BLOOM and BEL salivate after PIGO "cloud casino" license approval (Friday, Dec 11)
Happy DAY_OF_THE_WEEK, Barkada --
The PSE closed up 52 points to 7154 ▲0.7%.
The out-of-office replies are starting to come in after every MB send, so it can only mean one thing: the Christmas slowdown has already begun! Emmanuel and Cecilia, I hope you both have outstanding vacations. Haha.
MiddleClass ▼1.94% POGO Gaming ▼1.38% Fast Food ▼1.12%
Main stories covered:
[UPDATE] PAGCOR introduces its own online casino called “Live Shots”... the virtual casino will be open to Philippine Inshore Gaming Operations (PIGOs) who are willing to pay 25% of gross gaming revenue to PAGCOR. According to PAGCOR, Solaire Resort and Casino, Okada Manila, City of Dreams, and another land-based casino in Subic have already been approved for PIGO licenses. The terms of the license dictate that access to Live Shots will only be in the Philippines, and that only PIGO “VIPs” will be able to play.
MB:PAGCOR’s revenues have dropped 97% because of COVID, so it is obviously desperate to find some way to passively get a cut of some other action. As I speculated when the news broke about DFNN’s [DFNN 5.50 ▼6.30%] “first ever” online casino license, the rest of The Gang would probably be quite interested to follow suit. Here we are. Bloomberry [BLOOM 8.40 ▼1.18%] (Solaire) and Belle Corp [BEL 1.66 ▼1.19%] are already lined up at the trough; could Dennis Uy and PH Resorts [PHR 3.00 ▲1.01%] be that far behind?
[NEWS] MRC Allied [MRC 0.48 0.00%] halted until full consequences of Kerberus acquisition are disclosed... the deal between MRC and 5G Security Inc (5GS) calls for MRC to acquire 75% of Kerberus from 5GS, but that’s about all we can know from the relatively short disclosure. The PSE halted the stock before the open, saying that investors need to have access to “information [that] may reasonably be expected to materially affect the market activity and the price of its securities”. There was no lift date/time provided, so investors should assume that the halt will remain indefinitely until MRC is able to provide more info.
MB:Remember how MRC changed its articles of incorporation to change its primary purpose from “property developer” to “holding company”? Yeah, well that’s the only justification that MRC has provided for the purchase; “[the purchase of Kerberus] brings the Company closer to its aspirational goal of transforming from property business to a holding company.” Holding companies aren’t special, they’re just a company that owns other companies. Where is the strategy, here, if the goal is simply to own other companies?
[NEWS] BHI Holdings [BH 901.00 0.00%] suspended from PSE for failure to maintain 10% public float... according to the PSE, the investment holding company’s public ownership level is just 9.86%, which is below the minimum 10% required. BHI has “not been very active in investing and is only receiving interest income”, is “still in the process of finalizing its business plans”, and BH has no principal products or services because “it has not decided as to what product or service it will introduce to the market”. It’s website is still “under construction.”
MB:Prior to the suspension, BH was listed as having a 10.02% public ownership level, which is basically the required minimum (it’s even still listed that way now on the PSE’s website). So, how did the public ownership level fall from 10.02% to 9.86%? When Ms. Jemie U. Tan, a director of BH, bought 850 shares of BH in late October and early November. Because Ms. Tan is a director of BH, as far as the PSE’s concerned, her shareholdings are considered “non-public” holdings. Shares held by directors, officers, and even principal/substantial stockholders are not counted towards the percentage of the company that is publicly-owned. Seems like a silly mistake to make for a company that, even though it basically does nothing and looks like a rough draft, still has a marketcap of over ₱450m.
MB is posted to /PHinvest every Monday and Wednesday, but my newsletter goes out daily. To stay in the loop for daily email delivery, please join the barkada by signing up for the newsletter, or follow me on Twitter.
Ayala Corp buys Qualimed hospital network... and Merry Christmas! (Wednesday, Dec 23)
Happy Wednesday, Barkada --
The PSE closed down 23 points to 7202 ▼0.3%.
Thank you to @iso8583 and @tagongpangalan of the PHinvest Discord for bringing to my attention a case where someone has been stealing my content and posting MB articles to his website and 15 different Facebook groups. Maybe if he didn't remove my name and chop off the copyright notice at the end, he'd realized that I encourage people to forward MB on to others, provided that MB is not altered and that full credit to MB is given. Let's be real: MB is free, and I've always been "pro share" with anyone and everyone who might be interested... but hacking my name off and removing my branding is just basic copyright infringement. Thanks for letting me know! Gives me another thing to do over the holidays. A huge MB thank-you to one of my original Producer-level Patreon supporters, FinanceForever. Today's send is completely backed by his donation. FinanceForever has been a fantastic resource of feedback on MB's content, and a helpful well of suggestions for improvement! That producer title is well-earned. Haha Since today is the last trading day of the week (Christmas Eve and Christmas Day are non-trading days), I just want to wish you all a Merry Christmas... more importantly, I want to wish you a safe and healthy Christmas.
POGO Gaming ▼3.03% Fast Food ▼2.88% MiddleClass ▼2.35%
Main stories covered:
[NEWS] Ayala Corp [AC 838.00 ▲0.36%] acquires majority stake in parent company of Qualimed Health Network... Ayala Health, a subsidiary of AC, purchased Ayala Land’s [ALI 41.70 ▼0.12%] 39.2% stake in Mercado General Hospital, Inc (MGHI), the parent company of Qualimed Health Network. Ayala Health also purchased an additional 15% of MGHI directly from the Mercado Group of individual shareholders. The deal gives AC a 54.2% controlling stake in MGHI. The Qualimed Health Network includes four hospitals, an ambulatory care facility, and several clinics.
