Good afternoon, everyone. Welcome to our 2023 Second Quarter Briefing. My name is Hannah Chan, Investor Relations Officer of DMCI Holdings. Joining us today are members of our top management team, headed by our Chairman and President, Mr. Isidro A. Consunji, and Chief Finance Officer, Mr. Herbert M. Consunji. Before I proceed with the presentation, let me remind you of the following. This meeting is being recorded. Questions should be sent through the chat box. Those who emailed their questions in advance will be prioritized. We will answer as many questions as time allows. Pending questions will be replied to via email after the briefing. This briefing is meant to provide our covering analysts and investors with key information about DMCI's financial results and future plans. As such, management may make forward-looking statements regarding the company's plans, expectations, and growth prospects. Statements that are not historical facts, including statements about our expectations, hopes, intentions, or strategies regarding the future, are forward-looking statements. Forward-looking statements are based on the management's beliefs. Because such statements are based on expectations as to future financial and operating results and are not statements of fact, actual results may differ materially from those projected. The DMCI Group delivered robust Q2 earnings despite notable shifts in commodity prices and market demand. Even as coal and diesel prices plunged double digits during the period, our consolidated bottom line only contracted by 9%, mostly due to higher contributions from power and water businesses. Our modest decline underscores the resilience of our business portfolio and the soundness of our management strategies. For the first half, DMCI Holdings posted a 22% drop in consolidated earnings because of high base effects. At PHP 15.9 billion, our H1 earnings represent 59% of the consensus full year estimate of PHP 26.9 billion. Our results for the semester is also our second best ever. Quarter-over-quarter, our bottom line grew by 8%, driven by better results from SMPC, DMCI Homes, and DMCI Power. Compared to pre-pandemic, our consolidated net income more than doubled following triple-digit growth of our commodity businesses. Moving on to our consolidated income statement. Our Q2 and H1 top lines contracted on lower commodity prices and construction accomplishments, coupled with revenue reversals from real estate cancellations. Despite the weaker top line, EBITDA margins stayed above 40% as lower royalty expense muted the impact of higher cost of sales. Cash reserves hit PHP 38 billion, even after paying out PHP 9.6 billion in cash dividends in second quarter. DMCI's consolidated balance sheet remained very healthy as liquidity improved and debt declined on regular repayments. Book value per share increased by 6%, mainly due to significant earnings tempered by the cash dividends paid out last April. We now proceed to the standalone results of our businesses. D.M. Consunji, Inc. reported PHP 129 million in Q2 net income on persisting industry headwinds. Its construction accomplishment has been slowing down, mostly due to declining backlogs, which resulted from fewer projects being awarded during the pandemic. Margins likewise shrank on weaker top lines and higher material costs, specifically the cement costs. Revenue recognition from infrastructure and joint venture projects declined following the completion of the Cebu-Cordova Link Expressway and Tullahan North, coupled with slower take-up on new projects. Order book also declined by 9% to PHP 38.4 billion due to the slowdown in demand and project awarding. DMCI Homes recorded a 6% improvement in its bottom line as higher finance and other income offset the impact of lower revenues. Its top line receded largely due to revenue reversals from sales cancellations and fewer new accounts that qualified for recognition. As a background, it takes around 3 years for an account to qualify for revenue recognition. In effect, the company is now recognizing sales made in 2020, which was 50% lower than its 2019 sales volume. Bearish market conditions continued to sap demand as reflected in the sales, inventory, and launch tests of the company. Land banking efforts were concentrated in the Mindanao region, where values were more appealing. SMPC's Q2 revenues grew amid normalizing coal prices because of higher shipments and electricity sales at elevated prices. The power segment recorded its best ever Q2 and H1 net income with the continued operations of SCPC Unit Two. Strong cash inflows from its power businesses allowed SMPC to end the first semester with PHP 27.5 billion in cash, 7% higher than June last year, when the company declared record high special dividends in October. Coal sales rose 22% on the back of substantial commercial-grade coal inventory levels, a rebound in exports, and robust power plant demand. Management maintains its annual sales target of 15 million-16 million metric tons, which would go mostly to the domestic market. SCPC is negotiating new coal contracts with a major power producer and expects stronger second half demand from local cement and industrial buyers. The commercial operation of SMPC unit two in Q4 last year led to a double-digit increase in all key operating metrics for the Semirara power segment, mainly availability, capacity, and generation. With higher and more reliable output, the segment was able to sell more to the spot market at better prices. DMCI Power maintains its growth streak and set new records for the reporting period. Revenues and earnings for the second quarter and first half all reached all-time highs on