Aboitiz Equity Ventures, Inc. (AEV) Earnings Call Transcript & Summary

Hello, everyone. Welcome to our analyst briefing. Today, we are going to report to you the 9 months and third quarter 2020 financial and operating performance of AEV and its strategic business units. But first, some house rules. First, all microphones are going to be placed on mute by default to minimize unnecessary background noise. Two, if you have additional questions, please submit them to us through the Q&A button on the webinar controls because we have requested for questions in advance from our guests, and these will be prioritized in the Q&A today. And number three, the briefing will be recorded for documentation purposes. And after the order of presentations, we are going to begin with power, followed by banking, and then food, and then land, and then infrastructure, cement, AEV financials and then Q&A. I'd like to introduce to you our presenters for today. For AboitizPower, we have Mr. Manny Rubio, President and CEO. For UnionBank, we have Mr. Toto Hilado, Chief Finance Officer. For the Food Group, we have Hubert de Roquefeuil, President and CEO. For Aboitiz InfraCapital, we have Cosette Canilao, President and CEO. For Republic Cement, we have Nabil Francis, President and CEO. For AboitizLand, we have Dave Rafael, President and CEO. And finally, to discuss with us Aboitiz Equity Ventures, we have Dmi Lozano, Chief Finance Officer. I'd also like to acknowledge the presence of key leaders inside our briefing room. We are led here today day by Aboitiz Group CEO, Mr. Sabin Aboitiz; AP, CFO, Liza Montelibano; AP Gen, CFO, Racquel Bustamante; UnionBank of the Philippines, Group Head of Corporate Planning and Investor Relations, Carlo Enanosa; Food, Philippines, CEO, Tristan Aboitiz; Food, AVP Corporate Finance, Gayle Guzman. And lastly, I'd like to acknowledge the efforts of all of the teams who helped us put together the presentations for today and who are supporting our leaders. Without the whole -- without all of the teams who help us on a quarterly basis, we would not have been able to deliver on our commitments to our stakeholders. And now for our presentations today, I'd like to call on Mr. Manny Rubio to present for Power.

