$EPHE iShares MSCI Philippines Profits Rising

Posted by: : Shayne HeffernanPosted on: November 7, 2013 $EPHE iShares MSCI Philippines Profits Rising

$EPHE iShares MSCI Philippines Profits Rising

Philippine Companies are posting strong profit growth.


For the first time in three years, the Philippines made it to the worldwide list of top 20 investment destinations, ranking 19th, according to the United Nations Conference on Trade and Development (UNCTAD), which did the report.

Quoted by the Philippine Information Agency (PIA), the UNCTAD said the survey was conducted among 159 transnational corporations (TNCs).

TNCs, according to the UNCTAD website, are incorporated or unincorporated enterprises comprising parent enterprises and their foreign affiliates. A parent enterprise is defined as an enterprise that controls assets of other entities in countries other than its home country.

Tied with the Philippines at 19 were Hong Kong and Turkey. China and United States ranked first and second as preferred investment destinations.

Other countries conducive for investments are Japan, India, Malaysia, Indonesia, Thailand, Vietnam, Germany, Brazil, Mexico, United Kingdom, Russian Federation, Australia, Poland, South Africa, Canada, and France.

Meanwhile, the PIA reported that the Philippines ranked second among the ASEAN member countries that recorded the biggest foreign direct investment (FDI) inflow for the first half of this year.

Based on the UNCTAD report, the country had a 10.9-percent increase in FDI inflows or $2.2 billion in the first half of year 2013.

FDI refers to an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor, according to its UNCTAD definition.

National Power Corp. (Napocor)

National Power Corp. (Napocor) may be able to work with less state funding next year as it recovers financially, boosts efficiency, and streamlines its workforce as it continues to privatize its assets.

Ma. Gladys Cruz-Sta. Rita, the first female chief of the state-owned firm, said in a briefing that Napocor’s proposed budget for 2014 would amount to P14 billion, down from the P15 billion sought for this year.

Part of the reason for the smaller requirement is better financial health as the agency aims to book a P1-billion profit this year, from the P398 million reported in 2012 under former Napocor president Froilan Tampinco.

From 2009 to 2011, Napocor posted net losses reportedly due to poor fiscal management.

Now, Napocor aims to boost its collection rate to 46 percent from the current 33.7 percent by working more closely with electricity cooperatives and the local government units they serve.

Much of Napocor’s budget will still go to buying fuel for power facilities installed in missionary areas under the agency’s small power utilities group (SPUG), Sta. Rita said as she marked her first 90 days with the state firm.

Napocor is also spending P154.8 million for new diesel engines as part of a so-called refleeting program for its diesel-powered power plants.

About 20 engines will be used to upgrade facilities in remote areas that are not yet connected to the country’s power grid.

Sta. Rita said the refleeting program was originally scheduled for 2015, but the agency later reset it to 2014.

By upgrading the diesel power plants, Napocor will be able to save P261 million in three years, she added.

The company’s thrust to privatize assets will likewise free up resources that are presently used to maintain the power generation facilities still under Napocor, Sta. Rita said.

As more assets are privatized, Napocor will be able to streamline its workforce, she explained.

Metro Pacific Investments Corp

Metro Pacific Investments Corp. said its net income in the nine months through September rose 5 percent to P5.2 billion, a filing at the Philippine Stock Exchange showed.

The company, which is involved in water distribution, power generation, toll roads and hospitals, said revenues increased 11 percent to P20.5 billion. Core earnings also grew 12 percent to P5.6 billion.

The rise in core profit was due mainly to robust earnings growth at Metro Pacific Tollways Corp., which operates North Luzon Expressway and Manila Cavite Expressway, and Maynilad Water Services Inc., a water concessionaire for Metro Manila’s west zone.

In terms of contribution to net operating income, Maynilad accounted for 43 percent, Manila Electric Co. contributed 30 percent, Metro Pacific Tollways accounted for 20 percent and the hospital group accounted for 7 percent.

“All our businesses achieved strong growth in profitability for the first nine months of the year, leaving us well placed for a strong 2013 as a whole,” Jose Ma. K. Lim, Metro Pacific president and CEO, said in the statement.

“We are reviewing the outlook for 2014 and the only restraint on our optimism is concern over regulators’ management of water tariffs and road tolls,” he added.

Maynilad, the biggest contributor, recently suffered a setback after regulator Metropolitan Waterworks and Sewerage System (MWSS) denied the company’s application for an upward adjustment and instead ordered a negative adjustment of 4.82 percent, or P1.46 per cubic meter.

The decision was for Maynilad’s business plan for the determination of standard rates for 2013 to 2017. MWSS also ordered a reduction for the east zone concessionaire, Manila Water Co. Inc.

“Maynilad does not accept the tariff proposal of MWSS and [on Oct. 4] it filed a notice of dispute at the Secretariat of the International Chamber of Commerce International Court of Arbitration for resolution,” Metro Pacific said.

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Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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