PSE Points to Ponder

The replacement of a lost owner’s duplicate Certificate of Title of a parcel of land is governed by Section 109 of Presidential Decree No. 1529 (PD 1529) known as the Property Registration Decree. To sum it up the following are the requirements: The owner’s duplicate Certificate of Title must have been actually lost. This is the most important thing. If the owner’s duplicate Certificate of Title has not been lost but in the possession of some other person then the replacement owner’s duplicate Certificate of Title is void. The person in possession of the owner’s duplicate Certificate of Title can petition the court to have the replacement Certificate of Title be void from the very beginning. This is undisputed and held by the Supreme Court as a well settled rule. The Supreme Court has enunciated this rule in the case of Straight Times, Inc. versus the Court of Appeals wherein it said that when the owner’s duplicate certificate of title has not been ...

The market sell-off on the first day of the re-imposition of the Modified Enhanced Community Quarantine (MECQ) had Robinson Land Corporation down by 7.15% the most on that day with a volume of 3,110,220 above the 65 day average volume of 2,573,380 that made us wonder if RLC was in danger. As of the end of Q1 2020, RLC had a cash balance of 6.3 Billion Pesos while total debts falling due before the year 2020 ends is at 11 Billion Pesos. With limited cash flows due to the COVID-19 pandemic shutdown, this looks worrisome. But this is where the quality of of the Board and the top management comes in. You got to have experienced bankers in the Board and in the top management. On July 17, 2020 RLC quickly raised 13.2 Billion Pesos of mostly 3-Year fixed-rate bonds. Proceeds of the bond issuance will be used to finance RLC’s capital expenditures and repay short-term loans maturing within the year. The pandemic quarantine restrictions did not completely shut down RLC’s cash flo...

The AREIT public offering showcases the Ayala Corp. group’s ability to create and realize value. The Ayala Corp. group clearly has a roadmap on creating value. It starts with drawing in and employing the best, brightest, and most competent executives to the conglomerate. Then it adopts best-in-class systems and practices. This results to operational and financial excellence which leads to great returns on investments that results to shareholder value. Ayala Corp. group’s value creation process stands true even in this time of the COVID-19 pandemic. Its latest exercise is the AREIT public offering. The first Real Estate Investment “Trusts” (REIT) in the Philippines. The offering will allow Ayala Land, Inc. to raise around 13.6 Billion Pesos out of a roughly 5.4 Billion Pesos of net assets in AREIT. To extract such amount of money out of assets without losing control of such assets is magic. This is just one of the exercise of the Ayala Corp. group’s va...

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.