MB:AC believes that the acquisition of this “hospital platform” completes their cycle of patient care. AC, through Ayala Health, owns primary clinics, specialty clinics, and now... hospitals. AC has been growing its healthcare portfolio aggressively, but it’s interesting to see the group pivot away from its previous “stance”; the group was more focused on the distributed, non-primary care facilities like community clinics and specialty care clinics, and not so much on the traditional centralized hospital with an emergency ward and beds. As an investor, I was more interested in AC Health’s distributed approach, but I’m open-minded to see how these flavors might cook into the Ayala stew of assets.
[NEWS] PSE looking to tweak the rules on voluntary delistings... the new rules will only permit a voluntary delisting to proceed if less than 10% of the total outstanding and listed shares of the company vote to reject the move. That’s a huge change from the previous rule, which only required board of directors approval and a fairness opinion to proceed to a pre-delisting tender offer. Now, companies must conduct a shareholders vote, get less than 10% of shares to reject the move, and get 2/3rds of the board to approve, including two independent directors, and the minimum tender offer price is now the highest of a fairness opinion or a volume-weighted average price.
MB:This move is aligned with the PSE’s goal of increasing the public ownership of listed corporations. The exchange has been focused on ratcheting up the minimum public float from 10% to 20%, but it’s also been forced to take a second look at the voluntary delisting rules after a few sketchy transactions (Resorts World Manila, I’m talking about you). In the old days (you know, those days before this PSE memo went into effect a couple of days ago), all a company had to do to delist was have the board approve the move and then cram a tender offer through based on a fairness opinion cooked up by a valuator selected by the board. Now, while that fairness opinion bit hasn’t changed much, it’s no longer just up to the board. It’s no longer so easy for a company to court the investment of the public only to fold up shop a few years later once the novelty has worn off (or their interest in public disclosures has, shall we say, waned).
[NEWS] Bloomberry [BLOOM 8.20 ▼4.32%] adds ₱20bn to an existing loan facility... the Solaire casino operator negotiated with lenders to get an additional ₱20bn added to a ₱73.5bn creditline. The company also negotiated with its lenders to get a huge “covenant test holiday” on that loan facility until June 2023.
MB:That’s a pretty big add-on. Most companies are in need of some operating cash these days; they can sell something (assets), borrow it (debt), or raise it (follow-on offering / stock rights offering). Each option comes with a cost, but most owners would prefer to take on more debt rather than give up points of equity. That’s what BLOOM has done here. The interesting bit (to me) is that they’ve been able to delay covenant testing for almost three years. When a company signs a loan with a bank, the bank usually includes a list of covenants (promises) that the company must abide by. Sometimes the covenant has to do with maintaining a certain debt-to-equity ratio, or other times it might have to do with capping public ownership or transference of shares. Banks periodically test a company’s adherence to the covenants, and my feeling here is that the ₱20bn addition probably blows up an existing debt-to-equity ratio covenant for a period of years. The bank(s) are likely eyes-wide-open here, with confidence in BLOOM’s ability to service the debt eventually through gradual recovery.
MB is posted to /PHinvest every Monday and Wednesday, but my newsletter goes out daily. To stay in the loop for daily email delivery, please join the barkada by signing up for the newsletter, or follow me on Twitter.
DFNN soars 41%; will be PH's first online casino operator (Wednesday, Dec 9)
Happy Wednesday, Barkada --
The PSE closed up 69 points to 7204 ▲1%.
Greetings to all of the new subscribers that joined yesterday and this morning! I hope you enjoy what Merkado Barkada has to offer. If you do, please forward out to friends and family who might also enjoy it... and if not, please contact me at [email protected] to let me know why! I'm always interested in constructive feedback on how to make MB a better place for investors and traders alike.
[NEWS] DFNN [DFNN 6.35 ▲41.43%] granted PH’s first online casino license, stock soars 41%... the license allows the PAGCOR-approved company to develop and operate online casino games. DFNN said that the online casino would “only available to VIP players who must meet strict eligibility and registration procedures,” and would help in “regenerating revenues for the government”.
MB:PAGCOR has repeatedly tried to pitch “gaming” generally as the government’s cure to the cash crunch problem caused by its COVID-depressed tax income. I doubt it needed more than three slides in its pitch deck to government to get approval for the new license type. The government aches for income to replace what’s been lost. Investors and traders liked the news, in part because the complete surprise of the announcement allowed there to be a steep gap-up in the price (that’s always fun), but also because the license acts as something of a temporary monopoly for DFNN in terms of online gaming. There’s no word yet whether PAGCOR intends to license other gaming outfits to operate similar online casinos, but I’d bet that Dennis Uy and Enrique Razon are more than a little interested to join in on the fun, considering how poorly their profit puppies have performed through the pandemic. Especially if the license type will expand beyond the initial restriction to domestic bets only.
[NEWS] PH Resorts [PHR 3.00 ▼0.99%] halted for an hour after issuance of shares to Udenna Corp disclosed... the Dennis Uy-owned integrated casino/resort developer disclosed that it sold 1,686,309,523 common shares from its unissued capital stock to Dennis Uy’s Udenna Corp for P2.8bn (P1.68/share). The PSE halted the stock for one hour under the “additional listing” rule. That lede was buried in a press release that was supposedly about PHR “topping off” the two towers at its Emerald Bay facility.
