Quick Take: Dito plans to sell shares to meet threshold and 2 more market updates
Philippine Airlines [PAL 5.50 0.92%] [link] revised its gross revenue estimate for 2022, up from P2.0 billion to P2.6 billion. PAL already reached its 2022 target of P2.0 billion this month, and raised its goal to P2.6 billion based on estimates that it would be fully recovered to pre-pandemic domestic capacity by December. International capacity would be 70% recovered by that time, but PAL notes that full recovery depends on a re-opening of routes to China.
MB Quick Take: When PAL went bankrupt, the negotiated settlements with all of PAL’s creditors included some “sweetheart” modifications to its plane leases that allowed it to only pay for “time in the air” instead of just a flat lease rate. This deal ends by mid-2023, which means that as heart-warming as these stories of recovery are for PAL, the clock is ticking for the company to not only optimize the routing for its planes, but also maximize the capacity of those routes before the expiration of those lease modifications exposes PAL to the full burden of the lease agreements it signed before COVID. Moment of truth on the horizon. The revised revenue figure is basically equal to PAL’s 2019 gross revenue total. It lost over P9 billion that year.
Haus Talk [HTI 0.80 5.26%] [link] board approves re-targeting of IPO proceeds. The board decided to cancel the purchase of 7.8 hectares of property in Calasiao and Sta. Rosa, and divert the P62 million that HTI had set aside in its prospectus for this ~P300 million purchase to instead be used as “additional partial payment” for the purchase of a 12 hectare lot in Biñan, Laguna, worth P720 million. The HTI board referred to this as a “refocus” of proceeds to its “more prime” projects.
MB Quick Take: That’s one way of framing the cancellation of projects, I guess. HTI shareholders lose access to the P2.1 billion in revenue that HTI estimated it would receive for building “economic residential housing” on those 7.8 hectares. Don’t get me wrong, the whole point of the HTI IPO was “land acquisition”, and from this perspective, nothing has changed. But this disclosure signals that HTI is cutting projects at a time when rates are rising, and I’m curious to know what has caused HTI to push even more of its chips into this Biñan property. The canceled projects were going to generate P2.1 billion on P300 million of land costs (7x land cost), while the “more prime” project will generate P3.4 billion on P720 of land costs (4.7x land cost).
DITO CME [DITO 2.46 5.75%] [link] disclosed that Dennis Uy had to sell 500,000 shares of DITO in order to lift DITO’s public float up to meet the 20% minimum threshold. The shares were sold by Mr. Uy’s private holding company, Udenna Corp., for P2.60/share.
MB Quick Take: That price is DITO’s 52-week low, and it’s a level that the stock hasn’t seen since June of 2020. Since mid-2018, the stock price has only been this low for about four months (February through May) around the time of the initial COVID lockdown. While the transaction is minuscule in the grand scheme of things, it’s just another kick to the jellies for Mr. Uy to be selling shares from this position of price weakness.
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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.
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