. Cebu Pacific [CEB 32.00, down 0.2%; 74% avgVol] [link] said that 20% of its planes will be out of service in 2024 due to a maintenance issue related to planes carrying Pratt & Whitney engines. CEB expects to have 10 planes out of commission by the end of this year, and for that number to expand to 20 in FY24.


MB quick take: It apparently takes a minimum of 240 days for the repairs to be completed, so there is upside risk to the amount of downtime CEB could experience because of this. The airline is apparently trying to make deals with other airlines, like the “wet lease” that it recently signed with Bulgaria Air for two jets through Q1 and Q2 next year. A wet lease is one where the lessor (Bulgaria Air) provides everything (plane, crew, maintenance, insurance).
 

2. DFNN [DFNN 3.14, up 4.3%; 703% avgVol] [link] signed a memorandum of understanding with the Department of Information and Communications Technology and the Freeport Area of Bataan to be “founding anchors” of the Horizon Philippines Project, which is a startup accelerator program run by a US-based venture capital firm called Plug and Play Ventures.


MB quick take: If you’re allergic to bombastic, breathless PR copy, maybe skip this one. It’s filled with talk about Filipino “unicorns”, wall-to-wall innovation, and “creating an innovation-centered technology landscape”. DFNN said “Horizon Philippines is more than a project. It represents a commitment to nation building...” Grabe.
 

3. Alsons Consolidated [ACR 0.54, down 8.5%; 636% avgVol] [link] raised P1.15 billion by selling the third tranche of its P3 billion shelf-registration commercial paper program. ACR listed the commercial paper on the PDEx exchange. It will use the proceeds to fund working capital.


MB quick take: The term “commercial paper” refers to debt that matures in less than a year. When you buy commercial paper, you don’t get any coupon payments (like you would for a bond) or dividend payments (like you would for a preferred share). You pay a discounted up-front price and then get repaid the “full” face value price when the paper matures. This can be a quick way for a company to raise money for short-term needs (like working capital), but it’s a market dominated by institutional investors. The minimum buy-in can be huge. The minimum purchase for this one was P500,000.

 

 

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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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