MB:The follow-on offering that PHR conducted a month ago sold 450m shares at the same price, but this transaction is significantly larger. When the FOO dropped, Dennis Uy said: “At the offer price, investors will be given a good opportunity to get in early at attractive valuation levels.” He was really talking about himself, and about the private placement sale to Udenna that was to come. This transaction dilutes everyone materially, including the FOO buyers that diluted the previous shareholders.
[NEWS] Mergermarket reporting Indonesian coffee chain looking for JV partner in PH... Kopi Kenangan is Indonesia’s fastest growing coffee chain, and it’s fresh off of a Sequoia Capital India-led Series B investment round that netted it a US$109m warchest for expansion. The coffee chain reportedly prefers a Philippine “family-led conglomerate”, both for the conglomerate’s deep pockets but also its experience in the domestic retail sector. Kopi Kenangan is looking to co-locate its stores in buildings with a strong BPO presence.
MB:Looking for a family-led conglomerate with deep pockets is like shooting fish in a barrel in the Philippines. Kopi Kenangan is going to be able to run a beauty pageant to maximize the value of its potential JV. This store concept is not exactly like a convenience store (more like Luckin Coffee, actually), but it does serve some of the low-cost goodies (coffee, milk tea, snacks) that convenience stores like Seven-11 [SEVN 110.70 ▲4.43%], Ministop [RRHI 68.70 ▲0.51%], and Family Mart [PNX 12.74 ▼0.31%] use to lure customers in for repeated visits. That’s not exactly Kopi’s DNA, though, as it’s building its name and brand off of “coffee on demand” that is ordered by an app and either picked up in a small-footprint shop, or delivered direct to consumer. It’s not clear what Kopi Kenangan’s end-goal strategy is, whether it wants to be a stand-alone brand under the Kopi Kenangan flag here in the PH with its own locations, or whether it’s willing to be a branded component of a conglomerate’s overall offering, like “Ministop, with coffee by Kopi Kenangan”; either way, this is an indication that our convenience and coffee store market is heating up.
[NEWS] Metro Pacific Investments [MPI 4.55 0.00%] buys 20% of Philippine Tank Storage International (PTSI)... the purchase was part of a larger deal that saw Keppel Infrastructure Trust (KIT) and MPI together acquire 100% of PTSI’s stock for US$333.8m. According to Mergermarket, PTSI owns the Philippine Coastal Storage & Pipeline Corporation (PCSPC), which is “the largest petroleum products import storage facility in the Philippines”. KIT and MPI purchased PTSI from the Philippine Investment Alliance for Infrastructure (PINAI). PTSI’s storage capacity includes three “tank farms” and one marine terminal area, all within the Subic Bay Freeport Zone.
MB:There are no comments from the MPI side of the deal yet, but KIT is on record saying that this is a “strategic” acquisition to strengthen its distributable cash flow (the money that the company uses to declare dividends). KIT says the investment will help it “capture the expected growth in demand for petroleum products in [the Philippines].” I assume MPI’s reasons for entering the deal are substantially similar.
MB is posted to /PHinvest every Monday and Wednesday, but my newsletter goes out daily. To stay in the loop for daily email delivery, please join the barkada by signing up for the newsletter, or follow me on Twitter.
Power Gen. ▲1.88% POGO Gaming ▲1.76% #COVID-19 ▲0.84%
Bottom 3 MB indices:
MiddleClass ▼1.33% Logistics ▼0.80% Cement ▼0.60%
Main stories covered:
[NEWS] Airlines able to resume international flights with non-essential passengers on October 21... but will the demand be there? Non-essential travellers will be able to leave the country, provided they have “negative antigen test results, confirmed plane tickets, and health and travel insurance”. The government originally lifted the ban on Filipinos travelling abroad for non-essential reasons in July, but since only one insurance company could adhere to the IATF’s strict rules on conditions to cover rebooking, accommodation expenses, and hospitalization should a traveler contract COVID-19, the ban was re-implemented, awaiting better coordination. Seems as though the better coordination has arrived, though we are still waiting on confirmation of procedures from the IATF.
MB:As we discussed last week, domestic airline revenue has been constrained by a lack of demand, not by excessive regulations or travel bans. Philippine Airlines [PAL 5.85 ▲0.86%] and Cebu Pacific [CEB 38.00 ▲1.06%] know as well as any that many countries around the world still have quite strict travel regulations in place that make travelling a huge pain in the ass, aside from whatever hoops the IATF will make Filipinos jump through even before they make the trek to NAIA. The totality of this hassle against the backdrop of a global pandemic has decimated travel demand. The airlines will be in a lot of trouble until the hassle (and the pandemic) disappears.
[UPDATE] Converge [CNVRG 16.80] IPO oversubscribed with one broker, so, you know... in a talk with Michelle Ong, the President of PNB Securities, Antonio Lisbona, said that the CNVRG IPO was causing his firm “sleepless nights” because PNB Securities’ order book was already “oversubscribed”. He admitted that the CNVRG IPO might look “heavy” (too expensive, not selling quickly), but he reiterated his belief that CNVRG is in “the right business at the right time.”
