Juan Liners: Demographic Sweet Spot and Other Drivers (or Show-stoppers) of Philippine Economy

Last week, an article entitled “Heading towards an economic miracle” written by Den Somera was published in Inquirer. I found the article a good and promising review of what the Philippines’ future looks like, in the coming years. Fingers crossed of course.

Among the key drivers cited for the continued economic growth towards a miracle are as follows:

Consumer Spending

In general, Juan has money to spend, thanks to remittances coming from our OFW heroes, so circulation of that money in our local economy continues. Plus the favorable exchange rate of our peso, which means higher purchase power for those who earn and receive foreign currencies.

Juan is Saving Himself

Aside from money to spend, savings rate has been improving as well, up to 33% of GDP in 2012 from 18% in the 90s. With more savings, hopefully Juan is becoming more and more financially literate, starting with his emergency funds, then protection, then eventually some more risk taking in terms of investments.

Fiscal Strength

More and more manufacturers (case in point automobiles) are once again considering the country as their manufacturing hub. Lower debt for the country as a whole, coming from more judicious borrowing and strength of internal economic activity, while on the opposite better international reserves.

Window Demographic Sweet Spot

This is the first time I’m hearing this but this sounds mysteriously inspiring. This is said to be the time when our population has below 30% of aged less than or equal to 15 while those aged 65 or higher is less than 15%. Which means 55% of our population is aged 16 to 64, considered to be the more economically productive and income-earning ages, which means more Juan who can earn his keep and take part in economic growth. This is expected in 2015, to last until 2050, and based from observations in other countries, there is indeed a positive correlation between this window and advanced economic growth.

Challenges

If there are key drivers, of course there will be challenges as well. The article cited the truck ban in Manila City which could be a cause of slower movement and transport of goods which means slower economic activity. Another  is the cost of power which is a by product of lack of supply (good time to invest in power companies?). Another is the over supply in high end real estate property (there are few high end customers actually) while there is still backlog in mass housing requirements, for those with lower socio-economic status.

Oh, and also our PSE remains overvalued in terms of P/E ratio compared to regional peers.

The article did not include it, but I think other risks will be political risk, congestion risk and natural risk.

Political in a sense locally and internationally, we are viewed to still have high trust in our government leadership. But given the mind-boggling scams and the upcoming elections, will this trust and stability continue?

Congestion risk in terms of worsening traffic in Metro Manila, which also affects economic activity. Congestion in terms of the much-delayed government infrastructure projects (PPPs), which are meant to make lives easier in the long run, but for now will further aggravate traffic situations in affected areas. Congestion in terms of the limited capacity of NAIA, and how we lose money, time and tourism in the process.

Natural risk in terms of disasters: typhoons which are yearly and mega-earthquake, which is expected to hit Metro Manila anytime now. Is the country ready to mitigate the devastation brought by this, and if ever, how resilient will the economy and consumer confidence be if these disasters hit the center of Philippine economic activity: Metro Manila?

Oh, and the government’s stand on responsible mining and whether we should be more aggressive (yet responsible) in harnessing our natural resources. If we are too conservative in this regard, don’t we risk losing opportunity and failing to capitalize on this good economy (so far) and the demographic sweet spot? Add to this the recently conquered Benham Rise. How can the Philippines capitalize on this new piece of submarine land?

Here’s the link to the article: Heading toward an economic miracle. Fingers crossed every Juan.
Photo: IMG_3173 by Alchameo

Juan Liners: Throwback Sunday on Select Stock Prices Then and Now

Suddenly felt like doing a TBS: throwback Sunday or throwback stocks. Or some select stocks close to my heart and what their prices used to be (years or months or weeks ago) and now.
The Philippine stock market is once again gaining popularity with the bullish run towards 6800, with more and more newbies joining FB groups to ask around how it’s done, and more OFWs wanting to trade and/or invest and have a piece of the action. 

With the renewed interest from a wider “fan-base”, is the time to sell once again approaching? Sell in May and go away?

Caveat first. These TBS do not recommend a buy or sell rating. They just present some fun, cool, amazing or scary facts. The price movements described here may have taken years or months only, and I will no longer mention whether any stock dividends, stocks splits or follow on offerings along the way occurred, all of which could have affected the stock price one way or another. Who knows? The stocks right now may already be overvalued, or maybe not. So basically, it’s just a then and now.

Double Dragon (PSE: DD): IPO price at 2, with the run to 3, then 4. Rested a few days, reached 4.97 then a high of 7+ before closing at 6.7. I’d say this one’s exceptional, making all this run in less than a month. Hyped? Jockeyed? Fundamental? I leave it up to you. But as the traders say, the trend is your friend so regardless whether the run will be sustained and will last or not, as long as there is momentum, a killing can be made. For the brave of heart and risk-takers that is.

