Sunday, June 27, 2004
Pacific military chief to visit Philippines tomorrow on anti-terror fight
Philippines' Jollibee eyes expansion in China, Indonesia
Philippines aiming to lure Airbus maintenance ops from Singapore - official
Philippine Swift Foods sees return to profit on higher sales, lower cost
Toledo copper enters option to buy Atlas' 40 pct stake in Toledo copper mine

Friday, June 25, 2004
Philippines' Banco De Oro eyes debt, share issue to fund Equitable Bank buy
Manila shares close higher on Arroyo win, window-dressing
STOCK ALERT - Philippines' Jollibee firmer on robust earnings outlook
Philippines' Victorias Milling sells 94.8 mln pesos worth of assets
Airbus denies plan to set up maintenance hub in Philippines' air base
Philippine wage board approves 20 peso daily wage increase in Metro Manila
Philippine Salcon Power may pay 2.6 mln usd penalty for plant shutdown
Philippines end-March foreign debt 56.7 bln usd, up 2.1 pct yr-on-yr
Philippines' San Miguel declares 0.35 pesos/shr cash div
Philippines to export 2.75 bln usd worth of auto parts by 2007
Philippine San Miguel Jan-May net profit up 32 pct yr-on-yr on higher sales
FOCUS - Philippine markets cheer Congress' proclamation of Arroyo victory



Pacific military chief to visit Philippines tomorrow on anti-terror fight

     MANILA (AFX-ASIA) - The head of US military forces in the Pacific is due to visit the Philippines tomorrow to discuss the two allies' common fight against terrorist groups, a US embassy statement said.
     Admiral Thomas Fargo will meet with Philippine Defense Secretary Eduardo Ermita, military chief General Narciso Abaya and other top officials during his visit on June 28, the statement said.
     This will be the first meeting of a senior US defense official since President Gloria Arroyo was proclaimed winner of a new six-year term on Thursday, after having won a new six-year term during the bitterly-contested May 10 elections.
     Fargo's visit will "emphasize the value of the Philippines' continued support for Operation Enduring Freedom and the war on terrorism," the statement added.
     Operating Enduring Freedom refers to the US global anti-terror campaign launched with an attack on the Taliban and the Al-Qaeda terror network in Afghanistan after the Sept 11, 2001 attacks in the United States.
     The statement did not say what issues will be taken up during Fargo's visit which is part of a tour of Southeast Asia that also includes stops in Malaysia, Singapore and Thailand.


Philippines' Jollibee eyes expansion in China, Indonesia

     MANILA (AFX-ASIA) - Jollibee Foods Corp is eyeing the China and Indonesia markets and is looking to spend 1.0 bln pesos this year for expansion both locally and overseas with some 100 new stores planned.
     "With 77 restaurants in China it is considered a small to medium player in the fast food business with total sales last year of 24 mln usd," Ysmael Baysa, vice president for corporate finance and chief finance officer for Jollibee told Agence France Presse.
     "But we are confident China will be a major growth centre for the company in the coming years."
     In March Jollibee took its biggest step overseas when it acquired an 85 pct stake in Belmont Enterprises Ventures, which operates the Yonghe King restaurant chain in China, for 11.5 mln usd.
     He said the company would be giving priority to Asia, particularly Indonesia and China.
     "Europe is not a priority for us at the moment," he said.
     "We believe there is a significant unmet consumer need in Europe but we will focus on Asia first.
     "In Indonesia we have had a team there since last year doing feasibility work and food development and testing."
     He expects the company will open one or two stores there in early 2005.
     But it is in China where Jollibee sees its greatest potential.
     "At the moment we are looking at opening 20 stores a year in the first two to three years," Baysa said.
     "So far this year we are on track with 13 opened to date. Then we plan to open 50 a year in the fourth year and by year five we hope to be looking at 100 new stores a year.
     "But our main priority at the moment is to further develop the brand, the concept, the store design and the menu."
     Jollibee has three outlets in Vietnam. In India the company is looking further ahead. "I don't envisage anything in India in the near term," Baysa said.
     At the end of last year, Jollibee Foods Corp had 970 outlets in the Philippines including 467 Jollibee chicken and hamburger outlets. Its nearest rival McDonald's has 240.