MB:The domestic and international demand for CNVRG has not been strong. Remember, CNVRG’s IPO is split 70:30 between foreign investors and local investors, and that CNVRG was forced to lower its price twice by an aggregate of 30% in order to sign a cornerstone investor for the international tranche. After lowering the price, the stock sold out and the company was able to market the international tranche as being “oversubscribed”, but it has not been able to say the same thing for the PH-based tranche, despite a 10x increase in PSE EASy allocations and a white-hot connectivity market ([DITO 6.10 ▼1.45%], [NOW 5.25 unch], [MRC 0.37 ▲1.37%]). Now, PNB Securities is doing a media hit to say that it’s own order book is oversubscribed. It’s obviously trying to hype the market for the stock. We’re one week to IPO, so I expect more limp stories like this to try and juice the local market ahead of the big day.
[UPDATE] PH Resorts [PHR 2.69 ▲3.46%] prices its follow-on offering at P1.68/share... the Dennis Uy-owned casino resort operator is looking to sell 450m shares at P1.68/share to raise P756m to increase the size of the public float (it’s only 15.89% after the IPO) and help fund completion of its Cebu project. The pricing range had been P1.00 to P2.50. The deal is 100% primary (new shares), and is only available through brokers (not PSE EASy).
MB:Dennis Uy kills two birds with one stone: he gets cash for his cash-strapped company, and he gets to pull PHR’s head more fully above the PSE’s minimum public float line of 10%. What do you bet DAU uses some of the P756m that he gets in this deal to initiate share buy-backs if PHR continues to tumble? While DAU might not be the best at running a business, DAU is a master at the trading game, so I wouldn’t put it past him.
*[UPDATE] PSE determines backdoor rules apply to Xurpas [X 0.55 susp] transaction... * The PSE determined that the Wavemaker Group transaction was a backdoor listing, and that X stock will remain suspended until X is able to provide the PSE (and investors) with a comprehensive disclosure to outline the nature of the transaction and the impact that it will have on X’s business going forward.
MB:The writing was on the wall ever since X sold Yondu back to Globe [GLO 1992.00 ▼0.90%] for a fraction of what it paid. The Wavemaker deal never looked quite right, and to many in the investing community, X was a deadman walking already, so the suspension meant very little. The PSE’s first potential tech unicorn is pretty much dead at this point.
MB is posted to /PHinvest every Monday and Wednesday, but my newsletter goes out daily. To stay in the loop for daily email delivery, please join the barkada by signing up for the newsletter, or follow me on Twitter.
Converge's US investor doing most of the selling at IPO (Monday, Oct 5)
Happy Monday, Barkada --
The PSE closed up 55 points to 5999 ▲0.9%.
Shout-out to André for the Twitter love, and to Robin for his interest in my analysis of the PH logistics industry (with reference to MerryMart's "Dark Grocery" deal with FoodPanda). I hope to have more to say on the topic soon, as it's an industry that I'm looking very closely at considering the changes that we've seen all around the world in the warehousing, cold-storage, and delivery segments. Drop a note if you're involved in the logistics industry, or an analyst covering it; I'd love the chance to swap stories. Interesting times, especially now with this COVID twist.
[NEWS] PH Resorts Group Holdings [PHR 3.04 ▲1.33%] gets FOO approved by PSE... here comes the dilution. PHR is the travel and gaming subsidiary of Dennis “Davao” Uy’s Udenna Corp, and is looking to raise P1.125bn in a follow-on offer (FOO) to build an integrated resort (casino integrated with a hotel with restaurants) in Cebu. PHR is selling 450,000,000 new common shares at an implied price of P2.50/share. COVID has delayed the construction and opening of the resort, which Udenna expects to have fully opened by Q2/22, with a soft opening in late 2021.
MB:The FOO also lifts the public ownership (free float) of PHR above 10%. The PSE has made moves that indicate it will press to raise public ownership levels, so perhaps DAU is getting out in front of the PSE a bit here and killing two birds with one stone (lack of funds + lack of public ownership). The P.2.50/share price that’s implied by the P1.125bn raise through selling 450m shares is about 17% lower than PHR’s Friday close of P3.04/share. The new shares represent a 9.4% increase in the outstanding shares of PHR. This isn’t the only DAU-affiliated company that is in need of capital.
[UPDATE] Converge ICT’s [FIBER 24.00] US investor to unload 1 billion shares at IPO... the US investor is none other than Warburg Pincus LLP (WP), which invested US$225m (P12.4bn) in FIBER in 2019 through its subsidiary company, Coherent Cloud. WP plans to convert its preferred share holdings to common shares on the date that FIBER gets priced, and then to sell 1.011 billion common shares in the IPO (almost half of its 2,045 billion shares in FIBER).
MB:This means that the secondary share sale will almost entirely be to WP’s benefit, meaning that it does not look like The Other Dennis Uy is cashing out his chips in this transaction. WP, for its part, is looking to sell half of its original US$225m investment for P24bn, which is approximately US$495m. That’s a 4x return in just over 1 year of investment. From WP’s point of view, that’s a fantastic deal, but from a prospective FIBER investor’s perspective, I’m left to wonder what this deal has in it for them. FIBER’s expansion program sets a goal to reach 55% of Filipino households by 2025.
NEWS Globe [GLO 2120.00 ▲0.95%] ramps up fiber roll-out... in completely unrelated news, GLO has increased its fiber network roll-out by 50% this year. Cebu and Davao Del Sur have been the recipients of the most aggressive GLO activity, but GLO has been busy to “fill the gap on home broadband access”. BODY
MB:While FIBER has been the fastest growing broadband provider in the Philippines, the incumbents won’t just roll over and die and hand out marketshare left and right. FIBER will either have to take the share from GLO (and the rest of the existing providers), or it will have to make new markets before GLO and the incumbents get there first. Looks like GLO is trying to head FIBER off at the pass by getting its fingers into whatever new markets FIBER might have had its eyes on. I can’t tell from here if these new markets were just the easiest for GLO to tap, or if these were more strategic moves meant to take away FIBER’s easiest low hanging fruit. GLO trying to starve the FIBER fire before it even sparks?