the back of robust energy sales and lower fuel costs. The 17% increase in installed capacity translated to double-digit increases in gross generation and sales. Most of the growth came from Palawan, which has overtaken Masbate as DMCI Power's biggest market. Management sees tremendous growth potential in Palawan and expects dispatch to rise with the commercial operation of its 15-megawatt thermal plant in the area this month. DMCI Mining saw a sharp drop in its Q2 and H1 bottom lines owing to lower selling prices, subdued forex gains, and thinner margins. Margins fell due to higher depreciation, shiploading, fuel, labor, and amortization on account of increased shipments. DMCI production hit all-time high of 523,000 wet metric tons following the approval of its ECC last January. With its amended permit, the company is now authorized to produce up to 2 million wet metric tons annually, effectively compensating for DMCI's halted operation. However, the impact of production and shipments were muted by lower selling prices and nickel grade. Average selling prices during the period fell by 22% to $49 per wet metric ton as market indices corrected. DMCI ASP fared better than the LME Nickel and Philippine FOB prices, which declined by 23% and 41% respectively. Maynilad's top-line recovery in Q2 and first half was mostly the result of improved water supply, commercial consumption, and average effective tariff. Meanwhile, its bottom line improved as non-cash costs fell by 38% on the adjustment of its concession asset to align with its legislative franchise up to 2047. Despite a 4% reduction in Putatan water supply, Maynilad's production and billed volume showed improvements because of its supply augmentation initiatives. These include cross-border purchases, activation of Aten MLV water treatment plant, and reactivation of multiple deep wells. To summarize our results, Q2 and H1 consolidated earnings declined much slower than sharp corrections in global commodity prices. Historically, both periods are also our second highest. We attribute our better than expected performance to the record-breaking results of the power businesses, coupled with the strong rebound of Maynilad. As disclosed in previous briefings, post-pandemic recovery has been uneven across our portfolio. DMCI and DMCI Homes are now feeling the financial impacts of lower construction backlogs and anemic demand. SMPC is effectively navigating the headwinds of a normalizing coal market because of its defensive marketing strategies and forward integration into power generation. DMCI Power has been on a bullish path, setting new profit records because of its continued expansion in underserved markets. Despite market fluctuations and operating a single mine, DMCI Mining continues to post strong results driven by operational efficiency, a robust balance sheet, and targeted permitting. Maynilad is benefiting from the full pandemic reopening of the economy, magnifying the impact of higher volume and commercial consumption on its adjusted tariff and decrease in non-cash costs. Before I end my presentation, let me share with you our guidance and outlook for each of the businesses. Management expects challenging macroeconomic factors and normalizing commodity prices to persist in the second half of 2023. The group is banking on its strong value engineering DNA to protect its margins and deliver shareholder returns. DMCI will be focusing on its collection and cost reduction initiatives to sustain operations amid slowdowns in both private and public sector-led construction. This month, DMCI Homes is launching its first beachfront project, Solmera Coast, and is adapting to market shifts via new product offerings. SMPC forecasts a slower H2 due to the rainy season and plant outages. The reintegration of a 1,200-megawatt plant is also likely to impact spot prices. DMCI Power's 15-megawatt thermal plant is set to serve Palawan's growing energy needs starting this month. The group also has 24-megawatt projects in the pipeline, including wind and solar ventures. DMCI Mining is on track to becoming one of the country's largest nickel players, targeting operations in ZDMC and Long P oint by the first half of 2024. Maynilad expects improved earnings from rising industrial and tourism demand and is working to secure a tariff adjustment for 2024, dependent on meeting its water and sewerage targets. This ends my presentation to open the floor for questions. Let's start off with some questions you sent via email. The first few questions is addressed to our construction business, addressed to President of D.M. Consunji, Inc., Mr. Jorge A. Consunji. Oh, you are mute. I'm sorry. Okay. Hi, sir. Hi, Sir JAC. Sir, our first question goes: Is there any involvement by DMCI with regards to Build Better More projects by the government? Good afternoon to all. Yes, DMCI is involved in the BBM government projects. Right now, we are doing the North Rail. Okay. Then we just got awarded on the one segment of the subway, and we also got the award of the segment of the South. We're also bidding for three more sections of the subway. Thank you very much, Sir JAC. Next question goes: Do you expect revenues to recover sequentially from here on? If yes, will it recover in the third quarter or fourth quarter, or will revenues be even lower than PHP 4 billion per quarter in the next period? In the first semester of the year, you know, we did suffer some project delay, and we have to do a lot of catching up for the Q3 and the Q4. We're expecting that by year-end, we should be within our target revenue for the year 2023. That is the plan, and we expect to be able to make it. Thank you. Thank