Philippines aiming to lure Airbus maintenance ops from Singapore - official

     MANILA (AFX-ASIA) - The Philippines is courting the European aircraft maker Airbus to set up a regional maintenance site for Asia at the former US air force base of Clark near here, a Filipino official said today.
     Manila will provide incentives to Airbus Industrie if it agrees to transfer some of its Singapore maintenance operations to the Philippines, Clark International Airport Corp President Adelberto Yap said in a statement.
     He did not discuss the offer in detail.
     "Given that Airbus is launching a new wide-bodied, double-decker aircraft in the next three years, it is looking at sites where it could do some repair and maintenance work aside from Singapore," Yap said.
     The European aircraft maker had earlier denied newspaper reports it is considering a maintenance hub at the former military base at Clark.
     In a statement, the company had said "Airbus officially denies being in talks or even considering putting a maintenance base at the Clark International Airport."


Philippine Swift Foods sees return to profit on higher sales, lower cost

     MANILA (AFX-ASIA) - Poultry producer Swift Foods Inc is targeting a net profit of 150 mln pesos this year, a reversal from last year's loss of 534 mln, Swift president Luis Bernardo Concepcion said.
     Higher chicken prices and the continued reduction in the company's operating expenses, coupled with export opportunities in Japan, will enable the company to return to profit, Concepcion said.
     Swift Foods is a unit of Concepcion-owned RFM Corp.
     Concepcion said Swift signed long-term poultry supply contracts with two Japanese trading partners, Sumikim Bussan and Nisho Iwai. Exports to Japan will eventually account for 25 pct of the company's poultry production and revenues, he said.
     The company has so far exported 20 tonnes of chicken cut-ups for Japanese chicken barbecue dish "Yakitori."
     The company will set aside 250-300 mln pesos for capital spending to further expand its poultry processing capacity. The spending will be funded through borrowings.
     It also intends to lower operating expenses to 211 mln pesos this year from 409 mln last year, Concepcion said.
     (1 usd = 56.005 pesos)


Toledo copper enters option to buy Atlas' 40 pct stake in Toledo copper mine

     LONDON (AFX) - Toledo Copper Corp PLC (TCC) said it agreed to acquire the option to buy a 40 pct stake in the Toledo copper assets owned by Atlas Consolidated Mining & Development Corp.
     TCC said it will make payments and loans of as much as 28 mln usd to help develop the copper mine.
     On June 22, the BusinessWorld newspaper reported, quoting a company source, that Atlas may reopen its Toledo copper mine in Cebu province in two years after securing 28 mln usd in funds from a UK company.
     The mine has been closed for 10 years.
     Atlas is quoted on the Philippines Stock Exchange.


Philippines' Banco De Oro eyes debt, share issue to fund Equitable Bank buy

     MANILA (AFX-ASIA) - Banco De Oro Universal Bank plans to tap the debt market and issue new shares to finance the 8.3-bln peso acquisition of a substantial stake in Equitable PCI Bank, the bank's president Nestor Tan said.
     Banco De Oro is looking at acquiring a 29 pct stake held by state-run pension fund Social Security System in Equitable PCI.
     "We need to raise money for the purchase of that stake. We're looking at a combination of debt and rights issue," Tan told reporters before the company's annual meeting.
     Tan reiterated that the Sy-controlled bank is poised to grow its net profit by 20 pct to 1.8 bln pesos this year.
     "We expect some growth in second half of the year. In the second quarter, people adopted a wait-and-see attitude because of the election. We expected stronger growth in the second. The third quarter will be critical," Tan said.
     (1 usd = 56.005 pesos)