MB is posted to /PHinvest every Monday and Wednesday, but my newsletter goes out daily. To stay in the loop for daily email delivery, please join the barkada by signing up for the newsletter, or follow me on Twitter.
PH Resorts FOO is today... spicy times ahead (no ceiling/floor) (Thursday, Nov 5)
Happy Thursday, Barkada --
The PSE closed up 128 points (!!) to 6464 ▲2%.
I'm blown away by your response to the MB Patreon page. I have a hard time putting into words how it feels to see notifications from Patreon, many featuring familiar names from Reddit, Discord, and email chats, saying that someone has donated some money to the MB effort. During a pandemic, a down market, and a crazy year like this. A huge shout-out and humbled thank-you goes out to our new
"Ministop Coffee Crew" patrons: JRVS, Phantom-Spirit, and Jelo Agnasin
"Starbucks Coffee Crew" patron: Karlos Naidas
"Daily Production Team" patrons, Charles A Yeung, FinanceForever, and Marilin Nery! Thank you all for your support.
You didn't have to, but you did, and I appreciate that. I raise my coffee mug in thanks to the Ministop and Starbucks Coffee Crews, and to the Daily Producers, I say keep an eye on your inbox as I'll be in touch to figure out the specific day you'd like to sponsor! To anyone else who would like to contribute, please use this link. Remember, there's no obligation, no special access, and people who don't have an EF yet shouldn't donate! Focus on yourself first. Thank you, Patreon supporters. And thank you to all the Barkadans for reading!
Fast Food ▲5.78% POGO Gaming ▲5.34% 2019 IPOs ▲4.86%
Bottom 3 MB indices:
Telco ▼0.38% MiddleClass ▼0.34% Power Gen. ▲0.29%
Main stories covered:
[UPDATE] PH Resorts [PHR 3.27 susp] FOO is today, be prepared for wackiness... the follow-on offering for Dennis Uy’s integrated casino/resort developer will hit the market a lot like the weird Altus Property Ventures [APVI 13.08 ▲0.62%] offering “by way of introduction” did: with no ceiling or floor. PHR last closed at P3.27/share before it was suspended pending this offering, which was priced at P1.68/share.
MB:BE CAREFUL. Every single AVPI share purchased on its offering day is still underwater. Have a read of what happened on that day (I sort of live-blogged it), when it finished up 82% on the day, but down 93% from its intra-day peak. If you are trading price action, SET YOUR STOPS. You don’t want to end up joining the sad crew of momentum chasers that turned into “invals” (involuntary value investors).
[Q3] Globe [GLO 2002.00 ▼0.89%] profit ▼22% y/y... Q3/20 profit of P4.4bn, down 22% from Q3/19 profit of P5.6bn. Part of that decline could be attributed to the continuing trend of consumers moving away from “traditional” voice and SMS, where margins for GLO are ridiculously high; revenue from these sectors was down 3% y/y to P36.7bn. GLO did say that the “upturn in prepaid top-ups and subscriber acquisitions” was improved q/q by the less restrictive quarantine measures over Metro Manila allowing more people to transact digitally.
MB:Up until the end of Q3, it had been GLO and TEL just tromping around the country harvesting pesos from a captive audience that had no other choice. In the broadband world, Converge [CNVRG 14.72 ▲1.24%] has loudly splashed into the national spotlight through its “PLAYER 3 HAS ENTERED THE GAME” IPO last month. While the stock hasn’t popped, CNVRG has already banked the cash. CNVRG will hit the market with a long history of experience in providing the service that it offers, with the customer support (I know, I know), back-office team, and network of commercial subscriber funnels to efficiently consume new markets. So, while Dito Telecommunity is that same “PLAYER 3 HAS ENTERED THE GAME” moment on the mobile communications front, it’s starting from way further back. It has no proven processes; it’s never processed a transaction; it’s never dealt with an outage; and it’s never performed a network upgrade with live customers. That’s not to say that Dito couldn’t figure it out (it’s probably dangerous for GLO and TEL to discount Dito outright), but it is to say that public-facing communications infrastructure, at scale, is hard. That’s part of the reason why only GLO and TEL have survived. But from Q4 onward, the gloves are off.
[Q3] Century Foods [CNPF 17.00 ▲0.95%] profit ▲15% y/y... Q3/20 profit of P1.032bn, up 15% from Q3/19 profit of P0.898bn. The profit growth was driven by the company’s “”branded marine, meat and milk products” segment, which accounted for 81% of CNPF’s total revenue. Sales in this segment, which includes brands like Century Tuna, 555, Argentina and Birch Tree, were up 16%.
MB:This result might come as cold comfort to some investors. It’s not like people have all of a sudden grown an outsized appetite for canned goods and non-perishable milk products... it’s the pandemic. At first, in the heat of the ECQ lockdown, Filipinos flocked to the familiar safety of CNPF products when presented with the possibility of the country’s supply chain failing, or other apocalyptic scenarios that had all barangays seriously considering what life would be like to have barangay captains ration food out to residents amid a medical catastrophe of unknown severity. We filled our storage areas with tuna, corned beef, and whatever else might taste ok and not spoil. Then, when our fears of systemic failure did not come to pass, but the ravages of one of the world’s longest lockdowns began to cripple commerce resulting in job losses, under-employment, and vastly reduced household earnings with plummeting consumer confidence, we “downshifted” our eating habits to recognize the need to be conservative. Instead of eating at a restaurant, we went to Jollibee. Instead of eating at Jollibee, we ate street food. Instead of eating street food, we cooked at home. Instead of fresh meat and vegetables, we bought canned goods. This was explicitly mentioned by McDonalds PH in its conference call with Goldman Sachs that I covered in August. Consumers are shifting down, and that is pushing CNPF up. If the economy improves, and things go back to normal, will these customers stay? What is CNPF doing right now to encourage continued loyalty through changing circumstances?
