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Stock Commentary

Quick takes from around the market

Merkado Barkada
Quick takes from around the market

Solar Philippines [SPNEC 1.69] [link] shareholders approve a tweak to the company name to acknowledge its strategy shift from a single-project solar startup to a multi-project behemoth. The new name will be SP New Energy Corporation. The name change has been submitted to the SEC for approval.

MB: I still think it’s weird to bend over backwards to preserve the ticker symbol, and that’s a hill that I’m willing to die on. The public-facing part of this company is only 9 months old. Play the long game. Change the name to Solar Philippines and take the opportunity to rebrand the ticker to SOLAR, which is still open (but won’t be for long).
 

Ayala Corp [AC 702.00 0.71%] [link] completed its take-over of Air21, the logistics company owned by businessman (and former PNoy Customs Commissioner) Alberto Lina. The AC subsidiary, AC Logistics Holdings Corp (ACLHC), acquired a 60% stake in Air21 for P6.06 billion. AC said that the integration of AIr21’s would help the AC Logistics group deliver “end-to-end” services to address challenges in “pharma and healthcare.... food preservation, and proper waste management”.

MB: This is an acquisition by the direct AC logistics subsidiary, not the indirect AC logistics subsidiary under Ayala Land, Ayalaland Logistics Holdings Corp [ALLHC 3.63 3.13%]. While there’s nothing stopping the components of ACLHC and ALLHC from working together to provide this end-to-end support, it feels like there’s an uncharacteristic level of overlap (and inefficiency) in having two holdcos fishing in the same pond. It makes more sense for the actual “logistics” parts of the business to be held under ACLHC, since the primary source of revenue for ALLHC has been (and probably always will be) bulk industrial lot sales. Which makes sense for a subsidiary of a land developer, right? Let’s wait and see.
 

POGOs [link] are leaving the Philippines due to a “spike in taxes”, according to the Philippine Amusement and Gaming Corp. (PAGCOR), the government entity responsible for the licensing and monitoring of the Philippine offshore gaming operators (POGOs). PAGCOR said that the passing of the new law, meant to increase taxation on POGOs, did not increase government revenues because instead of staying and paying the taxes, the POGOs left the country. PAGCOR said that there are only 27 operating licensed POGOs, down from the pre-COVID peak of 60.

MB: POGOs were instrumental in driving up commercial and residential property values around Metro Manila in the post-Aquino, pre-COVID years, but efforts by the government to monetize the phenomenon were laughably ineffective. Billions in unpaid (and uncollected) taxes. Unlicensed operators that outnumbered licensed ones. Constant flip-flopping on policy. The property developers that tried to take advantage of this windfall did so with eyes wide open about the potential risks. Unless something dramatic changes in the background to make the Philippine jurisdiction cheap enough for these companies to return, it’s unlikely that we’ll see a return to those days when entire residential floors of condo buildings were being converted into wildcat commercial spaces to accommodate high-rent POGO clients. 

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Merkado Barkada is a free daily newsletter on the PSE, investing and business in the Philippines. You can subscribe to the newsletter or follow on Twitter to receive the full daily updates.
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

AYALA CORP

AYALALAND LOGISTICS HOLDINGS CORP.

PAGCOR

PHILIPPINE STOCK EXCHANGE

POGO

SOLAR PHILIPPINES

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