Thank you, Judd. Good afternoon. Good afternoon, everyone, and I'm here to talk about the third quarter performance of AboitizPower. Well, the past months have been really tough, but we're happy to see a gradual economic recovery and some semblance of normalcy. Despite the challenges and uncertainties, AboitizPower continues to advance business and communities by providing the much-needed energy supply that is reliable, cost-efficient and sustainable. While the pandemic has impacted our financial performance in the last 9 months, we remain committed to our plant availability and the liability targets, which is at the core of our growth strategy. We are pleased to share that our holding company, AboitizPower Corporation, has passed the surveillance audit for ISO 9001:2015. This reinforces our commitment to keeping the quality of our products and services at par with global standards and best practices. AboitizPower was also recognized at the Silver -- was given a Stevie award at the 2020 International Business Awards for integrated response and awareness towards COVID-19 hazards or I-REACH program. This initiative was aimed at providing support for customers, especially for critical institutions such as hospitals and health care facilities. Amid the pandemic, our commitment to stakeholders remains, as also evidenced by our efforts to make available to our host beneficiaries, ER 1-94 funds generated by our power plants. To date, we have downloaded about PHP 624 million worth of ER 1-94 funds to around 130 host beneficiaries all over the country. These funds are being utilized by LGUs for their COVID-19 relief programs. Meanwhile, our distribution units remain compliant with government regulations and protocols as far as billings and collections are concerned. We are also sustaining our initiatives to make bills -- bill payments more accessible and convenient to our customers. These efforts are geared towards creating long-term value for all our stakeholders. Furthermore, we take pride in our digital strategy, which aims to transform AboitizPower into an organization with a strong culture of working in a digital ecosystem. Even before the pandemic, we have made huge steps towards a digital transformation. We have invested in technologies that have allowed us to operate and maintain our facilities remotely. We also have digital tools and platforms that have kept our team members connected and engaged. These investments have enabled us to keep the business running smoothly despite the challenges posed by COVID-19. However, with innovation being one of our core values in AboitizPower, we recognize that there are still gaps as far as our digital efforts are concerned. Continuous improvements are extremely necessary for us to remain agile, competitive and sustainable. Thus, we continue to refine and strengthen our digital strategy by integrating 3 focus areas: our assets, our people and our customers. At the core of our digital strategy is our asset base, which is critical -- a critical component of our core business and operations. The strategy also ensures the development of a digital culture among our people to support our digitalization efforts. Lastly, it allows for a paradigm shift to a more intelligent digital customer experience. Our digital strategy framework has 4 key elements: digital operations, OT and IT cybersecurity, data and advanced analytics and digital infrastructure. In a nutshell, it is digital-first and digital where it matters. Now allow me to share AboitizPower's financial performance for the first 9 months of 2020. Our EBITDA was lower by 11% year-on-year, driven by lower demand due to COVID-19 and lower water inflows into our hydro facilities, both [indiscernible] and impounding. We will discuss this in a later slide, the impact of COVID-19 on energy demand. EBITDA margin improved from 33% to 34%. Our third quarter performance, as usual, was stronger compared to the first 2 quarters. The third quarter was 39% better than the second quarter. This was on account of higher availability of our coal facilities, better hydrology compared to the first 2 quarters and higher customer demand given looser quarantines. However, our third quarter performance was lower compared to the same period last year due to lower demand related to COVID and lower water inflows compared to last year. The decline in EBITDA, coupled with additional taxes from income tax holidays, expiration of Therma South and GNPower Mariveles and the additional interest expense from the parent bond and loans that were taken up late last year and earlier this year brought core income lower by 53%. If we exclude the ITH expiration interest expense, the core income would have been lower only by 43%. The peso appreciated compared to last year. It moved from PHP 50.64 as of December 2019 to PHP 48.50 as of end September 2020. With that, the group recognized an unrealized net foreign exchange gains of PHP 528 million from the revaluation of U.S.-denominated debts. As a result, AboitizPower's net income for the first 9 months was PHP 7 billion, 48% lower year-on-year. If we include the impact of the ITH expiration and interest expense, net income would have been lower by 38% year-on-year. Investment and advances increased by 5% versus the end of last year, mainly due to the equity infusions to GNPower Dinginin. Cash and cash equivalents were up by 2%, primarily due to the availment of the last tranche of retail bond, which was drawn in the first week of July. Total equity declined by 4% due to dividend declaration. Total assets decreased by 2% due to depreciation and amortization of PPE and intangible assets. Total liabilities decreased by 1% due to payment of lease liabilities. With that, our net debt-to-equity remained at 1.4x. Capacity sales grew by 9% compared to the same period last year. This was due to higher bilateral contracts driven by new capacity of Therma Visayas and additional portfolio in our BCQ contracts. Our total revenue decreased by 14% due to lower demand brought by COVID-19, lower indices, lower contact rates and