MVP companies a good buy

The local stock market is experiencing a gradual rebound after slipping into bear territory, with the index going higher for straight sessions in the past few days. People are gearing up for another rebound, and those with extra cash are preparing private mutual funds to go back into the stock market. Still a good buy would be the Philippine Long Distance Telephone Co., whose 2013 net core profits are expected to increase by 2.7 percent.

Even Philex Mining – whose profits experienced a drop due to the suspension of operations in its Padcal mine in Benguet – would be a good buy now that it has overcome the crisis brought by the accidental tailings pond leak.  The country’s biggest mining company has cleaned up Balog Creek after six months of manual bagging of sediments and other remediation/rehabilitation measures. All that’s needed is for Philex to fully resume operations – something that the local government of Benguet, the indigenous people and even the Social Security System are urging the DENR to allow considering that the company has successfully implemented the cleanup ordered by the government.

Chinese military ‘charm’

China’s leaders have long been dependent on the power of the People’s Liberation Army to support their regime, with the military having a hand in directing domestic and foreign policy – resulting in widespread abuse and corruption within the PLA. Those at the top echelons of power enjoy a lot of perks, driving around in European luxury cars, throwing lavish parties and living in big summer houses. That’s probably why during his first few months in office, Chinese President Xi Jinping quickly moved to consolidate his influence with the military.

But things seem to be taking a different turn with the new leadership initiating a crackdown on military corruption, ordering audits on the PLA’s lands and properties, reviewing infrastructure projects, cutting down lavish state receptions and recently, stopping the issuance of military license plates which has long been a source of outrage among ordinary citizens. Sons, wives and relatives are issued military plates which according to sources are also “sold” to private individuals. Apparently, anybody driving around in these specialized plates don’t have to pay toll fees and cannot be apprehended for violating traffic rules.

Corruption in the military and even among members of the politburo has been fueling anger among the Chinese – which is probably why China’s military has been encouraging leaders to do a lot of saber rattling over disputed maritime territories, precisely to deflect the anger at home and give the Chinese another object of collective anger. The intensifying clampdown on corruption seems to be softening the people’s resentment against the Communist Party – which could explain China’s “softer” tone, putting on a “charm offensive” at the ASEAN Summit in Brunei.

China has agreed to discuss the issue of territorial disputes with ASEAN-member nations this September, expressing willingness to participate in consultations to tackle a more detailed Code of Conduct on the South China Sea – a turnaround from its previous hardline position.

Analysts say the change is indicative of China’s willingness to adopt a more conciliatory approach in tackling the sovereignty dispute, and signals growing concern over the US “rebalancing” of power in the Asia Pacific region. Hopefully, the charming face being shown by China could help ease the tensions regarding territorial disputes and usher in a new era of cooperation among ASEAN nations.

New Boeing aircraft ‘fueling’ efficiency

The airline industry continues to be a highly competitive business especially now that a lot of budget airlines have entered the picture. In the region, AirAsia has been one of the most successful, with plans to expand in South India and acquire 10 new planes annually.  In fact, the airline was recently named the World’s Best and Asia’s Best Low Cost Airline – the fifth in a row – during the recent 2013 Skytrax World Airline Awards, considered as the global benchmark of excellence in the airline industry.  

In the Philippines, competition among budget airlines is also getting more stiff, with AirAsia Philippines, PAL Express (formerly AirPhil Express), Tiger Airways (formerly Seair) and Cebu Pacific competing for the growing market of budget travelers. Local budget carriers did very well last year, getting almost 80 percent of the share in the domestic market and 30 percent in the international market.

Despite the upbeat growth projection for the low cost industry, a major factor that could affect profitability is fuel efficiency. Rising fuel prices continue to be a headache for the airline industry since they affect fare prices. Industry experts agree that at the end of the day, productivity and fuel efficiency can boost or bust profitability.

At the Paris Air Show last month, Boeing unveiled a new version of the Dreamliner – known as the 787-10 – which is expected to give the Airbus 350 a run for its money as far as the largest market segment is concerned. Advance orders of 102 units from several airline companies have been made for the new aircraft that can accommodate up to 330 passengers, but the deal clincher seems to be fuel efficiency.

According to Boeing, the 787-10 is “25 percent more efficient than airplanes of its size today and more than 10 percent better than anything being offered by the competition for the future.” Air Lease Corp. CEO Steven Udvar-Hazy, known as the “godfather” of aircraft leasing, echoed the statement, saying the new Dreamliner’s better fuel economy makes it more attractive. Air Lease, which reportedly conducted a comparative test for fuel efficiency, has ordered 30 new 787-10 Dreamliners.

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