Happy Monday, Barkada --
The PSE lost 37 points to 6779 ▼0.5%
Thanks to
Jing,
aili, and
John for the meme love, and to /@humblebeast7-Tadpole-32 and /@sctony for their "weirdest inflation-related price increase" responses (taho guy, Jollibee corned beef breakfast meal).
Shout-outs to Palaboy Trader, MiUMaO, Bien EC, LanAustria, Stephen Chiong, Homer, Justn, TiymRyvt, CHARToons, Antonio Javier, cristinaorlina, meloi, Lance Nazal, arkitrader, Rolex Jodieres, Chip Sillesa, Evolves Capital, Inc., Dividend Pinoy | PGG, and Jing for the retweets, and to Jeffrey Aguilar, Genesis Umali, Evolves.co, and Mike Ting for the FB shares!
- COMING UP: A look at the week ahead
- Figaro's Q2 profit was ▲69% y/y
- Cemex board to shareholders: figure it out on your own
- Antonio Tiu suddenly resigns to "refocus" on agri
- PLUS: some dumb stuff
▌Main stories covered:
- [COMING] UP A quick look at the week ahead... From an event perspective, this could be a real nothingburger of a week. The heavy lifting by the central banks has already been done (US Federal Reserve raised rates 25 basis points, BSP raised our rates 50 basis points), but analysts and traders are still sifting through any other sources of data to try and improve models for how the rate changes will impact businesses and the economy over time. By Thursday morning, we should get the FOMC Meeting Minutes from the US Federal Reserve meeting, and that should provide additional context on the thinking that went into the raise and the thinking that may be behind the Fed’s future actions.
- MB: It’s not like next week is much better, either, but this is sort of the calm before the storm. March is packed full of interesting things, between the IPOs of Upson International [UPSON 5.50 pre-IPO] and Alternergy [ALTER 1.48 pre-IPO], the Cemex PH [CHP 1.16 ▼1.7%] tender offer, and the Megawide [MWIDE 4.08 ▼3.3%] preferred shares offer period and listing. Plus we’ll get consumer price index info on February’s inflation from the Philippine Statistics Authority in the first week of March. So there’s a lot going on there.
- [EARNINGS] Figaro Q2 profit ▲69% y/y... Figaro [FCG 0.83 ▼7.8%] [link] Q2/22 profit of ₱182 million, up 69% from Q2/21 profit of ₱107 million, and up 118% from Q1/22 profit of ₱83 million. FCG reported a 79% increase in system-wide sales over the first 6 months, which FCG attributes to opening new stores. This was partially off-set by a 114% increase in operating costs, which FCG blamed on “massive store opening activities” and “IPO activities” that resulted in higher overhead costs. Of the ₱1.49 billion in FCG’s H1/22 restaurant sales, 90% came from Angel’s Pizza, 6% came from Figaro Coffee, and 4% came from Tien Ma’s Taiwanese Cuisine. From a geographical perspective, FCG reported a lower concentration of revenues from locations in the National Capital Region in 2022, with NCR FCG stores earning 72% of FCG’s 2022 income, down from 82% in 2021. The remaining 28% of FCG’s 2022 revenue came from “Provincial Areas”. FCG is owned by Jerry Liu, and is a sister company to Cirtek [TECH 3.00 ▼2.3%]. FCG’s fiscal year starts on July 1, so what would be “Q4” to most companies using a fiscal year that starts on January 1 is actually “Q2” for FCG.
- MB: FCG started 2022 with 99 stores split between its various restaurant concepts, and it ended the year with 150. That’s a significant increase that will make a huge difference in revenue, profits, and operating costs. All of those changes were well-noted by FCG. That’s good. Unfortunately, though, the stat that I look for from growing restaurant companies is something called “same store sales”, which measures the percentage change in revenue for stores that have been open at least a year. It really gets down to basics and gives us a better sense of how the company is performing at its “real” job (running a restaurant, not building stores), and it helps put these goofy revenue and profit beats into perspective. Make no mistake, if FCG is making more money opening stores than it did before, that’s good. But for a company that plans to open another 150 stores by 2029, I feel like it should be giving us better insight into how the established locations are actually doing.
