BPI [BPI 114.50 1.0%; 101% avgVol] [link] teased H1/23 net income of P25 billion, up 23% y/y, driven by “average asset base expansion, margin growth, and lower provisions.” The bank’s Q2 performance sounds like it is less impressive, with BPI reporting a Q2 net income of P13 billion (+4.5% y/y), but the Q2/22 net income figure was bolstered by a one-time gain.
MB Quick Take: Banks are making huge profits and have been for years now. They’re hilariously healthy. Insidiously healthy. Tell me again why the BSP feels the need to “bribe” the banks with additional RRR cuts just to waive bank transfer fees for the poor?
PSE [PSE 158.50 1.4%; 116% avgVol] [link] IPO performance trails our comparable SE Asian peers, as evidenced by this easy-to-read chart by Bloomberg, and disseminated by Nicky Franco of Abacus Securities. The chart compares the number of IPOs in each country across a 14-year timeframe, from 2010 through 2023.
MB Quick Take: The low-hanging fruit is to look at this chart and say “That’s why we’re behind”, and I already did that. The harder thing is to dig beneath the surface and try to figure out the “why” of it all. Why have all of our neighbors been able to attract so many more companies to list on their stock exchanges? What is it about what they do (or don’t do), or what we do (or don’t do) that could lead to such a stark discrepancy?
Metrobank [MBT 57.25 2.2%; 103% avgVol] [link] subsidiary First Metro Investment Corp (FMIC) thinks that the “chances are slim” for companies that have deferred IPOs like Ovialand to list in 2023. FMIC’s Executive Vice President, Dan Camacho, said, “We’re looking forward to the comeback next year,” when the group is hopeful that IPOs and REITs will turn their attentions once again to the PSE.
MB Quick Take: I think the truth of it is just like FMIC’s Head of Research, Cristina Ulang, said: “We’re very resilient, we’re not a laggard, it’s a boring market.” There aren’t any critical problems with the Philippine market or our companies, but there aren’t any “wake up babe” level opportunities, either, with the gravitas to excite jaded veteran traders and pull new money into the market from first-time investors. A lot of the investors that I talk to are either already fully invested in whatever they’re in, and not looking to add, or they’re still on the sidelines with a big cash position waiting to see the market establish some momentum and grow a personality.
Philippine Amusement and Gaming Corp (PAGCOR) [link] is reported by Reuters to have plans to enter the e-gambling market by launching its own virtual gaming operations to “tap into new markets” and “diversify” its customer base. PAGCOR both regulates the Philippine gaming industry and partakes directly in it, operating 41 physical casinos. A recent study of global online gaming valued the market at $63 billion in 2022, with expectations of 11.7% compound annual growth through 2030.
MB Quick Take: The government needs more money, and PAGCOR is a dependable source of thick dividends for the government coffers. A potential expansion like this into the e-gaming market could substantially “embiggen” those dividends for future periods. Maybe they could even use the money to buy a new logo. How this might impact companies like DFNN [DFNN 2.99 0.3%; 42% avgVol], PhilWeb [WEB 3.30 unch; 365% avgVol], or any of the existing physical casinos operated by Bloomberry [BLOOM 11.32 1.2%; 78% avgVol] or any of the others will be a story for another time.
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