you, sir. Sir, next question: Are you facing collection issues, or is the issue just project delays or lack of new projects? Yes, we are experiencing collection delay, especially the government side, and there's a slowdown in some private entities. By and large, we are able to collect. Thank you, sir. Are input costs such as steel or cement still high, or are these trending lower already? Do you expect margins to improve further in the succeeding periods? And do you expect to be compensated for previous claims related to higher input costs? Well, right now, the prices for rebar and cement are somehow stabilized now, no spikes. Of course, this is still subject to geopolitical events in the future and of course, the volatility of the fuel and of the supply chain. We hope it will remain stable, as inflation is going down and hopefully the expecting. On the claims, we have contracts that allow adjustment now if material prices increase. We are hoping that we'll be able to recover some of these additional expenses. Sir, next question. May we request for update on rollout of latest infrastructure joint ventures and bidding for new construction projects? Well, right now, we are bidding for 3 segments of the subway with foreign partners. We are also looking at some of the incoming PPP projects of the government, but still too early to say because I believe there's a new law that will be passed on. Probably that will be next year already. We are right now preparing some bids on the subway right now. Sir, next question. Can you provide order book guidance for this year and next year? For this year, on the order book, we expect to be within the range of 20-22. Hopefully, there are bids that are being invited, so hopefully, we'll be successful before the year ends and by next year as well. For now, we are hoping that we should be able to be within the 20-22 order book as of now. Thank you for the guidance. Sir, last question for now. What is the reason for the quarter-over-quarter, so referring to the first quarter of this year, quarter-over-quarter decline in construction segment gross margin in the second quarter? Is it due to more infrastructure project revenue booking? Well, as you know, we suffered also the depletion of our margin, no. That is also brought about the fuel volatility last year, the Ukraine war. There's a spillover for this year. Prices have gone up. Inflation has gone up. The material prices have also gone up. That ate up also our margin and our contingency. We still remain positive now in our project, although not to what we are looking at now. To a certain degree, our margin had depleted, no? We're still okay as of now. Thank you very much, Sir JAC, and Miss Rebecca Civil for the guidance on DMCI. Now we proceed to DMCI Homes. Today, with us today is Mr. Alfredo Austria, President of DMCI Homes. Let me just add the spotlight. Hi, Sir Aya. Good afternoon. Good afternoon. Sir Aya, the first question goes, how many years' worth of pre-sales is your current land bank good for? Because as discussed earlier, we mentioned that we have around 221 hectares in land bank. Well, right now we have pre-sales inventory of around PHP 59 billion, good for around 24 months of selling now. As far as our land bank is concerned, well, a lot of them are still in the planning process. I think there's no worry about land banking, you know. We have a lot to develop because as you know, prior to the pandemic, we've acquired a lot of land. Thank you, sir. Next question. Does DMCI Homes conduct pre-selling activities, and how soon do you start construction after the project launch? Well, it depends on what you mean by pre-selling. If you mean design development and construction of sales offices, model units and preparation of marketing collaterals, that really takes a lot of time, no? Sometimes from the time that we start preparation for a project until we acquire the license, so sometimes it takes two years no, or two and a half years. It's taking longer nowadays no. Normally, as soon as we launch a project no, we start construction within a couple of weeks or a month no, from the launch. Yeah. Sir, next question. The next question is addressed to DMCI Homes Chief Finance Officer. We have Miss Vangie Achaco with us this afternoon. Hi, Miss Vangie. Good afternoon. Good afternoon. The question goes, what are the typical payment terms today, and how does this compare with the pre-pandemic level or pre-pandemic practices? Well, our standard payment terms today are generally the same as pre-pandemic. We offer cash, deferred cash during the construction period, in-house financing maximum of 10 years, and also bank financing. With 70% or bulk of our buyers would get bank financing as their financing option. However, today, aside from the standard payment terms, we are also offering promo terms specifically for our RFO projects. Like, we are offering down payment for one to two years and minimal DP of 10% compared to 20% minimum DP during pandemic. This is also to compete with other developers who are also offering the same payment terms of a low monthly DP for their RFO units, also. Aside from that, we also have a rent-to-own program, to cater those who are yet to decide if they would like to buy a condo unit. Under this program, we offer a lease for a period of two years, and then they have the option to convert after the lease period. They will convert, and a portion of their payment will be considered as equity, credited as equity. Otherwise, it will all be considered as a lease or rental payment. That's it. What about Solmera Coast? What's the payment terms for Solmera Coast? Solmera Coast? Standard payment term. Cash, deferred