Manila shares close higher on Arroyo win, window-dressing

     MANILA (AFX-ASIA) - Share prices closed slightly higher as positive sentiment prevailed a day after incumbent Gloria Arroyo was proclaimed winner of last month's presidential race, dealers said.
     Fund managers were also seen beefing up their portfolios, they said.
     The 30-company composite index closed up 5.74 points or 0.36 pct at 1,579. 51 on 1.49 bln shares worth 486.89 mln pesos. The index moved between 1,572. 76 and 1,580.93.
     The broader market's breadth was however negative as losers outnumbered gainers 32 to 26, while 44 stocks ended unchanged. There was some profit-taking in second and third-line stocks.
     Top-traded Philippine Long Distance Telephone Co gained 15 pesos to 1,140 on 144,310 shares in line with the overnight rise of its American Depositary Receipts in New York.
     Dealers expect investors' interest in selected blue chips to continue next week on follow-through window-dressing activities and as investors test the main index's ascent past the 1,600 level ahead of Arroyo's inauguration on June 30.
     However, caution prior to the US Federal Reserve's policy-setting meeting and fears of mass protests against Arroyo may limit gains, they added.
     Eagle Equities Inc President Joey Roxas said the market is consolidating after sharp gains in previous sessions. He still expects further upside until June 30 on first-half window-dressing activities.
     "What people are worried about are possible anti-Arroyo protests. But other than that, we expect window-dressing to continue. Concerns of a US interest rate increase and Iraq's handover have been factored in," Roxas said.
     "By early next week, we could perhaps see a confirmation of whether the market is headed for further upside. Should the main index break the 1,580-1, 590 level, then we could see possibly a gain of 100 points for the market in short to medium term," Regina Capital Development analyst Gomer Tan said.
     Banco De Oro Universal Bank was up 0.25 at 18 on 2.47 mln shares. The bank is due to hold its annual meeting this afternoon.
     Jollibee Foods was up 0.50 at 25 on 1.34 mln shares.
     Bank of the Philippine Islands shed 0.50 to 42.50.
     ABS-CBN Holdings was up 0.75 at 22.25.
     Meralco B, available to foreigners, gained 0.50 to 30. Meralco A, restricted to locals, was unchanged at 18.75.
     The all-shares index was down 1.70 points at 1,006.24.
     The commercial-industrial index was up 11.29 at 2,460.49.
     Property was up 4.43 at 539.63, while mining shed 14.02 to 1,572.75.
     Mining was up 14.02 at 1,572.75.
     Oil shed 0.25 to 1.90, while banking and finance retreated 2.38 to 472.50.
     (1 usd = 56.01 pesos)
     cey/swp AFN


STOCK ALERT - Philippines' Jollibee firmer on robust earnings outlook

     MANILA (AFX-ASIA) - Jollibee Foods Corp was firmer in early trade on the back of an expected 25 pct growth in net profit this year, dealers said.
     Jollibee was top-traded, up 1.00 peso at 25.50 on 259,300 shares.
     Its president and chief executive officer Tony Tan Caktiong said the fast food chain's 2004 net profit could reach analysts' projection of at least 1. 57 bln due to the company's strong first quarter performance.
     Its 2003 net profit stood at 1.25 bln pesos.
     (1 usd = 55.99 pesos)


Philippines' Victorias Milling sells 94.8 mln pesos worth of assets

     MANILA (AFX-ASIA) - Sugar producer Victorias Milling Corp said it has sold 94.8 mln pesos worth of assets since Aug 2002.
     Assets sold include farm tractors, cargo trucks, floating vessels and other machinery, it added.
     Victorias, which also cans sardines and meat products, earlier said it planned to sell 180 mln pesos worth of non-core assets to help in its financial recovery.
     (1 usd = 56.035 pesos)


Airbus denies plan to set up maintenance hub in Philippines' air base

     MANILA (AFX-ASIA) - European aircraft maker Airbus has denied newspaper reports that it is considering a maintenance hub in the former US military base in Clark, Pampanga.
     In a statement, the company said "Airbus officially denies being in talks or even considering putting a maintenance base at the Clark International Airport."
     Major dailies, quoting Clark International Airport president Adelberto Yap, reported that Airbus was "seriously considering Clark as an alternative maintenance hub." He however said discussions were very preliminary and exploratory at this point.
     The former US military air base sits on a 2,750-hectare complex with a two-parallel, 3.2-kilometer runway that can already accommodate large aircraft.
     It has a passenger terminal building that can serve 500 passengers an hour or 1.5 mln passengers a year.


Philippine wage board approves 20 peso daily wage increase in Metro Manila

     MANILA (AFX-ASIA) - The National Capital Region wage board has approved a 20 peso increase in the daily salary of workers in metropolitan Manila effective July 10, Acting Labor Secretary Manuel Imson said.
     The increase brought the daily minimum wage in the metropolis to 300 pesos from the current 280.
     It will be reflected only in the workers' emergency cost of living allowance (ECOLA), and as such will not be included in the computations for overtime pay, 13th month pay, bonuses and other benefits such as retirement, or separation pay and leave credits.
     "Acting upon the petitions filed by organized labor, the board found a need to provide for an increase in the daily ECOLA to alleviate the plight of the workers and employees in the private sector without impairing the viability and competitiveness of business and industry," Imson said.
     Labor groups had asked for an increase of between 65-125 pesos, records showed.
     The last time the ECOLA was increased in metropolitan Manila was in Nov 2001 when an additional 30 pesos was given to minimum wage earners.
     Imson said the wage board took into account the recent increase in transport fares and higher inflation in the wage hike order, which came hours after incumbent Gloria Arroyo's proclamation as winner of the May 10 presidential election.
     (1 usd = 56.035 pesos)