Meralco (PSE: MER): This happened years ago  when MVP and RSA suddenly had interest to acquire MER from the Lopezes. Trading at 40s only back then, the price shot up drastically. Now it’s trading at 273.

Megaworld (PSE: MEG): One of my favorites when I started investing in 2007. Trading at near 2 levels back then. Now it’s trading at 4.68.

Alliance Global (PSE: AGI): Another favorite. Back in global recession, this used to cost 4 each. Now, less than a decade later, stock price is now at 30.40.

JG Summit (PSE: JGS): Back in global recession, this also used to cost around  4 each. Now, less than a decade later, stock price is now at 50. #boompanes

Jollibee Corp (PSE: JFC): Price used to be at 40, then now it’s 174.

Manila Water (PSE: MWC): First stock I bought in 2007 priced at 16. Dropped to 10 during global financial crisis, now at 26. I’d think this is still affected by the regulatory issue it’s facing on tariff rates hence the price overhang. But once it gets resolved, plus the expansions in Boracay and Vietnam…

Philex Mining (PSE: PX): Just a couple of years ago, this gold miner was trading at 16. Disaster struck and it sustained damages in its spillways, incurring government suspension, operations stoppage and fines. It has been regularized and fixed since but prices dropped to 8 levels. Now threatening to break 10.

Bloombery Resorts (PSE: BLOOM): Reached 33 levels when news came out that the stock will be used as backdoor listing of Solaire owner Bloomberry. Dropped to 16 then to 8 levels. Now at 11.88.

Lessons? I leave it up to you. It was just fun reminiscing.

Juan Liners: Dragons Rising, Sugar Rush and Cementing Global Domination

Some interesting stocks news on dragons, sugar rush and cement.

Game of Thrones Season 4 premiered this week and we get to see once again Daenerys’ lovely….. dragons, among others. Bilbo still has his own dragon (to conquer), Smaug, which I think is scheduled for December this year.

In PSE, two dragons made its fiery debut, also this week: DoubleDragon Properties Corp (PSE: DD).

DoubleDragon Rises
When news came out that DD will make an IPO, I was pretty much interested at the onset (even though I generally stay away from IPOs). DD is actually a joint venture by Edgar Sia II (founder of Mang Inasal) and Tony Tan Caktiong (of Jollibee Corp, and now majority owner of Mang Inasal), both born on the Year of the Dragon (hence the name). Aside from residential and condominium development, DD is also into making community malls, dubbed as CityMalls, focused in Visayas and Mindanao areas. Company prospect is good, sort of market nicher tapping into unchartered territories where the big boys dare not go (yet). The prospect is so good that even big-league player SM is now minority owner of the company!

Imagine the synergy here, of retail/community mall developer partnered with mall magnate and restaurant giants! Steady supply of tenants I’d say.

The initial offering was expectedly uber-subscribed that COL Financial even had to raffle off the limited shares to too many interested retail investors. Yours truly was not fortunate enough to win, and so I tried my luck in the IPO itself last Monday.

Offer price was PHP2.00, but buying started at PHP2.40 and closed at PHP3.00, a 50% increase on opening day. 50% was actually the ceiling for the day, otherwise it would have gone up further. The next trading day, DD easily breached PHP4.00 (+33%) to a high of PHP4.42, before closing at PHP3.86. Price movement was crazily fast that I did not want to get caught in the mix and market emotions on this new crush.

Will just wait and see if there will be an opportunity for me to hold those dragons. Who knows.

Sugar Rush

Speaking of new crush, Biz Buzz dubbed it last Monday as ‘sugar showdown’ but I prefer to call it sugar rush, after a popular game Candy Crush. On Monday, it was reported that MVP is making moves to gain a bigger ownership of Victorias Milling Corp (PSE: VMC), the largest sugar firm in the country. Though forums have been abuzz with this move for quite some time already.

Although shares committed to MVP is still not enough to gain majority ownership (e.g. like 7% only from Metrobank group, if indeed they have agreed already), this MVP-move seems to have prompted another silent substantial owner, Lucio Tan group, to up the defense from being “nonchalant” previously.

And so just yesterday, it was reported that Kapitan’s group (PSE: LTG), has already consolidated its hold on VMC, doubling its owneship from 7% to 14% via actively buying VMC shares in the open market. Will there be further sugar rush in the coming days as MVP and Kapitan race for more sweets?

VMC closed yesterday at PHP4.66 but started 2014 at PHP2.00. Sugar rush indeed!