cash and, in-house and also bank financing. For anyone attending here who's interested to Solmera Coast, we now know the payment terms. Yeah. You can accept reservations starting next week, August fourteenth. It's the first beachfront property for DMCI Homes. Next question is addressed to Sir AYA again. Sir, what is your target reservation sales for this year? Do you plan to launch more projects in the second half, or do you intend to push these back to next year given the elevated inventory levels? Yeah. Our target for the year is PHP 35 billion. It looks like we still have a very good chance of hitting PHP 35 billion. What's the other question? Sir, do you plan to launch more projects in the second half, or do you intend to push these back to next year given the elevated inventory levels? Like after the Solmera Coast, the DMCI Homes still plan on launching more projects this year after Solmera Coast? We still plan to launch two more projects after Solmera Coast. As you know, we've lined up several projects, but the others will be pushed back maybe to next year. Yeah. Thank you, sir, for the guidance. The next question is addressed to EHA again. Ma'am, what is the normalized level of cancellations as a percentage of revenues or percentage unit reservations? And are cancellations still moderating quarter-over-quarter so far in the third quarter? As of June 2023, our cancellation rate as a percentage of our revenue is at 19%. This is high versus last year of 13% for the full year of 2022. We expect an average of 10% revenue reversal rate until end of the year for this year. We still don't consider this as a normal level. There are factors like the Chinese buyers who are canceling the POGOs. They bought from us way back 2018 and 2019. The bulk of our cancellations are all coming from the Chinese buyers. For the month of July 2023, we've noticed a decrease in blackouts and cancellations of around 12% compared to our average monthly cancellations for the first six months or as of June. Hopefully it will continue on the decreasing trend until end of the year. Thank you, ma'am. Next two questions are addressed to Sir AYA. Sir, are input costs such as steel also in relation to also similar to the question asked to JAC earlier. Are input costs such as steel and cement still high or for DMCI Homes, or are these trending lower already? Do you expect margins to improve further in succeeding periods? Yeah. As Jorge said, you know, the prices of construction materials have sort of stabilized, although a lot of them are still high compared to previous years, you know. We don't see any problem with that because we've projected these prices, you know, prices of construction materials. We think we'll still be able to maintain our margins at around 32%. Next question, sir. How many months in inventory does DMCI Homes have on hand? What sales take-up trend is so far from July to August? As I said earlier, we have around 24 months worth of inventory. You know, we're selling an average of PHP 2.5 billion a month, for the past several months, you know. We project that's good for another 24 months, you know. What else? The sales take-up so far from July to August. From July to August it'll be quite good because, well, for example, this August, we're launching Solmera Coast, and we're really expecting good sales from that. You know, initial indications is that, you know, we have several clients who have signed up for it, you know. Also our July sales is also good, you know. July and August looking good. Thank you, sir. Sir, so our last question for now is addressed to EHA. Ma'am, what is the reason for the quarter-over-quarter decline in real estate segment gross margin in the second quarter? Is it the product mix? Well, for Q2, we book a cost approval around PHP 600 million. This is higher than the cost approval in Q1. To record the difference, accounting policy, the difference on the POC estimate based on the physical estimate versus the actual cost recorded in our books based on the billings that we receive as of first half of 2023. That's why our GP rate for Q2 declined compared to Q1. We have adjusted the first half cost computation. Thank you very much, Miss Vanji and Sir Freddy for the insightful responses to the questions. Now, also to everyone who's interested in Solmera Coast, let us know. Our next question is addressed. We now move on to Semirara Mining and Power Corporation. For the question we have, we have Ma'am CCG, President and COO of SMPC with us. Ma'am CCG, the first question goes, was the DOE. Because this was in relation to the question answered last Monday in the SEC briefing regarding the COC renewal. There's a question. The question goes, was the DOE's referral to the DOJ also done during the previous COC renewal? Good afternoon, everybody. At that time when the COC period was to be extended. Be required. It was not required because of the 50-year term limit that the constitution has provided. This time around, because we will be reaching the 50-year in the year 2027, I believe the DOE wanted to clear something on the legal side of the term adjustment that we are asking for. I believe that is the reason why DOE has consulted DOJ. Thank you very much for the clarification, Ma'am CCG. The next few questions are regarding coal marketing. We have our head of coal marketing, Mr. Jat Villanueva, with us this afternoon. Hi, Sir Jat. First question goes because last time, last Monday, we mentioned about the pricing guidance. It was mentioned that 33% coal sold through fixed pricing are all volumes through the first quarter of 2023 to the fourth quarter of 2023 secured already and locking in a certain price