Market Event

Visitor arrivals from January to March declined to 29,383, from 1.39 million during the same period last year.

Opinion

The significant 98%year-on-year (YoY) drop is mainly due to the timing of the imposed ECQ last year, wherein travel restrictions were only implemented mid-March.

While sustained weakness for air travel demand will continue to be a drag for companies like CEB, we note that CEB has recently undertaken a P40 Billion recapitalization program through $500 Million worth of convertible bonds and preferred shares, as well as a 10-yr P16 Billion loan. Based on a monthly core cash burn of P1.5 Billion, the funds raised should last for ~27 months and should provide enough liquidity as travel demand is expected to recover by then.

On the other hand, we expect consumer companies like SSI to continue to bear the brunt from the drop in tourist arrivals.

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