Philippine Salcon Power may pay 2.6 mln usd penalty for plant shutdown

     MANILA (AFX-ASIA) - Salcon Power Corp said it may pay an estimated 2.6 mln usd in penalties for the shutdown of one of its thermal power plants in Cebu province due to a crack at the thrust collar of the plant's turbine rotor.
     "If the said penalty is finally determined to be imposable, the estimated amount of penalty, based on an August 15 return to operation is 2.6 mln usd," Salcon told the stock exchange.
     The power producer tapped US-based serviced company TurboCare Inc for the repair after the crack was found.
     Total repair cost is placed at 841,000 usd.
     Salcon said it is expected to exceed the annual outage allowance under the contract it has signed with state-run National Power Corp.
     "The replacement shaft arrived on June 19 and repair is scheduled to be completed by mid-July 2004," Salcon said.
     The projected amount of penalty is equivalent to 11 pct of the company's annual revenue for the period ending July 2003.
     (1 usd = 56.035 pesos)


Philippines end-March foreign debt 56.7 bln usd, up 2.1 pct yr-on-yr

     MANILA (AFX-ASIA) - The national government's total outstanding foreign debt stood at 56.7 bln usd at end-March, 2.1 pct higher than a year earlier, the central bank said.
     Compared to the end-2003 level, the country's foreign debt dropped 700 mln usd or 1.2 pct in the first quarter, it said.
     "While net inflows of more than 1.3 bln usd from external debt transactions were realized during the first quarter, the debt stock declined due to the availability of more data on residents' holdings of Philippine debt papers, which increased by more than 2 bln to 9.076 bln usd," central bank governor Rafael Buenaventura said.
     (1 usd = 56.07 pesos)


Philippines' San Miguel declares 0.35 pesos/shr cash div

     MANILA (AFX-ASIA) - San Miguel Corp has declared a cash dividend of 0.35 pesos per share to be paid to shareholders on record as of July 9.
     Payment date is July 30.
     (1 usd = 56.07 pesos)


Philippines to export 2.75 bln usd worth of auto parts by 2007

     MANILA (AFX-ASIA) - The Philippines plans to export 2.75 bln usd worth of auto parts by 2007, the Department of Trade and Industry said.
     The country also aims to expand production and sales of completely-built-up units (CBUs) to 200,000-250,000 by 2007 in a bid to make the Philippines as ASEAN's auto parts manufacturing hub, the department said.
     "The market prospects for Asia's motor vehicles are positive and we expect to double our 2003 export of auto parts of 1.35 bln usd to 2.7 bln by 2007," Trade and Industry Secretary Cesar Purisima said in a statement.
     "We aim to capture a big portion of Asia's motor vehicle market by strengthening the supplier base of our automotive industry."
     Investors in the automotive industry and the government drafted a plan to enhance the country's automotive supplier base for exports to ensure the industry's steady growth in the next three years.
     There are 256 auto parts makers in the country, fewer compared to Thailand's 1,700 firms and Malaysia's 350. The Philippines' export base is also limited to such products as auto wiring harness, auto transmission and alloy wheels, the trade department said.
     Over 90 pct of these auto part firms are small and medium enterprises.
     The auto part sector's roadmap covers four major areas. These include strengthening the country's auto policy environment, implementing productivity and competitive programs, addressing industry value chain gaps and establishing an auto technology excellence center.
     (1 usd = 56.07 pesos)


Philippine San Miguel Jan-May net profit up 32 pct yr-on-yr on higher sales

     MANILA (AFX-ASIA) - Food and beverage conglomerate San Miguel Corp reported a January-May net profit of 3.29 bln pesos, up 32 pct year-on-year, on the back of higher sales and lower costs.
     In a statement, San Miguel said its five-month consolidated operating income rose 39 pct year-on-year to 6.65 bln pesos due to combined higher volume sales of beer and the control of fixed costs of the Coca-Cola Beverage Group.
     Significant bottom-line improvement of the food group business also boosted the conglomerate's performance, it added.
     Consolidated sales revenue was up 15 pct year-on-year at 68 bln pesos.
     In the five months to May, operating income of its domestic beer business rose 27 pct year-on-year to 3.53 bln pesos. Total revenue rose 24 pct to 15.7 bln, while volume growth was up 20 pct from last year.
     International beer sales rose 19 pct in volume, while sales reached 99.5 mln usd.
     (1 usd = 56.07 pesos)