determined last or this year. In this case, is the ASP in the second quarter sustainable for the rest of the year, assuming the index flattens out? Good afternoon. Yes, all the volumes for under fixed price from the first quarter to third quarter has been secured based on last year's price. The average selling price for the second quarter is expected to be sustained for the rest of the year. However, coal sales and deliveries during the third quarter is expected to be lower mainly because our production is affected by conditions. Thank you, sir. Next question. What's the historical percentage of coal sales and/or volume that SEC is able to deliver in the first half of the percentage of the full year? For the past 12 years, our average historical sales in terms of volume is about 53% for the first half. Thank you, sir. Last question for now. Considering the uncertain growth outlook in China for coal, what will be the rebalancing strategy to diversify to other markets in the near future? We are further developing the domestic market and started discussions with the Aboitiz Group for coal deliveries in 2024, and we are targeting increased deliveries to power plants in the Visayas and Mindanao areas as well. In addition, the trial shipment to Japan was successful, and we're now in discussion with J-POWER for the regular coal shipments to Japan starting November this year. We are also expecting increased sales to South Korea and United Arab Emirates. Thank you, sir. Sir, sorry, sir. Just for clarification on that. We're saying that we are focusing as part of the rebalancing strategy. SMP is focusing on the local and- Yes. on the local market and diversifying to Japan and Korea. That's correct. Thank you. Thank you, sir, for the clarification. We now proceed to DMCI Power. With us this afternoon is, we have Mr. Anton, Antonino E. Gatdula, President of DMCI Power. Hi, Sir AEG. Sir, our first question goes: How is the renewable energy investment plan of DMCI aside from Semirara Wind Power? Yeah. Good afternoon to everyone. Currently, we're working on the installation of the 4-megawatt solar plant in Caticlan. As mentioned in the past, we have secured the reserve solar energy operating contract from the DOE. However, we're still in the process of securing the approval of the Energy Regulatory Commission for our power supply agreement. We will commence the construction once we get the approval. In addition, the thermal plants that we have in Masbate and Palawan basically can burn biomass up to 20% of its capacity. However, we still need to coordinate with the DOE on the necessary permits that we have to secure before we can operate. Basically, that's gonna be 3 megawatts biomass for Palawan and 3 megawatts biomass for Masbate. Thank you, sir. Sir, next question. Do you expect the new plants, like, because we mentioned earlier during the presentation about the 15-megawatt Palawan thermal plant, do you expect the new plant to drag earnings in the next three to six months? We expect otherwise. Our non-fuel rate now for Palawan, because it's diesel and bunker, it's basically low compared to the non-fuel fee that we will charge once the thermal plant operates. We're successful with the testing and commissioning of our 15-MW CFB for Palawan. However, we still have to get the COC from the ERC before we can commence COD. Once we commence the COD, we expect our margins will be a lot better in the next coming six months. At the same time, last week, we signed a 10-MW emergency power supply agreement with Ormeco. This will increase our margins in the next and the remaining months of 2023. Thank you, sir. Next question. On power, what are the ASP trends and effective fuel cost trends? Because fuel is pass-through, and there is a significant decrease in the prices of coal and oil. The trend for our average selling price and cost of fuel is downward. With the operation of the coal in Palawan, it will displace the most expensive fuel, which is diesel. In the next months, we expect a further decline in our average selling price and the cost of fuel. Thank you, sir. Sir, last question for now. Can you provide an update on the collection issues of the off-grid plants, and especially with your plants? We experienced a significant improvement in terms of our collection efforts from NPC. Because first, a PHP 5 billion loan was extended to NPC, and at the same time, the Energy Regulatory Commission has approved practically a total of six centavos per kilowatt hour increase for the UCME rate. That translates to more money for NPC. NPC has improved significantly its payment to all power providers in the off-grid. That's very exciting to hear, sir. We now proceed to DMCI Mining. We have President of DMCI Mining with us, Mr. Tulsidas Reyes. Hi, Anna. Good afternoon. Hi. Hi, good afternoon, sir. TDCR. Sir, the first question goes: Given the booming demand for EVs globally, what explains the 40% decline in nickel spot price for 1.5%- 40%, right? 