Happy Wednesday, Barkada --
The PSE lost 34 points to 6619 ▼0.5%
Shout-out to
Tenkan Sen for noting that CHP is likely to go through the same process as PLC after its tender offer, to
Trina Cerdenia for saying that MB is "habit-forming" (!), to
Jing for living for the memes, to
_JAOBAN for noting the differences between CREIT and FILRT (there are many), to
Paul G for wishing MB an "advance happy birthday" (May 20 is the big day; let me know if you have any ideas on how to celebrate), to
Rat Race Running for the positive feedback on my explanation of how I write each day, and to
arkitrader for the meme vibes.
- PSE: April inflation was 3.8% (est. 4.1%)
- Apex Mining Q1 profit: P853-M (+55%)
- AyalaLand Logists Q1 profit: P211-M (+18%)
▌Main stories covered:
- [NEWS] April inflation comes in at 3.8%... The Philippine Statistics Authority (PSA) [link] revealed that inflation quickened slightly in April to 3.8% y/y, up from the 3.7% reading in March, but below estimates from economists who (on average) were expecting to see inflation come in at around 4.1% for the month. The BSP released a statement yesterday on the “medium-term inflation path” which noted that the April inflation number is within the central bank’s forecast range (3.5% to 4.3%), and that it was consistent with the BSP’s projection that “inflation could accelerate temporarily above the target range in the next two quarters... due to the possible negative impact of adverse weather conditions on domestic agricultural output and positive base effects.” The BSP said that it expects our full-year average inflation to “return to the target” range and for inflation to remain within that range for 2025.
- MB: I don’t know a single analyst who expects the BSP to do anything other than “hold the course” when it meets next week to set interest rates. But I do know a bunch of people in my personal life who are struggling to make ends meet in Metro Manila between rent, food, and transportation costs. And I know a lot of corporations that are struggling under the oppressive weight of their debt. The interesting thing about April’s consumer price index data is that it’s actually down marginally from February/March (121.4 vs 121.9), and the peso is back down to the low ₱57s after a quick flirtation with ₱58. High rates aren’t keeping the price of rice in check. High rates aren’t suppressing excess demand for utilities. Let’s cut rates, give people and businesses a break, and focus on the government’s plan to insulate us from the inevitable supply-side shocks that we’re going to face this year and in the years to come.
- [EARNINGS] Apex Mining Q1 profit: ₱853-M (+55%)... Apex Mining [APX 3.70 ▲3.6%; 119% avgVol] [link] reported a Q1 net income of ₱853 million, up 55% y/y from its Q1/23 net income of ₱549 million. Consolidated revenues were up 31% y/y to ₱3.4 billion thanks to the “surge in realized price per ounce of gold” which increased from $1929 in Q1/23 to $2149 in Q1/24. APX’s sales volume of gold also increased 16% to take advantage of that uptrend in pricing to 27,373 ounces. Its silver sales volume increased 11% to 93,081 ounces. On the mining side of the operation, APX reported milling 12% more ore during the quarter, but noted that the gold recovery was “slightly lower” (85.45% vs 88.77%) and the gold that was recovered was of a lower quality/grade on average. APX updated that its Maco Mine has enough reserves to produce at the targeted production rate for another eight years. APX is owned by Enrique Razon Jr. and is a subsidiary of his private holding company, Prime Strategic Holdings.
- MB: While APX’s price action isn’t in lock-step with the spot price of gold, it does roughly follow the larger trends in the price of gold and has performed exceptionally well over the past two months following gold’s recent pump. Over the past year, APX is up 25% and gold is up 15%. The upcoming OceanaGold PH [OGP 13.33 pre-IPO] has generated a little more interest in the PSE’s small gold mining sector, on top of what was already bubbling up thanks to the weird gold price pump. Where OGP is positioning itself as a dividend play, APX isn’t the same animal. It pays a dividend, but its special and regular FY23 dividends amounted to ₱0.081433/share, which is good for a 2.2% yield based on yesterday’s APX closing price. OGP plans/projects a double-digit dividend yield based off its IPO price.
- [EARNINGS] AyalaLand Logistics Q1 profit: ₱211-M (+18%)... AyalaLand Logistics [ALLHC 1.89 ▼1.1%; 5% avgVol] [link] teased a Q1 net income of ₱211 million, up 18% y/y on what ALLHC refers to as a “solid recovery from the downturn experienced in 2023.” ALLHC said that industrial lot demand “remained steady”, generating ₱851 million in sales revenue, while warehouse leasing revenues jumped 15% to ₱175 million thanks to “higher overall occupancy”. ALLHC’s cold storage revenues reached ₱41 million, up 3%, and commercial leasing revenues reached ₱237 million thanks to “improved mall occupancies and rental rates.” ALLHC recorded ₱1.3 billion in comprehensive revenue in Q1/24 (+85%).
- MB: ALLHC has had a brutal two-year run, falling 72% from its January 2022 highs while signaling little in the way of strategy or creativity for ALLHC shareholders. Industrial lot sales are up, they’re down, then up again. Warehousing and cold storage continue to demonstrate growth and yet they’re basically footnotes compared to the big-ticket moves that ALLHC can book if it makes some meaty land sales. ALLHC is growing its logistics portfolio, and half of its press release was dedicated to outlining the growth that it expects to realize this year from its facilities in Cavite Technopark, Pampanga Technopark, Santo Tomas, and Mabalacat. I’d love for the opportunity to gain more direct exposure to ALLHC’s logistics business. Who cares about lot sales? Let those people baghold ALLHC. Imagine if the Ayala Group harnessed the tax benefits of the REIT structure to go on a buying spree and consolidate the private cold storage and warehousing industry in the Philippines. It’s hard to see given ALLHC’s current structure, but the possibility for the Ayala Group to take the lead in this sector still exists. Will we see bold moves here, or will the management group be content to mess about on the margins of this important industry?
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