Cementing Global Domination

International cement giants recently inked the deal to merge. Switzerland’s Holcim and France’s La Farge will soon be known as one company, Le Figaro. And then?

Well, both have Philippines operations and are listed in PSE. While Holcim (PSE: HLCM) and La Farge (PSE: LRI) have yet to disclose on what happens to their local operations, the market, forward-looking as it is, seems to have already priced in this development since Monday. The merger is looked upon favorably since this eliminates competition and makes the merged company virtually the biggest supplier of cement worldwide. Itaga mo sa semento!

LRI recently moved from sub-PHP9.50 to close at PHP10.42 yesterday, even reaching a high of PHP10.98. HLCM meanwhile, generally sideways since last year, was more tame, reaching PHP14.10 before closing down at PHP13.50.

Exciting times.


Related Articles:
DoubleDragon Sharply Higher on Debut
Holcim, La Farge announce Merger into Cement Giant

Photos: 
Daenerys Targaryen Bust by  PatLoika 
Image by  David Guo’s Master 

194/365 – Lesney Matchbox No.21: Foden Concrete Truck by  puuikibeach 

Juan Liners: Ayala Lucky in PPPs? SM Ignored? More MPIC Challenges

Let’s have some juicy and intriguing corporate “news”. Involved here are companies I pretty much like: Ayala, SM and MPI.

What about? PPP. Public-Private Partnership. These are the major projects (or promises) of the present administration (together with our business sector) to further fuel our dear country’s progress and economic growth. Given the unexpectedly slow pace of these various projects, some have already re-labelled PPPs as (mere) PowerPoint Presentations.

 

In fairness to the government, the process is really not easy and fast. Or maybe they have overpromised in the completion timelines?

From the initialization, feasibility studies and research, drafting of terms, bidding and awarding, things will really take time and effort, and will need lots of approvals. Given the increased vigilance of Filipinos when it comes to shady deals and scams, the agencies involved (for sure or rather hopefully) are being extra careful to ensure that everything is above board, fair, transparent, legal and will not be an eventual audit finding.Appeals also cause delay. These happen in many stages of the project. Appeals that usually come from losing bidders or participants in the bidding. Or that the bidding, it may seem to some, is biased for certain bidders, in spite of the (assumed) effort done by the government to ensure fairness etc.

More than a month ago, Mr Neal Cruz of Inquirer wrote an intriguing article about one of the major players in the various PPP initiatives, and how they seem to be getting lucky or influential in bagging a number of government projects. In basketball terms, they have a high field goal percentage.

The article describes or portrays the behind the scenes in the bidding and awarding process. What could have been or is it a twisted reality? I enjoin you to read the article, with a grain of salt of course, since the article is in the Opinion section. This is Ayala and SM going at it once again. Arch-rivals?

Here’s the link to the article Luck – or Influence? What say you?

I personally like the portion on Buendia and Ayala MRT stations going underground. Hmmm juicy.

Oh, if you’re up for more, here’s a related piece, this time from Biz Buzz: Ignored.

And one more, this time regarding the MRT-LRT common station to be built in Trinoma, originally planned to be near SM North EDSA. SM is said to have paid PHP200M just for the naming rights of the station, wherever it is located. Such sum of money, it is said, will be returned by the government.

Admittedly, other private companies are also having a hard time bagging awards. Either they lose through technicalities, or the previously awarded contracts have been subjected for review, or long standing contracts are now being challenged, and worse not honored given seemingly unfair clauses. Case in point is MPI having challenges in its Maynilad and NLEX projects. Add to that MVP group’s challenges in it’s Philex business (not a PPP, but mining is an unpopular issue with this administration).

I wish all participants, public and private, all the best. May they never get tired of trying to reach fair and reasonable agreements, so that these PPPs  may now accelerate, and in turn accelerate the country’s progress.

For other juicy corporate updates, aside from Biz Buzz, you might want to try Cocktales of Interaksyon and Business Incidental of Malaya.


Photo: Makati Skyline by  Jun’s World 

  

Juan Liners: SM Aura, NBS Backdoor Listing, PSE@7400 (shortly), etc.

Some random news tidbits.

Those that I hope you’ve read about somewhere.

If it’s the first time you’re hearing these, then I suggest you Google some more so you can read the details.

SM Fan

SMDC and SMPH are already finished with their annual stockholders meetings. Was hoping to get more concrete news on a possible merger of the former to the latter. But not much details were provided really. Still a work in progress I suppose. For the meantime, stocks rise and fall with the tides of the market. Some have observed that the two stocks tend to move to opposite directions, maybe because if SMDC becomes more and more expensive, SMPH will have to shell out more.