40, more or less. Yeah. Yeah. Due to the voluminous supply of NPI coming in from Indonesia, China has been accepting all of that refined product already. On top of that, we feel the lower economic activity in China has also slowed down, so the price of our product has gone down. What we feel more confident now this year is Surigao will be entering its wet season in October, and China still has to replenish its existing stockpile for the year. We feel that prices should rise towards year-end as Q4 enters. Thank you, sir. Sir, in terms of, what is the management outlook for future supply demand for low-grade nickel and the plan to process raw nickel for EV? Actually, we're quite excited there because once we get enter our areas, both in Zambales and Palawan, but more in focus on Palawan. Once we identify the grade needed for EV batteries, which is normally around 1.2% nickel and below with a high iron. But on top of that, you know, we have to find the specifications or which is more ideal for this battery grade, is low magnesium and silica dioxide. Once we identify these areas within our properties, we're very much positive we have very much a positive outlook in participating in this EV battery stage. Thank you, sir. Next question. Do you think you can still at least match 2022 shipments this year given the heavy rains? Actually, I'm confident we'll beat last year's production and shipments. Actually, just so you know, the ZDMC had a historical high for the first half, both in production and shipments. I think last year we did about 28 shipments. Actual performance for our group using only one mine in ZDMC is about 24. I feel very strongly and very confident that we will beat last year while operating only one mine. One mine instead of two. Instead of two. One mine now. Our Berong last year only gave us 350,000 tons or seven shipments, so just to give you some scale. Next question, sir. Update on the mining expansion and claims, any progress in permitting in the last quarter? Is there some sort of a completion rate for the permitting? Okay, we've had progress. Now, let's bring you to Zambales first. In terms of progress rate, we're quite confident. We have two assets there in Zambales, Lot four and ZCMC, respectively. We're quite confident that Lot four, we have a good chance to open this area before year-end. ZCMC, we have a shot of opening it by year-end, and if ever it does delay, we get delayed a little bit, by Q1, we are very confident we can open both. Palawan. Yes. I'd peg both at about 95, 90%, respectively. In Palawan, let's start with our Long P oint asset. I would peg that about a 75% current status, and w e will do everything we can to deliver this asset to you by Q1, but latest will be possibly Q2. Now, Dangla is our other asset, which peg about 50% because most of our group now is focused on Long Point. We should deliver maybe Q3, Q4 for Dangla. It's slightly behind, so we're confident we can catch that up as well. Sir, next question po. Last question for now. Target shipment volumes for mining in the short to medium term? Short term, you wanna peg at one to three years, easily 5 million -7 million tons, depending on if we open all four, three to four assets. Medium term, maybe 7 million -8 million tons in the next four to six years, give it five years, more or less. Obviously, we're strongly pushing for the latter, always. Sir, may pahabol na question we just received now. On mining, what's your view on the proposed margin-based royalties on the nickel? Royalty. The proposed margin-based royalties. You know, we're together with the government, making sure that we can help promote the industry, enter these areas like processing and creating more sustainable futures for these communities. If that's what it takes to get these things done and open up great things for the country, like opening hydropower plants and other employment generation things, we're very much for that. We're hoping we can continue working with the government on many levels and making sure that we continue growing this industry. Thank you very much, sir TDCR. Now we proceed to Maynilad. We have Mr. Dicky de los Reyes, Chief Finance Officer of Maynilad. Hello, Hannah. Hello. Hi, sir. Hello. Sir Dicky. Good afternoon. Good afternoon. Sir, the first question goes, was the water shortage in the second quarter also the reason for the soft billed volumes? Not really. Water production volume was relatively the same as last year. What accounts for the relative soft volume is that, you know, we haven't been pursuing expansion over the previous months in light of our desire to control and conserve the water levels in Angat. Thank you, sir. Next question. What is the reason for the jump in the NRW, or non-revenue water to 29% versus only 25% in the pre-pandemic time? During the pandemic period, as you two might recall, there were severe quarantine months that prevented us from doing both diagnostic and preventive work to reduce our NRW. Naturally, there was some deterioration during that period of time. All right, sir. Sir, we get this question quite frequently. When does Maynilad plan to IPO? We are targeting the year 2025 for the IPO. Although we really have until January 2027 to list. Somehow, with IPO, with the planned IPO 2025, you're still ahead from the 2027 deadline. Yes. from the franchise. Sir, next question. What are you doing to alleviate the risk of El Niño this year and then probably next year? Are there new water sources coming in the next 12 months? If there's none, how fast can you bring down NRW? And can you provide billed volume growth guidance in light of El Niño? Okay, for the short term, we are focusing on the reactivation of deep wells and then lowering our NRW as quickly as we can through various initiatives. Now, for the future, we are working on introducing new water sources or enhancing our existing water sources. In fact, I have here our AVP for corporate planning. I'd like to invite him to just describe some of the water supply or water source enhancing initiatives we have for this year and next. So we have- Yes. Mr. Emmanuel Marmol, AVP for Corporate and Finance Planning for Maynilad with us. Hi. Hi, everyone. Good afternoon. To answer the question, there are a couple of projects that are in the pipeline for 2023. One would be in September 2023, the expansion of the Anabu Modular Treatment Plant. From 5 