[Q3] International Container Terminal Services [ICT 115.50 ▲0.43%] profit ▲23% y/y... Q3/20 profit US$69m, up 23% from Q3/19 profit of US$56m. The shipping terminal owneoperator’s revenues are a pretty good proxy for global trade, as they have facilities in the Philippines (including the Manila International Container Terminal), across SE Asia, Africa, the Middle East, and South America. ICT has a fairly clear lack of penetration into Russia/China, Europe, India, and North America, but otherwise has a strong presence in developing countries with significant raw material exports and significant finished goods imports. In Q3, ICT made more revenue (6.7% more) with fewer expenses (1.1% less), an outcome that ICT attributes to “stringent cost management”.
MB:ICT should be well-positioned to benefit from any uptick in global trade. The cost management initiative will serve ICT (and its investors) well in the time between now and when COVID fears begin to lift. We aren’t there yet, but ICT will be one of those “recovery stocks” to watch. It’s probably too early now, but keep an eye on it.
MB is posted to /PHinvest every Monday and Wednesday, but my newsletter goes out daily. To stay in the loop for daily email delivery, please join the barkada by signing up for the newsletter, or follow me on Twitter.
PHR FOO was a mess and a rousing success (Friday, Nov 6)
Happy Friday, Barkada --
The PSE closed up 181 points (!!) to 6645 ▲2.8%.
Thanks to JD for writing with some ideas on how to hack down my monthly Mailchimp costs. My eyes/ears are open to suggestions, but I'm paranoid of spam filters. Thanks to kidfrom93 for pointing out that my "no ceiling no floor" analysis on PHR's FOO was only half-right: there was a ceiling, but no floor. Not that the ceiling came into play, but still. :) Shout-out to keneno89 and amasai12! Thanks for the support! A huge shout-out and humbled thank-you goes out to our new
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Fast Food ▲4.16% #COVID-19 ▲3.88% POGO Prop. ▲3.36%
Bottom 3 MB indices:
POGO Gaming ▼0.92% Power Gen. ▼0.70% Cement ▼0.42%
Main stories covered:
">- PH Resorts had a FOO, and it was both a mess and a rousing success
Background PH Resorts [PHR 2.18 ▼33.33%] is Dennis Uy’s casino resort developer that has struggled to fund completion of its Cebu-based resort due to COVID. PHR had been exploring options to fund the project for months, but ultimately elected to push through with a follow-on offer priced at P1.68 per share, which was a little bit shocking considering the stock’s closing price before the announcement was P3.27/share.
What happened leading up to yesterday? The FOO added 450 million shares to PHR’s outstanding shares, bringing the total from 4,793,266,504 to 5,243,266,504 (an increase of 9.4%). But the way it got there was a little bit... unfortunately for PHR investors. PHR announced in late September that it would look to do a FOO, but provided no pricing information. From that point, the stock jumped from P2.15/share to up to P3.20/share. Then, on the morning of October 19, PHR announced that the price would be P1.68/share. The price dropped, and by the end of the day, PHR had applied for a voluntary trading suspension until yesterday. Everyone invested at that time that was not able to sell was “trapped” in the dilutive situation.
How did the FOO go? Depends who you ask! If you ask someone who was quick enough to buy the FOO (brokers sold out quickly, for obvious reasons) at P1.68 and who sold anywhere around P2.18/share, that person is probably happy for the 70% gain. But... if you ask an investor who owned PHR stock before October 19th, at a closing price of P3.27/share, and who is holding stock worth P2.18/share today, you probably are not talking to someone excited about a sudden 33.3% loss.
BARDAKA BOTTOM-LINE Dennis Uy got crushed on the market yesterday. PHR was down 33%, Chelsea [C 4.94 ▼6.44%] was down 6.4%, and DITO CME [DITO 5.89 ▼6.66%] was down 6.7%. The recent move by Chelsea to sell its stake in Dito Telecommunity, arguably one of the most important and mysterious companies in the country, to a completely unknown private corporation with a confusing name and absolutely no guidance as to what is happening or why aside from “restructuring”, and now this double-dip that is gleefully pitched by PHR”s executives as just another step in the master plan (FOOs are never part of the master plan, unless you’re Injap), well maybe you’re sort of losing patience with this loosey goosey attitude toward shareholders and potential investors. I’m not an investor in PHR, but if I was, I’d be right choked that I was forced to buy-up some stupid FOO to protect myself from the dilutive losses.
[Q3] LBC [LBC 15.72 ▲0.13%] profit ▲37.6% y/y... Q3/20 profit of P448m, up 37.6% from Q3/19 profit of P326m. LBC attributes the great result to its “significant growth” in gross revenue by 6% (+ ~P200m), and by a 9% reduction in the cost of services (+ ~P250m). The gross revenue bump was due largely to 33% higher sales in LBC’s retail logistics segment.