the prolonged outage of TSI. Energy sold declined by 8% year-on-year due to lower demand brought by COVID-19 and the prolonged outage of TSI. Our gross margin declined by 7%, driven by lower demand brought by COVID-19, prolonged outage of TSI, lower bilateral contract quantity rates and lower water inflows into our hydros. The 6% decrease in energy generated was due to lower demand brought by COVID-19 and the prolonged outage of TSI. WESM prices were lower than our marginal costs, plus -- thus AP opted to purchase power from the spot market as part of our trading strategy. In addition, replacement power contracts were in place to mitigate margin losses from outages in the first half. This resulted in higher purchase power volume in the first 9 months by 33%. And as you can see from the quarterly performance charts, on the right, our gross margin and energy generated improved by 28% and 21%, respectively. These were largely due to better hydrology, better availability of our coal facilities and higher customer demand given looser quarantines. Bilateral quantity selling prices decreased by 11% to PHP 4.05 per kilowatt hour, mainly due to lower indices and lower renewed contract rates. Average NEWC for the first 9 months of this year was $62 per metric ton versus $89 per metric ton in the same period last year. The decrease in spot selling prices by 43% to PHP 2.64 per kilowatt hour was due to higher availability of baseload plants and lower demand brought by COVID-19 compared to the previous year. As we resolve the outages -- as we have resolved our outages in our coal facilities, our overall availability performance for the first 9 months of 2020 increased to 90%. This was higher compared to the 82% availability in full year of 2019. We expect to sustain this performance moving forward, now that we have strengthened the organization and implemented our digital strategy in our baseload facilities. Now I'd like to give a brief update on WESM. The first 10 months of 2020 had lower LWAP compared to the same period last year. This was due to higher availability of baseload plants and lower energy demand due to COVID-19. We will show how the demand was affected by the community quarantines in the next slide. Actual average year-to-date LWAP was PHP 2.55 per kilowatt versus PHP 4.94 in 2019. LWAP in September 2019 was lower compared to September this year due to the testing and commissioning of baseload plants. We expect WESM prices to continue to be soft on the back of our lower demand brought by COVID-19. Based on public data, we see how energy demand in Luzon and Visayas was affected by the imposition of the enhanced community quarantine or ECQ in its succeeding variant -- and its succeeding variants. The blue line shows us the Luzon and Visayas with average weekly peak demand for 2020. We've placed a coronavirus icon where to mark out when the ECQ started. The red line is the Luzon, Visayas grid average -- Visayas grid average weekly demand peak for 2019. The broken green line shows us the percentage change versus last year's average peak demand. Through this line graph, we see that the biggest decline was experienced in the first week of April, where demand contracted by more than 26% versus the same week last year. It also shows that the gradual recovery of demand, although not totally recovered yet. And as of the second week of October, public data shows that the grids on average have already recovered to 10% lower than last year. This was due to lower temperature compared to last year as well. However, it is too early to conclude that prem recovery has begun. To come to this conclusion, subsequent demand data should be consistently in line or higher than the previous year's demand. There's no public data available for Mindanao. Magat Dam ended the first 10 months of 2020 at an elevation of 175 meters above sea level, 11 meters below the rule curve. This was due to unusually dry or below-normal third quarter of the year inflows, brought about by one of the most quiet third quarter in terms of typhoon activity in the Magat Dam area and the farms that it serve -- it serves. Thus, this led to more irrigation dam releases being needed to water the downstream farm service areas while low inflows were experienced in the upstream Magat Dam. As we experienced recently, this October, Luzon, especially in Magat Dam, areas have been receiving greater-than-normal rainfall and typhoons. Where we're active again in the Philippine area of responsibility. In fact, we have forecasted a slight La Niña to continue from the fourth quarter to early next year. This was due to the poor resurgence of La Niña in early October. And this was projected to last until February 2021. Today, Magat level was actually close to full level, and we were spilling the last 2 typhoons. For distribution business group, beneficial power sales were down by 8%. This was due to lower consumption as a result of the enforcement of COVID-19-related community quarantines. Energy sales from residential customers grew by 13% due to higher consumption. Meanwhile, energy sales from commercial and industrial customers declined again because of COVID-19. Our distribution units have complied with the applicable ERC guidelines and advisories. Even with the lockdown measures, we made efforts to do meter readings for the majority of our customers, especially during the early part of the quarantines. We used various communication channels to reach out to our customers. We have also implemented initiatives to make bill payments more convenient for them in these challenging times. We have already received advisory from ERC regarding the Bayanihan 2 Law or the Bayanihan To Recover As One Act. The one thing that affects us in the directive to hold up on disconnecting customers with multi-consumption at higher than twice the ERC approved maximum life and consumption level until the end of the year. We are in the process of estimating the impact of this. This will increase the receivables from this customer type. Meanwhile, we are monitoring the cash to ensure we have