MLD, its capacity will increase to 16 MLD. Another is for November 2023, the Poblacion Water Treatment Plant. Its capacity is designed at about 150 MLD. It will start at 50 MLD, and it will increase into 150 MLD to 2024. For 2024, we are looking at two more capacity building treatment plants. These are the Molino Modular Treatment Plant and the Pasay New Water Treatment Plant. The Molino Plant is 5.5 MLD, and the Pasay New Water Treatment Plant is 12 MLD. That would address if ever there would be water supply shortages from now till next year. Thank you for the details, Sir Noel. Our last question for now, for Sir Dicky and Sir Noel, can you provide billed volume growth guidance for this year and next year? Yeah. We're expecting to deliver billed volume of 533.84 MCM, or million cubic meters, by the end of this year. That will represent a growth of 1.3% in billed volume versus last year. For 2024, assuming the constrained supply that we expect for at least the first quarter of next year, we are targeting 545.05 million cubic meters or a growth of 2.1% over the end of this year. Thank you very much, Sir Dicky and Sir Noel, for the very insightful responses. Now we move on to our holdings question. With us this afternoon is Mr. Joseph Legasto, our Deputy Chief Finance Officer. Hi, Sir JBL. The first question goes, Maynilad standalone in the second quarter core net income is PHP 2.2 billion, but the core net income contribution was only PHP 474 million, significantly less than the 25% effective ownership proportion. Why is this so? Good afternoon. Yes, that's right. We picked up PHP 474 million for Q2 of 2023, and this represents 25% effective interest in Maynilad Water Services, Inc. Because of accounting elimination items between Maynilad Water Holdings Company, Inc. and Maynilad Water Services, Inc., the effective income that goes to DMCI Holdings is slightly lower. Thank you so much for the details, sir. Next question. What is driving the lower Opex operating expenses of the group on the consolidated Opex quarter-over-quarter? Okay. For the first quarter, we had a lot of expenses that were loaded upfront and the major drivers of this would be the business permits and taxes which decreased quarter-over-quarter by 33% or PHP 164. Another item would be the repairs and maintenance, particularly for the on-grid power plants. It decreased by PHP 164 million or 44% quarter-over-quarter. The last items that's driving the lower Opex is the lower professional fees, which is particularly the legal fees and auditor fees. Basically quarter-over-quarter, it decreased by 44% or PHP 142 million. Thank you very much for the details, Sir JBL. We received a follow-up question on Maynilad. We go back lang to Sir Dicky and Sir Noel on, we received a query on the Capex. Any Capex guidance for Maynilad for 2023? Yeah. During the rate rebasing last year, you might recall, Hannah, that we committed to a five-year program that involves PHP 163 billion in Capex spending over that five-year period through 2027. For this year, we committed a spending of PHP 26 billion. This would be, you know, substantially greater than the highest level of Capex spending in previous years, which would have been around PHP 15 billion. This year we're targeting PHP 26 billion, and we're confident that we will reach that target by the end of the year. Thank you very much, sir. Thank you very much, Sir Dicky and Sir Noel. We also received questions addressed to Sir Das, to Sir TDCR. Hi, Sir Das. The question goes, how much are your reserves today, and how much do you see this rising to, given that you expect shipments to rise substantially in the short to medium term? In Zambales, it's quite fluid. We're always continuously opening areas, getting tree cutting permit and continuous drilling. If you look on paper, I think we're very small to maybe 3 million or less. But the ongoing permitting when it comes to outside of our main assets, it'll keep on rising. I would say today, maybe 3 million, but that. We're currently in the pipeline. We're exploring another 7,000 hectares for ZDMC. On top of that, we have ZCMC at about 16 million -20 million tons. In Zambales alone, today you might call it effective rate of about 20 or less, but in the future these might jump quite significantly. Let us do some work, continue exploring, verifying what's in the area, and I think we can get a more accurate number for you in the near future. As we continue to do our strategy, things keep on rising in a very good way. On top of our mandate to keep on pushing historical performance and operating two mines there. In terms of Palawan naman, obviously we're at zero, but our current drilling and exploration has given us a lot of confidence, especially in Long Point, where approximately 77 million tons or so, and we have to continue going to 50 by 50 in our explore, continue looking at the cutoff grade, so that may continue to rise. Dangla, we're currently doing the same strategy, and right now we're looking at 22 million tons, but I'm very confident that that number will also continue to rise. Allow us to do a bit more work, and we can get more and accurate information for you. That's very, very exciting po, sir. Next, now we proceed to questions addressed to our Chairman and CEO, Mr. Isidro A. Consunji. Sir, hi, Sir IAC. The first question goes, any plans to acquire renewable energy companies? Good afternoon, everyone. I mean, thank you for participating. We looked at investing in existing renewable companies, but we find the valuation very high. We compared it with developing our own renewable energy portfolio. We feel we're getting greater value if we develop it ourselves. Now