MB:LBC is coming off an absolutely ba-ruuuutal quarter where it lost over half a billion pesos due to the lockdown and various movement restrictions implemented around the country. Q3 saw many of those restrictions ease, but I wonder if perhaps some of the bounce-back could be from the country’s growing ease with using third parties to deliver everything from food to furniture.
*[UPDATE] Megawide [MWIDE 7.58 ▲2.43%] FOO details confirmed for listing on November 27... * MWIDE will sell up to 50 million preferred shares, split into two symbols (MWP2A and MWP2B), at P100/share, to raise P5bn. Offer period runs from November 10 to 17, with listing on November 27.
MB:Specific details on the terms of the preferred shares are not yet available, but I will update. My feeling here is that MWIDE is cashing up to take advantage of its recent run of “good luck” in bagging contracts from the government. Make hay while the sun shines.
[UPDATE] DITO CME [DITO 5.89 ▼6.66%] shareholder dumps 50m shares... Eric Recto, the former owner of ISM Communications, which Dennis Uy purchased to (eventually) convert into DITO, had owned over 234m shares of DITO as of January this year. With this latest sale of 50m shares on November 3, Mr. Recto now owns only 1.89m shares of DITO out of the nearly 2 billion listed shares.
MB:This looks like DITO “cleaning up its cap table”, which is finance-speak for tying up loose ends in the list of major shareholders before a major change is made. From Dennis Uy’s perspective, if he were truly to use DITO as a vehicle for Dito Telecommunity, he would need to somehow transfer Dito Telecommunity into DITO. Any existing shareholders would “benefit” from this acquisition, possibly by way of a higher stock price. So it’s in Dennis Uy’s best interest (if this is what’s happening -- I have no idea) to get rid of as many hangers-on as possible at the pre-acquisition stock price to “capture” as much of that gain for himself as possible. Having Eric Recto as a major shareholder is a pretty significant value-leak. This whole paragraph is just speculation, so please take it with a kilo of salt. I have no idea what Dennis Uy is doing, or what Eric Recto is doing. Just trying to make an educated guess.
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Need some help finding games for my gambling grandparents
My grandparents have been avid gamblers for as long as I have been alive. Their PC has always been used to play casino-esque games. Back when club pogo was a thing they would play all the time on that website. Now they are deep in the weeds with facebook games. I would like to steer them away from browser based games as they are becoming increasingly unsafe in my opinion. I am teasing the idea of trying to move them to Steam, but I wouldn't even know where to begin to find games like pop-it or bejeweled, diner dash, card games etc. etc. that they are used to playing on a platform like Steam. Even if it's not Steam, a suggestion of a reputable platform with games like these would be appreciated. EDIT: The games would have to run on a pretty shit Best Buy special PC. which shouldn't be too hard of an ask for the level of games we are talking about. TLDR; Trying to get that Facebook mobile candy crush feel without using a browser.
I happen to had a good conversation with one of the Chinese POGO (Philippine Offshore Gaming Operators) workers here in Makati, she was cute and all smiles at Starbucks, and she speaks good english. Apparently, she is a manager in an online casino, which is why she can speak english way better than others. I asked her how she find Manila/PH so far, and she told me: people are nice and happy. They are always smiling. She told me "maybe it was because you are very free to do what you want" Then it strikes me, yes, China has been very suppressive to its people, they have intense surveillance and censorship going on. She then asked me about posters around the city, and the election that will happen. She has no idea whats going on, why we get to choose even the president, because back home, she said they can only choose a leader of the village, from there they ahve no direct voting as to who becomes mayor, governor or legislator. I asked her if she considers living here, and she says "yes, If i will be allowed to". She explains that they are on rotational assignment, and that PH is a destination most of them love because here they get to do R&R and work at the same time. That explains why there are tons of Chinese POGO workers in Bora. I suddenly felt privileged to be in a democratic country.. At the same time, I felt anxious that soon we will become a province of China, like what Duterte wanted..
Here's an idea for another type of post-game content for a new Crash platformer I made. They just don't stop coming, do they? So, even with the wider amount of levels the game might have, it might still not be enough (key word: might) for the same price tag N. Sane Trilogy and Nitro-Fueled had. Considering the latter, it probably wouldn't be that hard to reach the price, CTR on its own was pretty short and this game's going to be significantly longer. But what the hey. And with any traditional Crash game like this, unless you're putting in a fuckton of minibosses, there's a chance every henchman Cortex or Brio have had in the N. Sane Trilogy (and perhaps Nitro-Fueled, given Nina Cortex and Komodo Moe) might miss out on their own boss fight. No worries though, they can make it in another way. With a new Crash installment, some people have been stating Crash Bash could be a good side mode for the game, or at least something similar to Bash. It's not a bad idea, some of the minigames in Bash look like fun (I haven't actually played it), but making it just a side mode could make it feel slapped in at the last minute. Same with the multiplayer modes in N-Tranced. Then I remembered that Skylanders had small challenge levels accessible from talking to Cali in the HUB world. So, why not add that to the main campaign? And as I mentioned those boss characters earlier, why not have them be the ringleaders of said challenges?
The structure
There are different types of challenge levels. There's a simple level race, an Atlasphere battle that could take some inspiration from Polar Push, a slightly more combat-oriented Crate Crush minigame and an on-foot Pogo Pandemonium-esque minigame (honestly not so sure about that last one). Each type of minigame is hosted by a different character. Let's go with Rilla Roo for level races, the Komodo Bros. for the Atlasphere, Koala Kong for Crate Crush and Ripper Roo for on-foot Pogo Pandemonium. The environment these challenges take place in are based around the certain character, as a call-back to Crash 1's bonus rounds, only more varied in terms of looks. There's at least 3 per character, can't make it too big of a number.
