Happy Friday, Barkada --
The PSE lost 81 points to 6450 ▼1.2%
Shout-out to /@neener99, /@aldaelen, and /@mauro_g for the questions on the MPI tender offer. I'm soliciting reader questions for a bigger Q&A episode on the MPI tender offer that I want to put out on Monday or Tuesday.
For instance, I just noticed that COL's email yesterday said that COL would tender my shares on my behalf if I did not respond "by the deadline". Uhh... wtf? Since when is a tender offer an opt-out process? So COL has gone from "DO NOT TENDER" to "COL will tender your shares on your behalf" in just a few weeks?
If you have any questions of any kind, please send them to me by email (
merkadobarkada@gmail.com) or
Twitter DM!
Additional shout-out to
Will Cabangon of AAA Equities for the discussion on what should be done for the HLCM minority shareholders, to
Atot for predicting that FILRT would declare a div and it would be fun to talk about, to
Rommel O for getting a kick out of the JFC meme, and to
Arkitrader for the vibes to help carry me through to the end of the week!
- Q2 GDP cratered to 4.3% y/y
- Huge miss
- Consensus was 6.0%
- GDP contracted 0.9% q/q
- Alexa play Despacito
- ACEN sets pref div rates
- CREIT sets record best div
- FILRT ties record worst div
▌Main stories covered:
- [NEWS] Q2 GDP cratered to 4.3% y/y (-0.9% q/q)... The Philippine Statistics Authority (PSA) released its Q2 gross domestic product (GDP) data, and showed that the Philippine economy expanded by only 4.3% in Q2/23 relative to its size in Q2/22, and that the economy actually contracted by 0.9% relative to the previous quarter. GDP is a macroeconomic metric that looks to measure the amount of spending in the economy over a certain period, and it considers everything from household consumption, to capex spent by companies, to the money spent by the government on various programs like infrastructure. While the 4.3% GDP figure represents growth, the actual size of that growth was well-below what analysts had expected, which ranged between 5.5% and 7.5%, with 6.0% growth as the median estimate. The government’s target is to have growth remain within the 6.0 to 7.0% range. One of the major factors noted by the PSA and by other analysts was the contraction in government spending. The government was simply not spending enough money to juice its own growth metrics. Analysts also noted a weakness in consumer demand that was blamed on inflation, particularly in the amount spent on clothing and footwear.
- MB: This is a massive “miss” to have actual growth be around 20% lower than the lowest estimate on the board. A number starting with 4 wasn’t even in the imaginations of the economists making these estimates. Going through all of the commentary this morning, it’s clear that people have already turned their minds to how the BSP should now act (or not act) to prevent further slowdown and give our economic managers a shot at achieving the government’s target range for FY23. Despite the US Federal Reserve’s recent 25 basis point increase, most are now calling on the BSP to “pause” rate increases at its meeting next week. Already the peso’s value has fallen relative to the dollar as a result of this news, and that could get worse if a BSP pause locks-in the temporary differential that was created by the Fed’s earlier raise. There’s a lot going on here!
- [UPDATE] ACEN prices dividend rate for ACENA and ACENB... ACEN [ACEN 5.13 ▼3.6%; 107% avgVol] provided an update on its ₱25-billion follow-on offering of preferred shares. According to the supplement, ACENA shares will pay a 7.133% dividend, and will be subject to step-up if not redeemed by the 5th anniversary of the listing. ACENA shares may be redeemed by ACEN starting on the 3rd anniversary of its listing, and then on any dividend payment date after that. ACENB shares will pay an 8.0% dividend with no step-up rate. The ACENB shares will pay an 8.0% dividend until redeemed, which may happen on the 7th anniversary of its listing, or on any dividend payment date after that.
- MB: I’ve seen a lot of interest in ACENA/B online, and I get it considering that the dividend rates for these shares are pretty high for a Zobel Family offering. For those wondering about how changes in interest rates will impact the price of these shares going forward, any drop in the prevailing interest rate should cause the per-share prices of ACENA/B to rise to compensate, with the inverse being true in the case of a rate increase. The price of fixed-income investments will generally rise as interest rates fall, and fall as interest rates rise. This is a dynamic that we’ve seen at work over the past 18 months with the REIT index, where REIT yields have had to rise to remain competitive with other less-risky fixed-income investments, and the only way for REIT yields to rise is for REIT stock prices to fall.
- [NEWS] Citicore Energy REIT declares record quarterly dividend... Citicore Energy REIT [CREIT 2.54 unch; 261% avgVol] declared a Q2/23 dividend of ₱0.049/share, payable on October 4 to shareholders of record as of September 9. The dividend is 4.26% larger than CREIT’s Q1/23 dividend of ₱0.047, and bumps CREIT’s annualized yield (including an estimate for the annual variable dividend) up to 7.99% (from 7.68%). The total amount of the dividend is ₱321 million, which is 107% of the ₱301 million in distributable income that CREIT reported for the quarter. The dividend increased CREIT's total stock and dividend return relative to its IPO price to 11.92%, up from its pre-dividend total return of 10%.
- MB: Three for three! That’s the third REIT dividend declaration that has matched or exceeded the company’s previous quarterly dividend record. In the six declarations since its first dividend declaration back in Q4/21, CREIT has either matched or exceeded its previous dividend declaration. The company has grown its regular dividend from ₱0.44/share to ₱0.49/share during that time. Relative to the other estimated annualized yields, I’d say that CREIT’s stock is about 10% underpriced. But that’s just my opinion, and the market has a weird way of showing me that my opinions are pretty meaningless, so do with that what you may!
- [NEWS] Filinvest REIT div confirms lower yield range... Filinvest REIT [FILRT 3.38 ▲0.6%; 25% avgVol] declared a Q2/23 dividend of ₱0.071, payable on September 20 to shareholders of record as of August 31. The dividend is the same size as the one FILRT declared in Q1/23, so FILRT’s annualized yield is still 8.4% based on the previous closing price. FILRT distributed 100% of the ₱347 million of its reported distributable income in Q2 through this dividend. Relative to FILRT's IPO price, the dividend increased FILRT's total stock and dividend return to -39.7%, up from its pre-dividend total return of -40.71%.
- MB: C-c-c-combo breaker! FILRT was the fourth REIT to declare Q2 dividends, but the first to fail to match or exceed a previous dividend high. In fact, FILRT did the exact opposite: the ₱0.071/share dividend matches the all-time low that it first set in Q4/22 and repeated again in Q1/23. It’s reassuring to see FILRT finally trading with that low-8% yield, which I said it should have as far back as February based on its terrible shrinking dividend. Back then, with FILRT trading at ₱5.80/share and a 4.9% annualized yield, I predicted that FILRT should trade with a ~₱3.50/share price tag, and carry an annualized yield “in the low 8% range”. Six months later, and here we are: FILRT now trades at ₱3.38/share with an 8.4% annualized yield. The company has provided no explanation for why the dividend has fallen so dramatically, and because it’s not done the work to acknowledge the problem publicly and outline the steps it will take to deal with the issue, I don’t see any compelling reason why an investor might want to own FILRT as opposed to any of the other options that are available at the moment.
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