FOCUS - Philippine markets cheer Congress' proclamation of Arroyo victory

     ---- by Cecille Yap ----
     MANILA (AFX-ASIA) - Philippine shares held onto yesterday's strong gains and the peso recovered lost ground after Congress today proclaimed President Gloria Arroyo winner of the May 10 presidential election.
     Economists and analysts said the proclamation is expected to ease the political tension and uncertainty the country has endured since the start of the election season.
     Arroyo's victory has also given the US-trained economist a clear six-year mandate to continue with her key reform programs, suggesting stability in the priorities and policies of the government, they said.
     The 30-company composite index today held onto the strong gains posted yesterday, as it closed marginally up at 1,573.77 -- a new seven-week high -- on 734.9 mln shares worth 489.4 mln pesos.
     The equities market held the victory party yesterday, when the benchmark index rose by 30.65 points or 1.99 pct at 1,573.47 on 721.2 mln shares worth 666.6 mln pesos, ahead of the formal declaration by Congress.
     The peso also rose today, averaging 56.079 to the US dollar at the end of the morning trade from yesterday's close of 56.225. It fell to a record low close of 56.43 Friday last week as the tally of votes from the May 10 polls dragged on.
     "Investors welcome President Arroyo's proclamation not only because she was the market's favored candidate, but largely because it removes a major uncertainty," AB Capital Securities research director Jose Vistan Jr said.
     Arroyo beat her main rival, movie star Fernando Poe, by over a million votes. Poe's camp has accused Arroyo of massive cheating, although it is silent on whether formal complaints will be filed with the Supreme Court electoral tribunal.
     The full six-year term awaiting Arroyo, whose inauguration is set for June 30, should be devoted addressing the country's deteriorating fiscal performance, economists said.
     "She could use her mandate to take measures to improve the public finances. Details of the May budget deficit are not comforting. Not only was spending excessive, the Bureau of Internal Revenue continued to underperform, " ING Financial Markets said.
     Worries on the budget has made Philippine debt paper unattractive in the international market, it added.
     The government recorded a budget deficit of 12.7 bln pesos in May, pushing the cumulative deficit for the first five months to 77.4 bln, or only about 2 bln below the first-half ceiling of 79.6 bln.
     Economic managers said election-related spending and lower collection on the part of the BIR, which accounts for over 80 pct of revenues, pushed the deficit higher.
     "If she can rise above charges that she lacks a mandate because of her narrow victory in an unfair election, (Arroyo) is in a position to drive the legislative agenda," ING added.
     Economic managers have lined up several proposals to enhance revenue, including a controversial plan to tax text, or the short-messaging system offered by mobile phone companies. Lawmakers have however opposed the proposal due to fears of public backlash.
     Tom Byrne, vice-president and senior credit officer of Moody's Investors Service, said trimming the budget deficit and reforming the power sector are key for the Philippines to prevent a further downgrade in sovereign ratings.
     "Arroyo will need to demonstrate administrative effectiveness to prevent a further downgrade," said Byrne in a briefing on Asian sovereign ratings outlook.
     Its success in these measures, on the other hand, could earn the country a rating with a positive outlook, Moody's said.
     Early this year, Moody's lowered the Philippines' sovereign foreign and local currency ratings to "Ba2" due to fiscal problems and political uncertainties. The outlooks for the ratings and ceilings remain negative.
     Moody's Byrne said privatizing state-run National Power Corp (Napocor), the country's main producer of electricity, has been a major challenge for the Arroyo administration especially amid a looming power crisis in about two to three years time.
     The bankrupt firm has also been a major drag on government's finances since government borrows in its behalf.
     Early this month, the Arroyo administration announced a plan to absorb as much as 500 bln pesos in Napocor's debts to pave the way for the power firm's privatization.
     Economists warn that the amount, which is more than double the 200-bln peso limit set by law, is seen worsening the government's deficit woes.
     "The government had set an ambitious timetable for itself in the past as far as the power sector reform was concerned, but not much progress had been made. I believe this will still be among the major challenges of the Arroyo administration today," Byrne said.