What the fuck are you even doing this for?
At some point in the game, Pinstripe leaves a note for Crash to find in the HUB world, harshly teasing him and bragging about Tawna being Pinny's girlfriend or something idk it's just an excuse plot. Crash understandably gets furious and goes on a little side quest to find that rat. After the note has been read, the challenge guys appear in the HUB, being Pinstripe's league of buddies stopping Crash from progressing on his revenge quest. Keep going through those challenges and Pinstripe will keep leaving you notes, ala Cortex from Crash 3, but written on paper and only narrated by the character. Once every single challenge has been completed, the five baddies finally give up and lead you to Pinstripe's huge corrupt casino facility. Here, you'll get to meet Pinstripe face-to-face in a good ol' mafia-style boss fight, way better than the shit he pulled in Crash 1. Beating Pinstripe then gives you the ending to this side quest. Tawna walks in while the two violent marsupials are fighting. After being disgusted with their immaturity and obsessiveness over her, she breaks up with Pinstripe and declines getting back together with Crash. After both of them being dumped, both of them have a moment together and tie up loose ends with each other. This side quest probably gives you a brand new coloured Gem or something, like a black Gem or a rainbow Gem. Something like that. Or it could just be optional. I dunno.
What's the actual reason for why you thought of this?
Game Corners: A Single Player Progression System (
[Fan Concept] In classic Pokemon Games there is a place called "The Game Corner." There you can play various casino games for a chance to win currency which can be exchanged for valuable prizes. I think such a concept would fit perfectly in Pokemon GO! Game Corners could act as traveling circuses or carnivals in Pokemon GO! They could either spawn randomly like raids over Stops or Gyms, or they could just appear on the map and open and close at preset times like a real casino/carnival. A Game Corner on the Map Once you're in range you can interact with the Game Corner. It'll ask you for an Admission Pass which you can either collect once a day, bought in the store. Once they accept your pass the clock will begin ticking and you'll have that much time to enjoy the Game Corner. Once inside you'll enter a menu with a list of available mini-games. Many of these games would use PoGO's existing code to allow Niantic to easily develop them without too much headache.
Pidgey's Target Test A game where you flick a ball at as many moving targets as you can. Smaller and more distant ones net you more points. Curve balls net you big bonus points. Consecutive hits give you more and more points as well. This game could help improve accuracy when catching tricky Pokemon as well.
Diglett's Hole in One Toss balls into the holes in front of you, but be careful. If you see a cloud of dirt a Diglett will emerge and block your shot. This game also might be better in the reverse sense, where the goal is to play Whack a Mole with heavy balls that you toss at Digletts. This game tests your understanding of PoGO's depth of field.
Poke'Match Flip A basic 2-matching game. Try to find two matching Pokemon by flicking Pokeballs at the floating flip puzzle pieces.
Rhyperior's Rocks that Roll An action based game that uses the battle system's dodging mechanic. Your Pokemon stands there and must dodge right/left or stand still to avoid Rhyperior's boulders that he shoots from his palms. Watch which arms he holds up to know which way to dodge.
Another possible game (that I didn't make a graphic for) is a racing game where you're tasked with spinning a nearby PokeStop and then running back to the game corner within a timelimit. I wanted to include something that doesn't involve burying your head in your phone and gets you up and moving like this game should be doing.
Doing well in these games will net you Tickets similar to how an arcade works. These tickets can be cashed in at a prize counter for rare Pokemon like Porygon, and TMs as well. This is a reference to how these rare items were obtained in the original games. Many Pokemon were simply rare trophies to be won at the Game Corner, which is why they were commonly not fit for battle. In Pokemon GO this could be an alternative way to obtain rare Raid-only Pokemon that solo-players cannot get. Niantic has been very unambitious with new features for a while. Most new features are just small new things to watch out for when playing with existing systems (like Lucky Pokemon) and I'd like to see something BIG like Raids be added to this game. There could also be Co-op mini-games down the line perhaps to help with the social aspect, but I wanted to focus on providing some fun stuff for people who aren't lucky enough to have busy towns. Anyways, that's it! If you have any suggestions on how to perfect such a feature, I'd love to hear it. Thanks!
My grandma really, REALLY likes to play online bingo, to the point where that is pretty much the only reason she has a computer at her house. Currently she plays at pogo.com but I know that sites like pogo tend to be really bad for her little $200 laptop (it’s basically a flash game website for adults but they also are home to a lot of viruses). I was wondering if there was a bingo game anywhere for the PC where she can get pretty much the same experience. The specific game on pogo she plays is “Bingo Luau” If there are other suggestions for games geared towards seniors those might help as well. I know this isnt a typical post but I thought this would be a good starting point. She also likes casinos and gambling if that helps, but lets avoid gambling real money.
December Community Day Across the Northeast Looking for a local meet-up for the January 2020 Community Day? Check out the Silph League Map ((https://thesilphroad.com/map#5/41.43/-69.69)) , and join a local server. Here are your local staff that will be distributing the limited time Silph Traveler Badges at each event. Be sure to set up your Traveler Card ( https://thesilphroad.com/travelers-cards) before attending your local meet-up. REMINDERS >Fusion CUP: Be sure to check out the https://silph.gg/map to find a Fusion Cup near you! (Listings and meet-up days subject to change. Please reach out to listed Discord Staff for most current info.)
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