enough to cover for the requirements. And likewise, we are looking into programs to encourage timely payments. Next slide. The average gross margins increased from PHP 1.61 per kilowatt hour to PHP 1.67 per kilowatt hour year-on-year. This was due to the shift in the sales mix to residential customers given reduced operations from industrial and commercial segments. All our systems losses are below the regulatory cap of 6%, except for Cotabato Light, which ended above the regulatory cap due to nontechnical losses with minimal impact on the bottom line. Now for the exciting part. We are currently working on 1,067 megawatts of net -- of attributable net sellable capacity and allow me to update you in the next few slides. GNPower Dinginin project is in the final stages of construction. In fact, we are on the early stages of commissioning Unit 1. But we continue to face the challenges due to COVID-19 pandemic and the imposition of the travel ban in China. Project time lines have been impacted due to the ability of our key technical personnel to travel and delay on delivery of certain materials. Strict COVID-19 measures have been implemented at the site. Key personnel and materials mobilization have now been largely achieved. And we have all the foreign advisers that we need to complete the commissioning for Unit 1. And consequently, momentum has gathered pace. Due to the said circumstances, Unit 1 will synchronize by the end of 2020 and will commence commercial operations by second quarter of 2021. Unit 2 will synchronize and earn commissioning revenues by the second quarter of 2021 and will commence commercial operations by the third quarter of 2021. The rehabilitation of the 6 diesel engine units were completed last January in TPVI in Naga and achieved the grid rehabilitation milestones, including the successful grid compliance test by NGCP. The units have demonstrated a combined net sellable capacity so far of 39 megawatts, but we're aiming for 45. This was almost twice the previous output before Therma Power Visayas took over the facilities and now actually offering into the grid. We have our -- since we have already achieved -- and we were given by ERG provisional authority to operate, and we are now on commercial operations. Next slide, please. SNAP's floating solar project has proven its viability, both technical and commercial. On October 21, the SNAP Board approved for the project to proceed for full engineering design for 67 megawatts. On October 16, Scatec Solar signed a binding agreement to acquire 100% of SN Power, our partner [indiscernible] and its subsidiaries. We welcome the transaction as we recognize the value of Scatec Solar, a major power player with extensive experience in renewable energy development and operation, particularly in solar space. We are excited to announce that AboitizPower's first battery project. This is a SNAP-Magat battery energy storage system project, which we call SNAP BESS, for short. The location will be in Ramon, Isabela in Luzon. And it has a storage capacity of 20 megawatts to provide ancillary services. It is currently in the preconstruction phase, and the next step is to engage with the EPC contractor for the early works, and we have identified the EPC. Target commercial operations, 2023. In the same light, we announced the approval of our TMI hybrid entity storage system project or the TMI BESS, for short. The location will be in Maco, Compostela Valley in Mindanao. It has a storage capacity of 49 megawatts. The intent is to use this energy storage for ancillary services as well. We have ongoing development activities to integrate the battery energy storage systems with the Therma Marine's oil barge. The SNAP and TMI BESS projects are of strategic significance to us because they optimize the capacity of our energy portfolio and build our capability to meet the energy demands of the future and to serve us a model for our future battery investments. In closing, I wish to share with all of you the positive energy that keeps us all going at AboitizPower. Positive energies and initiatives that we've started at the onset of the pandemic in efforts to thank, recognize and motivate our frontliners across 1AP. It has since been successful, gaining traction not only within the organization, but even externally. Facebook has recognized our positive energy campaign as a global use case for COVID-19 communication best practices. Such an accomplishment that wouldn't have been possible without all our team members working together and supporting one another through these tough times. It's also humbling that we get to share the positive energy with our stakeholders in the recent Energy Smart Forum that I joined. The keynote speaker, Senator Win Gatchalian, commended Aboitiz as a very good partner. Specifically, he cited the efforts to develop hydropower facilities, which he said is a tough undertaking. It's really inspiring that our stakeholders are seeing and appreciating the value that we bring to our customers and communities that we serve. This motivates us to continue being most trusted, reliable and reputable industry leader and partner for progress. I would also like to thank -- take this opportunity to assure you that AboitizPower's growth strategy for the next 10 years remains the same, which is to significantly grow our renewable portfolio. Cleanergy -- that is Cleanergy. We welcome and fully support the Department of Energy's programs to make the Philippine energy system more flexible, resilient and sustainable. But we'll be able to see more details as the guidelines are yet to be released as far as the moratorium on coal plants is concerned. Nevertheless, we are confident that AboitizPower's balanced strategy is well aligned with the government's efforts to address the Energy Trilemma of energy security, energy equity and environmental sustainability. We remain committed to our goal of a more than -- a more balanced energy mix to an almost 50-50, Cleanergy and thermal capacities by 2030. So thank you, and let's keep all the positive energy. [Foreign Language]