we are actively developing, although small, 4 MW in Masbate, 12 MW in Semirara. If we get the permits for both of them, I think we can replicate that again and again. We will concentrate on the off-grid SPUG areas rather than the grid because the tariff is more than double and the Capex is about the same. We don't see any reason why we should put our investment in the grid areas. Thank you. Thank you, sir. Sir, the next question goes, actually, this is addressed to you and, Sir AYA. Hi, sir- ARA. Sir Freddy, Sir ARA. The question goes, any plans for DMCI Homes to list for REIT? The DMCI's business model does not have any rental incomes of any significance. The REIT is essentially for- Recurring. a company with recurring income like malls or office buildings and so forth. Ours is purely sales. We have essentially no rental income. Sales of residential unit. Our company doesn't have any portfolio that is suitable for REIT. Thank you, sir, for the clarification. Next question, since DMCI Holdings partly owns Maynilad, what will be the impact of Maynilad's upcoming IPO? Hard to say because that's going to happen two years from today. I guess the elements that go into valuation is the approval of its extension, the approval of the tariff, the way management handles the non-revenue water, the way the performance of the Capex expenditures. There are so many elements that enter into the picture that I don't think we can say that the valuation can be fixed today. All indications are all of these elements can be managed properly and the valuation should be on the positive side rather than on the negative side. I think it will be accretive of value to the existing stockholders. Sir, last question. In view of a more challenging second half, will the management still consider a dividend at the end of October? Of course, if we have excess cash, we always give dividends. We've historically been doing that, so I don't see any reason why we would change our practice. I think that's normally done after the board of directors meeting after sort of the third quarter. manood kayo sa susunod na Excited po kaming lahat, sir. Should be somewhere around the middle of October, no? The announcement. But the cash balance is okay naman, so it should be okay. Thank you, sir. Actually, we've come to the end of our list of questions. Before we end, let us ask Sir IAC for his closing remarks. Good afternoon again. Actually we're quite interesting year this year, 2023. You know, like Semirara experienced negative 23% reduction in average coal selling price. We have been offset significantly by the improved performance of the power sector, both in volume and in price, no? Homes naman, although the sales is still below pre-pandemic level, it's significantly higher than last year's sales. We were able to improve prices to cover more than our cost differential, so we are seeing an increase in margin even in a more difficult time, no? We also, Homes has also created new formats up and down the price level of residential. We have ventured into the leisure market. I think we have one launching, Solmera, in Batangas, and that should happen, what, Monday? Friday. Tomorrow. Oh, tomorrow. We feel it's a very strong demand for that project. Maynilad, as Dicky has been mentioning, we have a significantly good tariff this year, so we expect a positive growth in income. Non-revenue water has been going down, although not as fast as we want it to, no? In our power business line, this month, we've finally been able to run our thermal plant in Narra two months late. That's pretty good considering the two years of pandemic, so it's only been two months late. That's pretty good. As Tony has said, that will improve our margins considerably because we get rid of diesel. We improve our margins with coal, and the balance will be with bunker. We'll also have a higher margin for us, despite the fact that we can sell it to the customer a lot cheaper because bunker power from bunker is significantly cheaper than coming from diesel. It's win-win for everybody, you know. Of course, mining, although we only have one mine this year, we will produce bigger volume that will mitigate a lot of the reduction in the price of nickel, which our buyers expect to be depressed in the next two or three years given the huge capacity that's happening in Indonesia for nickel pig iron and also for HPAL products. Yeah, Indonesia. I think we went to Indonesia a couple of months ago. In just one area, we saw a $6 billion expansion that happened in the last 4.5 years. Phase I. There is another one that's coming up even bigger, running, going at the same time, even bigger than what we saw. There's going to be nickel, a huge increase in supply which possibly cannot be covered by the increase in demand by EVs and others. The expectation is the next two years will be significantly depressed prices until demand catches up with supply. Okay. Other than that, I think the mining also is I think the government has been very good in giving this positive goal for mining. As Tulsidas Reyes said, the amount of areas, resources that's being permitted today, which are expected to be permitted in the next 12 months or so, will dwarf what we have previously. That will allow us to expand our production 100%, 200%, up to 500% over the next five years. Essentially, we're quite excited about almost all our business, businesses. Although construction remains quite, you know, quite challenging. Low margin, high volumes, very competitive. We have to develop a new business model in order to survive this particular business environment. Again, Maraming salamat. Thank you very much, and good afternoon to all.