PSE Points to Ponder

MM surge in value could not be justified by fundamentals. Before the public offering (IPO), MM’s balance sheet is at 915 Million Pesos. The proceeds of the IPO at 1,500 Million Pesos (1.5 Billion) doubles MM’s balance sheet. However, the balance sheet growth will not translate into a magnificent net income growth. There is a high barrier to entry in the non-discretionary retail industry. The dominant players are well entrenched and have long established an economy of scale in their operations. SM Investments ( SM ) is well entrenched not just in SM Malls but also in third party-owned locations with Save More, Watsons, SM Supermarket, Waltermart, and Alfamart. It is not just SM but also Robinson Retail Holdings ( RRHI ) with Robinson Supermarket, Ministop, The Generics Pharmacy, Rustan’s, etc.; Puregold ( PGOLD ) with Puregold, S & R, ThreeSixty Pharmacy, etc.; Philippine Seven Corporation ( SEVN ) with7-11; Metro Retail Stores Group, Inc. ( MRSGI ) with Met...

CHP debuted in the Philippine Stock Exchange through an initial public offering at a price of 10.75 Philippine Pesos per share raising a total of 25.1 Billion Philippine Pesos. The proceeds of such fund raising were all paid to the parent company CEMEX of Mexico. Proceeds of the IPO was not even enough, CHP borrowed around 14 Billion Philippine Pesos from BDO to make additional payment to the parent CEMEX of Mexico. Despite those payments CHP still owe the parent 1 Billion Philippine Pesos. How did CHP became indebted to CEMEX? CEMEX sold the 40% of the operating companies Solid Cement and APO Cement to CHP. The acquisition of the 40% shares of the two operating companies created a goodwill of 27.9 Billion Philippine Pesos, that means the 40% shares of Solid Cement and APO Cement were acquired at around 40.1 Billion Philippine Pesos and of that purchase price only around 12.2 Billion Philippine Pesos could be attributed to tangible assets such as cement plants, equipment, machin...

It is interesting to watch on how the biggest companies in the country are going to fund the debts due on second half of 2020 and on the year 2021. It is noteworthy that with the economy slowing or even shrinking these companies may see their internally generated funds weakened. Whether they will be able to raise new funds or the banks will just roll them over, it is interesting to follow. One such company, PLDT, announced that they have successfully priced their US$600 million 10-year and 30-year dual tranche senior unsecured fixed rate notes. We will be evaluating PLDT’s ( TEL ) finances and shall make a report on it.

Remittance of contributions to the Social Security System (SSS) for the Month of February, March and April 2020 will be extended until June 30, 2020. The country were on strict quarantine on the middle of March 2020 and has just recently started to ease the quarantine measures and the SSS has understand the predicament of small businesses to fund the contributions during those times especially that most of the small businesses were also on shut down during those periods and most revenue of small businesses has gone down to nil.

Yes, the non-renewal of the ABS congressional franchise to operate a free-to-air broadcast is a clear attack on the on press freedom and on democracy itself. When no less than the President of the Republic whose policy has been frequently criticized by the network announced that he will not move for the renewal of the network’s congressional franchise, it is undoubtedly a curtailment of the freedom of expression, of the free speech and of the free press. It maybe even evil to suggest or impress that the controlling interest, the Lopezes, should sell for the network’s congressional franchise to be renewed. While it is an attack on the constitutionally guaranteed freedoms, the government more particularly the Congress has done nothing illegal. It has been clearly provided for by the Constitution that the Congress has the sole prerogative to grant or deny any congressional franchise. What has happened is the weaponization of a political tool to attack the freedom of the pr...