Thank you very much for that, sir. And now I'd like to call on Mr. Toto Hilado to present for banking.

Good afternoon, everyone. Thank you for joining us this afternoon. This year has been quite challenging for the bank and the country in general. We did not foresee that we would be having this health crisis nor did we expect to be in quarantine for 6 months. We have actually been working from home for 6 months now. But despite the challenges, the bank has done fairly well for the first 9 months of the year. Of course, loan loss provisions have gone up substantially but in general, top line revenues have been good. Let me start with an update on the net income performance of the bank. In the first quarter of the year, the bank posted net income of PHP 4.2 billion, that's 11% higher versus the third quarter of 2019. The growth was driven by higher recurring income as revenues from the core lending business grew by 27% to PHP 7.6 billion, while service fees increased by 18% to PHP 622 million. As for the first 9 months of the year, the bank's net income was at PHP 8.5 billion or lower by the same period last year of about 0.9%. The lower income was mainly due to the higher provisions amounting to PHP 7.5 billion, which we set aside amid the continued weakness in the economy due to the COVID crisis. The bank's performance, however, remains healthy. Recurring income was up 33%, driven by significant margin improvement and sustained increasing our higher-yielding loan segments. Higher trading gains for the year also boosted the bottom line. Next slide, please. Net interest income rose 36% to PHP 21.4 billion, due to the significant increase in margins and continued growth in our earning assets. Net interest margins increased by 92 basis points to 4.6% and was largely driven by the drop in funding costs by about 120 basis points. And yield in our assets dropped from 6.7% to 6.4% or only 30 basis points. Earning assets also increased by 9% year-on-year, driven by growth in our loan portfolio. As for loan growth, total loans were up 9% year-on-year to PHP 336 billion. Driving this was an increase in our commercial banking loans. It was up 28%. SME banking increased by 16%. Consumer loans was up 28%, mostly composed of mortgage loans. Credit card receivables were flat year-on-year while corporate loans grew only by 1%. Total deposits grew 17% to PHP 509 billion. This is attributable to the robust growth of CASA, which increased 23% year-on-year. Higher CASA volumes were recorded across our corporate banking and retail banking segments since the start of the ECQ. CASA ratio now stands at 41% from 39% in the same period last year. Noninterest income increased by 26% year-on-year due to higher securities trading gains amounting to PHP 7.5 billion, most of which was booked during the first half of the year. Fees increased 6%, driven mainly by the higher service fee from our subsidiary, City Savings Bank. As for our operating expenses, operating expenses grew single-digit by 9%. Our controllable expenses only grew by 5%. Where we had a substantial increase in OpEx was in volume-related operating expenses for taxes, DST taxes and PDIC insurance. Next slide, please. Now for the loan portfolio, our NPL ratios remain manageable. The gross NPL ratio improved to 3% for the group and 2.1% for the parent bank, following a PHP 4.6 billion write-off of nonperforming loans, which we did last September. Mostly -- or most of these nonperforming loans were fully provided. Write-off was part of our regular review of our credit portfolio, the same exercise that we did in the previous year where we wrote off more than PHP 2 billion in November, which lowered our gross NPL ratio to 3.1% and 2.6% for the parent bank. As for the NPL cover, because of the write-off, the NPL cover of the group decreased to 86% from 109% in June. The reduction is primarily due to CSB's lower NPL coverage. But that is by design, considering that teacher's loans are deducted from the salary of the teachers through the Department of Education. The NPL cover for the parent bank remains at about 100% -- remains above 100% at 115%. On a net NPL ratio, the ratios are lower year-on-year. The net NPL ratio is at 2% and 1.3% for the bank. Next slide, please. As for our capital ratios, the bank's capital ratios remained strong. Our CET1 ratio is at 14.6%. Total CAR is at 16.8%. Let me now go to our outlook. So for the asset growth, we foresee that loan growth will be flat primarily because of the continued weakness in the economy. We saw second quarter GDP coming in at negative 16%. The third quarter GDP is due next week. We think that it's still going to be weak, and our forecast for GDP for the average for 2020 remains at negative 8%. As for policy rates, we think that the BSP will keep the policy rate at 2.25% for the rest of the year, given the substantial liquidity in the system. Currently, we estimate about PHP 1.2 trillion in excess liquidity in the market. As for the reserve requirements, we think that the BSP will keep the reserve requirements at 12% for the rest of the year. Let me end my presentation with an update on what the bank has been doing during the COVID crisis and our digital strategy. Over the past months, the bank has launched various initiatives geared towards supporting the banking needs of our customers amid the pandemic. So this would include the deployment of bank on wheels on areas with large transaction needs. So essentially a mobile ATM. We have launched various features in our app to enable customers to bank safely from home, such as sending money to remittance centers, the ability to deposit checks using your phone, cash in via partner outlets, buy and sell foreign exchange via the app. We also launched partnerships with digital platforms who launched financial products catering to a new segment of customers, and we have been working with the government agencies and LGUs for the distribution of their cash assistance programs. The bank also participated in pioneering projects such as the launch of Bonds.PH, which was the first app-based blockchain enabled distribution of retail sovereign treasury bonds. The same app will be used in the coming -- upcoming issuance of the premium bonds of the Bureau of Treasury. So these initiatives reinforce the bank's presidency to operate amid the pandemic, the agility to respond to our customers' needs and overall deliver superior customer experience. Lastly, an update on the digital take up. With this adoption of our digital channels, we have continued to gain traction in getting more clients. From 1 million customers in the second quarter, our retail digital customers already reached the 1.5 million mark in the third quarter. Of this, more than 335,000 were digital accounts opened through the app. Corporate digital accounts were onboarded using the portal, and the number has more than doubled to more than 14,500. The volume of transactions on UnionBank Online continues to go up. Compared to the start of the year, transactions have increased by almost 3x. That ends my presentation. Thank you.

