Phoenix Petroleum [PNX 5.10; 47% avgVol] [link] confirmed that both of its active preferred shares listings, PNX3B and PNX4, are set to receive the applicable “step-up” interest rate according to the relevant prospectus. PNX said that, “as part of our commitment”, the prefs were already subject to the step-up rate starting on December 18, 2022 for PNX3B and November 7, 2022 for PNX4. PNX said that the step-up rate for each will be “computed and applied on the next dividend period”.
MB Quick Take: It’s wild to see PNX still dancing around the fact that it’s missed two dividend payments in a row with shareholders receiving little more than a few “we’re working on it” updates to show for it. PNX’s conduct here raises some existential questions, like, “What good is a step-up rate if the company just refuses to pay dividends?” Yes, both divs are cumulative, meaning that missed payments are still “owed”, but at some point, you’ve got to wonder about the state of the finances that would force PNX to treat its shareholders so terribly.
Jollibee [JFC 223.00 1.3%; 45% avgVol] [link] purchased a majority stake in Meko Holdings Limited (Meko), the company that owns the Jollibee brand master franchise for Hong Kong. JFC will pay US $16 million to buy 60% of Meko from its existing shareholders, with those shareholders continuing to own the remaining 40% of Meko post-transaction. JFC said that Hong Kong is an “important market” for JFC, and an important part of JFC China’s goal to “mainstream” the Jollibee brand with Chinese consumers. Prior to this transaction, the Hong Kong market was 100% franchised.
MB Quick Take: This gives JFC control of how the critical Hong Kong market is developed. Hong Kong is a unique market, in that it is both a hotbed of fast food cuisine trends, and an important “joining” of some important Mainland consumer preferences. It also gives JFC a more direct line to the loot from these franchises, so if they have big plans, they’ll get a greater share of the profits.
Philippine Airlines [PAL 5.48 0.4%; 112% avgVol] [link] FY22 net income of P10.4 billion, which was 83% lower than PAL’s FY21 net income of P60.6 billion. Total revenues were up 135% to P139 billion, with passenger revenues jumping 208% y/y to P115 billion, and cargo revenues falling 14% to P13 billion. PAL reported that total expenses also increased by 94% y/y to P122 billion. Financing chargers also increased, reaching P7.3 billion (up from P6.5 billion in FY21).
MB Quick Take: The elephant in the room, which is sort of buried in PALs own analysis of the year, is why net income is down so hard. The answer is that last year, when PAL went bankrupt, it had to recognize as income all the debt that it held that was canceled and re-negotiated as part of the bankruptcy settlement, and that figure for “Other income” last year was a P64.4 billion gain. Remove that, and PAL’s FY21 was actually a P3.8 billion net loss, making PAL’s FY22 a 373% increase.
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