More SM

SM Aura Premier in Global City opened this month. It opened with the bang and flair it wanted, plus some more unintended publicity. It currently has issues with BCDA (or maybe it’s Taguig LGU vs BCDA?) over the piece of land where it was built and the necessary roads for further construction. Some even opined that this is a proxy war between Ayalas (behind BCDA) and SM (which benefited from the land donated to Taguig government which SMPH bought / leased). Let’s see how this progresses, but if you ask me, welcome to Global City SM Aura (someone actually asked me if it’s walking distance from Grace Residences. So excited). But as trade-off, more traffic jams in BGC!

Phoenix Reborn

Not the bird but the smuggling case against Phoenix Petroleum was somewhat reborn, as the case was reopened again. As expected, this sent the stock price tumbling down. But oil prices continue to go up.

Upgrade v2.0

As many expected but not too soon, S&P upgraded the credit rating of the Philippines, shortly after Fitch initiated its own upgrade. Some would say that with this second upgrade, we are now officially under the radar of fund management companies abroad as they usually require that investments be made only on ‘investment grade countries.’ And that the Fitch upgrade is usually used more for tie-breaking / 2nd opinion purposes, the ratings provided by S&P and Moody’s are what they usually rely on. So now we’re waiting for Moody’s to further lighten the mood with their own upgrade. And of course the FDI concern and trickle down effects of these upgrades to the common Juan.

PSE 7400

PSE recently breached another psychological barrier of 7400 but did not stay there for long. Recent days have in fact shown some serious correction, with market today ending in bloody reddish sub7000! Ended at 6953 today. Market seemed to ignore the very good GDP growth for the quarter as concerns on China, Japan and US plus profit taking dominated our small market. Hoping that this healthy correction ends soon.

VUL Erupts

This is no new news. National Bookstore shall enlist backdoor via Vulcan Industrial and Mining Corp (VUL). First official news actually came out around last month which sent the VUL stock price erupting upwards due to speculation and anticipation. Well VUL finally had its annual stockholder’s meeting yesterday approving the enlistment of NBS (and the change in stock code, capital infusion, change in corporate structure, nature of business etc). The catch, target date is 1Q2014 which prompted the sell down of VUL stock today. Market was expecting that it would come sooner but as some would say, documentation and preparations need enough time for this to be done right. Add the fact that the whole market is correcting in general so stock was really battered NBS-red today.

Mining, Gambling este Gaming

Some progress on government policies on gambling and mining, in terms of revenue sharing and taxation. At least it helps minimize the impact of this deep correction for gaming and mining stocks. On the other hand, PX will be fined with more penalties as filed by Napocor.

12 New Senators

Good luck to those who won and good luck to us for electing them. Whether we voted for them or not, they are our Senators now. And if we want a deserving and competent President by 2016, Jim Paredes is right. We have 3 years to do massive voter’s education.

Juan Liners: Doing Small Things With Great Love (Mother Teresa)

Arguably one of the most influential persons of our time and yet very simple and full of humility. I can already guess she did not dare take much credit for any impact and change that was attributed to her.

Once more, this quote is one of those I first read on a bulletin board of quotes in school.

Here she say’s the things we do may be limited in size and scope, but it need not be limited in terms of substance and driving force within. Surely, for her, she doesn’t think she did wonders with great impact while she was still alive, lovingly serving and being one with the poor in her country. But undeniably, she did all this with great love, far greater than most of us can ever give.

It’s just inspiring and empowering how simple acts of love and kindness can have so much profound impact that lasts, much more impact compared to grand gestures and world-shaking ideas that only touch us temporarily. We need not look far if we want to reach far and achieve something, we just need great love in what we do.A challenge for all of us: Finding God in all things, He who is the Greatest Love of all.

Base Photo: Mother-Teresa-Collage by  @Peta_de_Aztlan 

Juan Liners: Real Wealth is Ability to Create Wealth

This is basically what Bo Sanchez preaches and promotes via Truly Rich Club. Being wealthy is not necessarily bad, the same thing that money is not the root of evil. What we do with the money we have and how we regard it, whether as our master, or our slave, is what determines whether it shall be good or bad for us. Being wealthy is not the end all and be all, but a start for greater things for others.

I do believe that God wants all of us to prosper and live abundant lives, here and in the after life. Seeing that this is not the case for most of our fellow Juan’s means that we have to do something about it. We have the opportunity and the capacity to be wealthy, for ourselves and others, and that’s our true gift from God. We have to embrace it, claim it, and work for it. Our family’s greater fortunes can start within our lifetime, with us.

Hopefully this site, together with Truly Rich Club, brings you closer to financial freedom.

Base Photo: Giving Hands and Red Pushpin by  Artotem