Thank you for that report, Toto. And now I'd like the call to present for Food, Hubert de Roquefeuil. Hubert, are you with us? Can you hear me? Hubert, I think you are on mute. Hubert, can you hear us? Okay. I think -- Cedric, are we good?

Are we good now?

Yes, I can hear you. Awesome. All right, Hubert, I think it's your turn to present for Food.

Okay. No problems. Thank you for the first chart. The first chart highlights 3% decrease in USD and PHP for the revenue. It mainly depend on farms. And then the EBITDA is above 3% to $79 million, following the margin improvement across all divisions, except Farm. But overall, overall Food group operating NIAT dropped by 3% year-on-year as a result of the sluggish performance of Farm division. Next slide. Thank you. A slide on the revenue, after we will have a slide on EBITDA. So on revenue, we see the 3% decrease. Floor revenue rose 3% year-on-year to PHP 6.4 billion or $120 million, due to the 9% growth in volume, slightly tempered by 5% weaker average selling price. Meanwhile, Farms average selling price and volume improvement deeper 6% and 2%, respectively, due to the spread of ASF in Luzon, the plunge in both selling price and volume throw down Farm revenue by 5%. Thank you. Now we are on EBITDA. We are on positive figure. Food Group 9 months 2020 EBITDA rose 3% year-on-year to PHP 3.9 billion or $79 million. On the better margin of Feed and Flour, the improvement is in the raw material cost. Starting with the flour business. EBITDA saw a 32% year-on-year or -- and on the 9% improvement in gross profit per value, and higher production product contribution due to the lower foreign exchange and wheat cost. Consolidated Feed EBITDA jumped 23% year-on-year due to the following factors: 68% year-on-year upswing in Feed Philippine performance and even better ROIC per metric ton; 5% improvement in Feed, Gold Coin Management Holding from the outstanding performance of the livestock business. And however, improvement in total Food Group was slightly offset by the unfavorable performance on the Farm division. Farm went down by 198%, following the challenge margin and volume due to the spread of ASF in the country exacerbated by the COVID pandemic, which hampered the demand for pork in hotel, restaurants and -- continue. And now we go to our finance NIAT. Food Group operating NIAT dropped 3% year-on-year due to farm negative bottom line. Farm incurred a net loss of PHP 700 million or $14 million from a 24 million or $841 million. NIAT last year driven by ASF and worsened by the COVID pandemic. Nevertheless, Feed consolidated NIAT contribute 64% higher year-on-year, with a 23% increase in EBITDA, coupled with the 16% improvement in the financial cost of feed. And we realized 100% profit of Gold Coin Management Holdings, in January to May versus 75% share last year. Further, our flour NIAT surged 27% year-on-year, following the 32% growth in EBITDA. The upswing in EBITDA was softened by the 3x jump in interest expense due to the higher working capital requirement and 11.7% higher unrealized ForEx loss on money placement. The continuous spread of COVID-19, I would say, and African swine fever around the world has been causing several challenges in the country where we are operating in. However, food group set measure to have been proven to be efficient in keeping our operation and strategic count intact. We have maintained sufficient level of raw material to support our operation. There are no major issue in terms of domestic and international logistics. We keep on accelerating the business despite the turmoil through: one, focusing on product line that are supported by strong demand; two, improving operation efficiency; three, managing proactively collection and expense to improve cash flow. Lastly, we make sure that we have prioritized vital capital expenditure to protect our bottom line. The status of all our ongoing projects will be taken up in the succeeding slide. Next slide. Okay. It's resume slide for 3 locations, 4 location: Philippines, Vietnam -- Philippines, Malaysia -- sorry, 3 locations. Philippine has a project of Meat Fabrication Plant. We will see that in a while. Vietnam, Fish Feed Line. Philippine, Iligan Feed Mill Expansion. And Malaysia, Fish Feed Line, 5 tons per hour. So we start with the slaughter house meat fabrication Plant Tarlac Meats Master. Last August 2020 is a plant had a capacity of 461 -- 468 heads per annum equivalent to 1.7 of our current [indiscernible] projection. This is a big step we are undertaking to integrate the business forward the value chain. Second, we are in Ha Nam, North Vietnam. And we build [indiscernible] to feed the fish mainly, but we -- because we are handling the exposure, we are putting a vacuum cleaner, vacuum quarter which means that we can also do pet food and marine fish. There is a lot of Sea BESS in the country have been -- that needs to be feeling correctly. So that's a very good capacity because if no demand for feed, we can do demand for pet food and freshwater fish. Thank you. Okay. In the middle, on the right -- on the left-hand side, you see brand-new equipment. This is third, the third fully commissioned equipment to do 20 times -- 20 tons per hour to feed [indiscernible] in VisMin region. And then, this is also something interesting ongoing now in the construction of 5 tons per -- from fish meal line in West Port, Malaysia. The plant respect its commissioning so far by the end of first quarter 2021. These are for the Food Group. If you have no question...

