Quick Take: Fence-sitting on POGOs and 3 more market updates
Converge [CNVRG 19.0 2.0%] [link] reported achieving its 2 million fiber port goal in 2022, further expanding the “largest fiber-to-the-home network in the Philippines”. CNVRG expects its network to reach 55% of the population this year, up from the 53% coverage that it reported back in September of 2022.
MB Quick Take: Never a bad thing to achieve a goal, but the “problem” with CNVRG (to me at least) is more in the declining rates of everything: expansion is slowing, new subscriber acquisition is slowing, profitability is “slowing”. My hope is that capacity monetization efforts, like what CNVRG is attempting in Singapore through its subsidiary there, will allow CNVRG (and its shareholders) to continue feasting on the low-hanging fruits that are so profitable. A quick example: CNVRG’s coverage at the end of 2021 was 42.7%, which it expanded by 24% in the first nine months of 2022, but CNVRG only plans to expand the network by 4% in 2023.
President Marcos (PBBM) [link] thinks that the only problems from POGOs come from the “illegal ones”, and that he doesn’t see the point of implementing a blanket ban of the shady industry because it is “not a huge part of our economy”. However, PBBM did acknowledge that the amount that the “legal” POGOs pay in taxes “might not be worth it” to offset the social cost of the “illegal” POGOs, and that if China wanted our assistance to crack down on POGOs, he would listen to potential arrangements.
MB Quick Take: It’s not shocking to hear a government starved for funding is willing to sit on the fence while collecting some tax revenue. While the POGO revival has not happened as the LT Group [LTG 10.1 0.6%] predicted back in September, the industry does provide demand for commercial office space in Metro Manila, and that helps real estate developers, and REITs with exposure to the industry, like DDMP [DDMPR 1.4 0.7%] and Filinvest REIT [FILRT 5.8 1.8%].
Phoenix Petroleum [PNX 8.3] [link] announced that its CFO and treasurer, Ma. Concepcion F. De Claro, has retired, and that her role will be filled by Udenna/Chelsea veteran, Ign
MB Quick Take: I could imagine someone in Ms. De Claro’s shoes might want a little rest after the absolute chaos of the “go go go” Duterte years has given way to the “no no no” (money) environment of the post-Duterte era for Dennis Uy and his constellation of suffering companies. At least Ms. De Claro’s replacement, Ms. Braga, has a long history of work at the CFO position for many of Mr. Uy’s other businesses which have also struggled to make ends meet. It is unimaginable to me the amount of stress that must come from being placed in situations like these.
Philippine Business Bank [PBB 10.8] [link] updated its stock rights offering plans. PBB is looking to raise P500 million through the sale of 50 million shares, at a price of P10/share, with an entitlement ratio of 1 SRO share for every 4.6428 existing PBB shares owned by the ex-date. The original plan, which was announced almost 2 years ago in May of 2021 and formally announced in August of 2022, called for PBB to raise P1.75 billion through the sale of 175 million shares at an entitlement ratio of 1:3.6786. PBB’s owner, Alfredo Yap, said that he would like to conduct the fundraising exercise this February.
MB Quick Take: The goal of this fundraise is to have enough capital to satisfy the BSP’s requirements for PBB to obtain a “universal” banking license. To that end, it makes sense that PBB’s ownership group would want to sell as little of the company as possible in the SRO, and so the massive reduction in the SRO’s scope at least makes sense from an incentives perspective. There are a few moving pieces (private placement and authorized capital stock raise) which all need to be approved by the SEC separately before the SRO launch.
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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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