Happy Tuesday, Barkada --
The PSE gained 45 points to 6029 ▲0.8%
Thanks to
Atot and /@neener99 for the meme appreesh, to /@luciano123 for noticing the "love and attention" that I put into MB updates, and to
Jack Plumber for the thumbs-up on my Q&A piece on APL.
There really isn't a lot happening in this marketing right now, so this update is going to be quick. Let's get to it!
Shout-outs to Vi, Penelope Vaun, Kim Penado, M, K A T H'S 12MIDNIGHTS-3AM, (Taylor's Version), ai, LastCelebration,
delatorrejulieann60@gmail.com, biatchese, nadya, Yasmin Elvria V. Ngo, (｡･ω･｡)ﾉvee, Cherry, GOOD GOVERNANCE IS THE ONLY WAY, Midnight_K, bonita, Hana, Pao, Miss Steak, Chaty, Stephen Chiong, ash, koninja, roxy | LAST SCENE | MIDNIGHTS NI MES TAYLOR, Palaboy Trader, Just’n, Lance Nazal, mArQo, leaf, Chip Sillesa, aili, Rolex Jodieres, arkitrader, Jonathan Burac, Dividend Pinoy | PGG, LanAustria, and Jing for the retweets, and to Froilan Ramos, Evolves.co, and Mike Ting for the FB shares!
- ACEN gets ₱3.2-B cash bump by selling coal plant shares
- PLUS: Quick takes on
- BCOR delays shareholder meeting
- DoF speculates about peso value
- TEL starts new cable link
▌Main stories covered:
- [NEWS] ACEN gets ₱3.2-B cash injection through subsidiary’s redemption of preferred shares... ACEN Corp [ACEN 6.09 ▲1.50%] [link], the power generation arm of the Zobel Family’s group of companies, disclosed that its subsidiary, South Luzon Thermal Energy Corporation (SLTEC), will redeem 32 million SLTEC preferred shares owned by ACEN for a total redemption price of ₱3.2 billion. ACEN said that the redemption will “enable the return of capital to ACEN”, which ACEN plans to deploy into “new renewable energy investments”. The disclosure indicated that there are still 3,830,250 SLTEC preferred shares, worth ₱383 million, that have not yet been redeemed, but that redemption is expected to close by “end 2022”.
- MB: The redemption was facilitated by the Energy Transition Mechanism (ETM) that was created by the Asian Development Bank (ADB). At a high level, the ETM is a special corporation that is formed and cashed-up using institutional investment funds, which is then deployed to encourage early retirement of coal-fired power plants. The ETM will navigate SLTEC to an early retirement in 2040, which ACEN says is 15 years before its originally-planned “end-of-life” date in 2055. For its part, ACEN gets the dirty coal power plant off of its books through an orderly exit that provides nearly ₱4 billion in cash that it will spend on renewable energy projects that it was planning to build anyway. This is a win-win, and infinitely better than SLTEC being acquired by some third party and operated at full blast until 2055.
- [NOTES] Quick takes from around the market...
- Berjaya Philippines [BCOR 7.70 unch] [link] delays its annual stockholders’ meeting until next month. BCOR’s bylaws require the meeting take place “Any day in the month of October”, but BCOR’s board of directors said that the consolidated audited financial statements are not available yet, and therefore met yesterday to approve the delay.
- MB Quick Take: The process of preparing financial statements is time consuming and riddled with complications. Audits are the same. Anyone that knows an auditor will know that no audit proceeds smoothly, and that if an engagement does happen to feel easy, everyone involved grows anxious and suspicious that they’ve missed something. Sometimes delays happen, and it’s not a function of the company’s competency or the board’s preparation. With this disclosure, BCOR seems to have handled the delay well. It’s only a problem when it happens year after year, like we’ve seen with Boulevard Holdings [BHI 0.05 suspended], which was suspended (as is tradition) for failure to submit year-end financial statements to the PSE.
- Department of Finance (DoF) [link] Secretary, Benjamin Diokno, “assured” the President that OFWs will “ease” the peso’s slump around Christmastime as they send money back to the country for Christmas. Mr. Diokno also said the peso will eventually strengthen back to ₱55:$1, which is, according to Mr. Diokno, “where the government wants it to be.”
- MB Quick Take: My analysis of the pesos’s value in Q4, relative to Q2, over the past 12 years is that it’s more likely to be worth less at the end of the year than the middle of the year. So, while remittances may be supportive, the peso’s value history doesn’t suggest that this effect is significant enough to cause the peso’s value to clearly outperform at that time of the year. It’s also a little out of pocket for Mr. Diokno to be commenting on what the government will or won’t do with respect to the peso’s value, as managing its value is not part of the DoF’s primary functions. The BSP is independent of the DoF. Maybe Mr. Diokno is having a hard time getting used to his new desk (he was the BSP Governor during the Duterte years).
- PLDT [TEL 1535.00 ▲3.02%] [link] begins the first phase of the Asia Direct Cable (ADC) undersea cable link in Batangas, with all links to Singapore, Hong Kong, Japan, Vietnam, Thailand, and China, to be completed by the end of 2023. TEL said the ADC link would “diversify” its connectivity and strengthen its global network. TEL’s section of the link is estimated to cost $75 million to construct.
- MB Quick Take: Readers have been quick to point out in the past that these kinds of links are done all the time, and are not that important from an individual perspective. That’s true. There’s nothing particularly interesting about the ADC that should be cause for celebration, but all of these connections, whether through TEL, or Converge [CNVRG 12.48 ▲0.81%], are necessary to improve the resiliency of our network to disruption. The world is going fully digital, and the more links with the outside world that we have, the better.
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