Thank you for that report, Hubert. And now to present for infrastructure, I'd like to call on -- sorry, to present for land, I'd like the call on Mr. Dave Rafael. Thank you, Hubert.

Thank you.

Can you hear me?

Yes, I can hear you, Dave.

Okay. Right. Sorry. Okay. So good afternoon. For this briefing and going forward, AboitizLand will be focused on the residential business. The industrial and commercial business had been transferred to Aboitiz Infra and consequently, will be reported later by Cosette. So -- okay. So for the third quarter of 2020, AboitizLand's revenue increased by 2% versus the same period last year. Gross profits have also increased by 6% versus the same period last year, although net income suffered a 90% decline. As I will show you, the main reason being the difficulties, the challenges we experienced in construction activities during the lockdown, of course, by the pandemic, which, as you all know, affects construction completion and, therefore, affects our revenue recognition, okay? However, we're happy to note that in spite of the pandemic and the slowdown, residential book sales actually registered a robust 66% increase versus the same period last year, booking PHP 2 billion in sales during this first 3 quarters of the year. Next slide, please. Okay. Okay. So as I mentioned a while ago, I'm not going to be delving too much on industrial. Although here, this slide shows that revenues did increase largely because of -- largely because of the improvement -- the revenue recognition coming from our industrial business, right, whereas in terms of our residential, we suffered a 45% decline in revenues. And as I said, this decline was largely due to restrictions in terms of our construction activity in the job side. Next slide, please. Okay. So here, you will see that for the residential, while revenues decline by 45% versus same period last year, our actual sales, book sales has actually increased by 66%. As you all know, in the real estate business, construction is really very important in terms of revenue recognition. You can do sales, but if you are not able to complete the houses and you're not able to turn over then, it really affects revenue recognition. Next slide, please. So what were the business highlights during this period, particularly during the pandemic and during the lockdown? One thing that we focused on during this period was 3 -- 2 things: Number one was we wanted to really strengthen our sales channel network, particularly from our brokers. We have a fairly small in-house sales team. So what we wanted to do was we wanted to maximize the reach and the network of brokers. So we invested a lot of time in recruiting brokers. Secondly, another major thrust that we had really was really getting good at and focusing on what we call contactless selling. We were fortunate that very early on, even before the pandemic, we had invested in the platform in the processes that allowed us and our sales group to do a lot of marketing, do a lot of customer engagement and, ultimately, even to closing sales and tripping virtually without the need of a face-to-face contact. So that investment -- the early investment in the digital infrastructure, I think, was -- proved very -- it paid off, especially during the lockdown. Next slide, please. Okay. So going forward, we believe that the business environment for real estate brought about by the man is here to stay. It's even with the vaccine, even when things go back to normal, I think the way things are being sold and -- hello? Yes. Hello?

I can hear you, Dave.

Go ahead. Go ahead, Dave. We can hear you.

Okay. So as I said, even post pandemic, we believe that real estate business has really changed permanently. In terms of how people buy real estate, in terms of what people will look for in terms of preferences or real estate. They're probably going to be more open to house and lots, even if they're not within the CBD. So long as they provide open space, spaciousness, anyway, they can work from home, right? So we're going to be riding on this new wave with further investments in our systems, digitize existing processes, and we will be more aggressive in our marketing efforts. We will be more competitive in terms of our payment terms because all our competitors are doing the same. So we need to really keep up. So next slide. Okay. So that basically is my last slide. Thank you.

Thank you. I think the next who will report for us is presenting for infrastructure, we have Cosette.