- [NEWS] Cemex board declines to help shareholders evaluate tender offer... The Cemex Philippines [CHP 1.16 ▼1.7%] [link] board of directors released a statement on Friday to say that it “expresses no opinion” on the Tender Offer that is being conducted by CHP’s parent company, Cemex Asian South East Corporation (CASEC), and said that the board’s position toward the Tender Offer is “neutral”. CHP’s board went on to say that each shareholder’s decision to tender their shares or not is a “personal investment decision” that is based on each shareholder’s “particular circumstances.” CHP’s board made this statement to comply with U.S. Securities Exchange Act, which (according to CHP) requires the board of directors of a company that is the subject of a tender offer to “inform CHP Shareholders of the CHP Board’s position, if any, with respect to the Tender Offer.” CHP’s eight-member board of directors is controlled by CASEC-group directors from Mexico and Spain; only three of the eight directors, all Filipinos listed as “independent”, are not officially affiliated with CHP’s parent organization.
- MB: I don’t have any skin in this game, but this decision by the CHP board comes across as cowardly and disingenuous to me. What group is in a better position to help shareholders make sense of the offer than the board of directors, who were elected by the shareholders to represent their best interests as fiduciaries? Only CHP’s board of directors would be able to measure CASEC’s offer against all of the private data that it has on market trends and its own future plans, to tell whether the ₱1.30/share offer is fair. I mean, it certainly looked like a good offer compared to the stock’s price before the suspicious pump up just before the tender offer announcement, but what’s stopping the CHP board from coming out to say that? Why give a “Homer-fades-into-hedge” GIF response in the very moment when the shareholders needed you the most?
- [NEWS] Antonio Tiu suddenly resigns from Ever-Gotesco and Philippine InfraDev... Philippine InfraDev [INFRA 0.91 ▼1.1%] [link] director, President, and CEO Antonio Tiu resigned to focus on his agricultural business. Tiu also resigned as President and CEO of Ever-Gotesco Resources [EVER 12.76 unch]. Mr. Tiu said that the Makati City Subway project will continue with the company’s Chinese partner-contractor, but that he wants to fully focus his attention on agri-based projects, as food security is important for the country, and he wants to inspire young farmers. The resignations were made retroactive to February 16. No replacements were named for either company.
- MB: For a guy that previously had no problems spreading himself paper-thin, it’s fascinatingly weird for him to suddenly resign entirely from two companies to focus on agriculture. This feels really framed to make it seem like quitting these two companies is the logical consequence of needing to focus on agri, but that doesn’t make a lot of sense to me. Maybe something going on behind the scenes made this a convenient and face-saving way to make changes? Feels rushed. No succession plan or named replacements.
- [DUMB STUFF] You didn’t ask, but...
- Figaro doesn’t have a logo on the PSE website (just the janky factory).
- Cemex Philippines received a “Golden Arrow Recognition” for being a “Top Performing Publicly-listed Company in the Philippines” for corporate governance. It received this award in February, presumably around the time it was also deciding to completely avoid helping its shareholders make sense of its parent company’s weird tender offer.
- Philippine Telegraph & Telephone has been suspended for 19 years, for failure to comply with the PSE’s structured filings rule. Its last trade was on December 9, 2004. Why isn’t junk like this delisted? Wouldn’t the PSE make more money by forcing these kinds of delinquents to re-list at some future point? The PSE’s website lists PTT as having a (theoretical) marketcap of ₱495 million, with a 15.99% free float. That’s ₱79 million of the public’s money held hostage by PTT for 20 years.
- DFNN supposedly stands for Diversified FiNancial Network, which was the company’s previous name.
MB is written and distributed every trading day. The newsletter is 100% free and I never upsell you to some "iNnEr cIrClE" of paid-membership perks. Everyone gets the same! Join the barkada by signing up for the
newsletter, or follow me on
Twitter. You can also read my daily Morning Halo-halo content on
Philstar.com in the
Stock Commentary section, and in the Saturday edition of the
Daily Manila Shimbun.
Subscribe here
Read today's full newsletter here
