1. Aboitiz Power [AP 37.70, down 0.3%; 18% avgVol] [link] predicted “tight market conditions” for electricity in 2024 due to “thin supply margins”, 6.6% demand growth, and insufficient transmission infrastructure. The Aboitiz Family’s energy generation company said that “finishing long-overdue transmission projects” will help “free stranded capacity like that in Mindanao and help support thin margins elsewhere in the country.”
MB quick take: This take runs counter to the one that we just heard from Ramon Ang of San Miguel [SMC 109.80, down 0.2%; 13% avgVol], who said that he doesn’t foresee “any additional electricity demand in the next three years”, and we probably won’t need any additional power generation until 2027 or 2028. Electricity consumption is closely tied to economic growth, so perhaps one could make the case that the Aboitiz Family is incentivized (due to its enmeshment with the current presidential administration) to cheerlead the potential for economic growth and thus speculate about that 6.6% electricity demand as an indirect statement about its opinion of the administration’s ability to grow the economy in 2024. Truth is that the 6.6% growth number is actually quite large, so to me the Ramon Ang take and the Aboitiz Family take cannot coexist. It is possible, though, that things might happen to curb growth (and as a result, electricity demand), but the Aboitiz Family’s prediction was made based on the same inputs that Ramon Ang had when he made his statements earlier this week.
2. Colliers Philippines (ColPH) [link] thinks that the Metro Manila commercial market will experience a 2024 improvement “in terms of office demand and net take-up.” ColPH said that they anticipate companies will begin to emerge from their “wait-and-see” pandemic approach to office space leasing, and will begin “rolling out their real estate plans that were put on hold by the pandemic.” ColPH is expecting the net take-up to reach 300,000 square meters, which is 36.4% higher than 2023.
MB quick take: REITs focused on commercial office leasing, like AREIT [AREIT 33.75, up 0.3%; 67% avgVol], MREIT [MREIT 12.52, up 0.8%; 108% avgVol], RL Commercial REIT [RCR 5.00, down 0.8%; 35% avgVol], Filinvest REIT [FILRT 2.82, up 2.5%; 62% avgVol], and DDMP [DDMPR 1.23 unch; 145% avgVol], will like the sound of the headline, but some of the quiet parts of the article tell a somewhat darker story. The one that caught my eye: ColPH still thinks that occupiers are in “flight-to-value” mode, which means that they’re trying to take advantage of a glut of available premium office space by snagging higher-quality space than they’d normally be able to afford.
3. Citicore Energy REIT [CREIT 2.57, down 0.4%; 195% avgVol] [link] disclosed its Three-Year Investment Strategy Report, and identified all of the projects in its sponsor’s pipeline which could (one day, possibly) become targets for sideloading into CREIT. The report said that there are 8 projects listed in the “Ready-to-Build/Under Construction” phase, with a total estimated cost of P49.3 billion, that are expected to begin operations at some point in FY24. The report also identified 12 additional projects with commercial start dates between 2025 and 2027 that are in the “Advanced Development” phase, and 29 projects with commercial start dates between 2026 and 2028 that are in the “Pre-Development and Early Development” stages.
MB quick take: CREIT is the gold standard on the PSE when it comes to communication of its growth strategy. Imagine how different life would be like for DDMP [DDMPR 1.23 unch; 145% avgVol] bagholders if they received even a fraction of the guidance and data for what is to come as is delivered regularly to CREIT shareholders by Oliver Tan and the CREIT management team. Perhaps some of this effort comes from the combination of being the PSE’s first non-commercial office REIT and the good-faith underdog mindset that the group appears to operate with. The disclaimer here is that these are only potential injection targets; CREIT is not entitled to anything, and whatever is injected will come down to a negotiation between CREIT and its sponsor. Whether you love CREIT, hate it, or simply don’t care, the management team gives you all the information in the world to help you confirm or deny your opinion. Love it.
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