SHAKEY'S EARNINGS UP
The earnings of SHAKEY’S Pizza Asia Ventures, Inc. (SPAVI) increased by 2.5% from January to March 2019 on the back of expanded store network and steady margins. The company announced that its net income in Q12019 reached PHP188 million from PHP184 million. The company hopes to close the year with a double-digit profit growth. Shakey’s said it is bringing in Peri-Peri Charcoal Chicken to its portfolio.
The Philippine retail sector has been benefiting from higher disposable incomes following the reduction of personal income tax rates that started in 2018 as well as Filipinos’ fondness for food and beverage (F&B) which continues to grow at a sustained pace despite inflation peaking in 2018. Overall, consumer outlook in the country has been improving as shown by the Philippine central bank’s latest survey. The F&B demand in the Philippines remains strong with the sector covering between 30% and 50% of total retail space in the country. A mix of local and foreign F&B concepts continue to enter the Philippine market, indicating investors’ confidence in Filipinos’ purchasing power.
AVIDA LAND LAUNCHES FINAL PHASE OF CAVITE PROJECT
Avida Land is launching the third and final segment of its 10-hectare Avida Verra Settings Vermosa within Ayala Land’s 700-hectare mixed-use estate in Imus, Cavite. The P2.8 billion project will offer 370 units with each unit priced between P9 million to P9.5 million. Floor areas will range between 67 sq m and 85 sq m. Among the amenities that residents will enjoy are an Olympic-sized swimming pool, a track and field oval, and the Philippines’ first sports science laboratory. Avida Land said land development is due to be completed in May 2021 while turnover is scheduled H2 2021.
In our opinion, developers are likely to continue to venture into horizontal residential projects in second-tier and third-tier cities all over the country, where demand comes from end-user buyers. The markets may be smaller compared to Manila but more stable in terms of end user housing demand. We believe that Avida’s decision to expand footprint in Cavite is partly due to the development of road network from Manila to Southern Luzon. In our opinion, projects in Southern Luzon should become more attractive given the planned railway expansion and toll road projects.
INFRA SPENDING DOWN 5.7% IN MARCH
According to the national government, infrastructure spending dropped by 5.7% in March as some agencies failed to implement new projects under the reenacted national budget. Data from the Department of Budget and Management (DBM) reveal that infrastructure and capital outlays reached PHP59.7 billion in March from PHP63.4 billion in the same month in 2018. The DBM noted that while the disbursements of Department of Public Works and Highways (DPWH) increased yoy, the capital expenditures of Interior and Education departments declined during the period.
Colliers believes that infrastructure spending is likely to pick up for the remainder of the year following the implementation of the national budget for 2019. Government agencies such as the National Economic and Development Authority (NEDA) and Department of Finance have urged national implementing agencies such as Departments of Public Works and Transportation to build projects round-the-clock. Similar to projects implemented in the past, Colliers believes that public projects being implemented by the current administration are likely to influence developers’ strategies moving forward. The infrastructure projects should influence developers’ decision to continue developing offices, residential units, and malls outside of Metro Manila. Private construction as a component of the Philippines’ gross domestic product has been rising by an average of 10% and this indicates strong appetite for private-sector led implementation of offices, malls, condominium, and industrial parks and facilities.