Yes. Good afternoon. Thanks, Judd. As Dave has shared, the management of the industrial and commercial business units has been transferred from AboitizLand to Aboitiz InfraCapital effective September of this year. This integration completes InfraCap's approach in expanding the various businesses and projects around the group's existing assets and resources, thereby harnessing inherent synergies. The ICBU is a captive market of other businesses of InfraCapital. With this update, let me now start my presentation with ICBU's operational highlights and future plans. Next, please. The financial performance for ICBU as of third quarter this year was driven by revenue recognition of 16 hectares industrial lot sales in Lima Technology Center. That translates to PHP 1.3 billion revenues, with gross profit of PHP 562 million and EBITDA of PHP 457 million. The strong industrial performance tempered the 6% drop in our commercial business. Note that we offered rental concessions to tenants to aid them through the disruptions caused by the pandemic. We are fortunate that disruption to industrial operations was kept to a minimum, with a majority of our locators remaining open through the strictest periods of the lockdown. Today, nearly all our locators are operating, and power and water consumption are already hovering pre-ECQ levels. To ensure continuous operations, disinfection of common areas of our parks are regularly scheduled. A strict no face -- no face mask, no entry policy has been implemented, and safety reminders have been posted throughout our zones. We also hold regular virtual meetings with locators regarding procedures on reporting system, contact tracing, infection control and other COVID-related measures. Safety protocols were also implemented upon resumption of construction activities for phases undergoing developments in Lima Technology Center. Proper sequencing of construction activities and staggered breaks is being implemented in order to maintain social distancing. Temporary accommodation is also being provided to all workers throughout the community quarantine, with pre-deployment procedures conducted for every instance of reentry. On the other hand, we recognize a challenging environment faced by the tenants of our commercial business. While foot traffic has been increasing since the lifting of the ECQ, recovery is still gradual with the current foot traffic at about 1/3 of the normal levels. Daily sales are faring better, especially with the alternative purchasing modes and Al fresco areas made available to our tenants for free. Nevertheless, we see the retail environment will continue to be challenging. To support our tenants through these trying times, we will continue to provide them with rental relief in the form of concessions through the adoption of either a sales-based lease rate or an outright lease discount. To ensure the safety of our mall visitors, safety measures such as hand sanitation, wearing of masks and face shields and technology-aided contact tracing are being implemented. In order to further facilitate commercial activities, delivery partners were tapped for food deliveries and alternative shopping arrangements such as curbside pickup and weekend drive-thru bazaars and markets were also introduced. We hope that these efforts will help spur the retail businesses recovery. Despite the pandemic, exciting things are in store for ICBU. We want to expand and transform our 3 industrial zones in Batangas and Cebu to fully integrated and smart integrated economic centers. We will continue to harvest value from the sale and lease of industrial and commercial lots and explore new product lines to make our parks more attractive to locators and tenants. Now moving to our water business units. Lima Water continues to deliver unhampered services to our customers at the Lima Technology Center. Build volumes have reached pre-ECQ levels as locators try to recover productivity losses from strict lockdowns during the first half of the year. In September, Lima Water launched its wastewater analysis services to the locators. Lima Water is the first and only industrial park water services provider with a laboratory accredited by DENR. Lima Water also took the opportunity during lockdown to implement production efficiency programs to improve power efficiency of our deepwell facilities. At Apo Agua, despite challenges brought about by COVID, we are still targeting for a 2021 construction completion. Construction activities have been ongoing since it resumed in mid-May. Our EPC contractor, J.V. Angeles, continues to work on the rural water facility, water treatment plant and treated water pipeline. Aside from the aggressive manpower ramp-up and subcontracting of works whenever applicable, JVACC is also implementing simultaneous work and extended hours on different work sites. Round-the-clock pipe fabrication supplements all these efforts to fast-track the project completion. To ensure the workers' health and well-being amid the pandemic, our EPC contractor has put in place various safety measures on site, including testing, social distancing, work clustering, provision of quarantine facilities and on-site health care professionals, provision of employees' quarters and regular disinfection of offices and quarters. Aboitiz InfraCapital's goal to push for digital infrastructure continues, especially with the increasing need for better telecommunications services. Last month, we announced our venture into small cell sites business to help improve the country's ICT infrastructure. We have deployed poles for 5G equipment of Dito and Globe. We expect the demand for sites to increase in the next 2 years as telcos and ISPs accelerate expansion and gear up for 5G deployment. As to our other projects, for towers, we are still continuing discussions with Globe, Dito and PLDT-Smart for the lease of build-to-suit tower sites and other passive telco infrastructure. In the meantime, we have restarted our site surveys and acquisitions. On September 10, we were also granted our provisional registration as an Independent Tower Company by DICT. For our airport proposals, we remain committed in pursuing our proposals for the Bohol Panglao International Airport and Laguindingan Airport, because we firmly believe that these projects are integral for the country's economic recovery. Moreover, these projects are aligned with our objective to support regional growth outside of the national capital region. Discussions with the government are still ongoing regarding the best and most prudent way forward for the said -- for said proposals, taking into consideration the impact of COVID. In parallel to our projects and operations, together with the rest of the group, we've also been doing CSR activities to complement the government's efforts. Most recently in collaboration with the Office of the Civil Defense, Lima Technology Center was chosen as one of the industrial parks that receive boxes of fish to support the employees of our locators who are severely affected by the pandemic. Distribution took place last September 22, and approximately 800 boxes of fish were donated to the employees of Lima locators. So far, we have deployed COVID relief operations, not just to our host communities, but to various hospitals, frontliners and even our subcontractors. We continue to support beneficiaries of our programs in Apo Agua through our college scholarship program, financial assistance to high school students, assistance to public schools and Adopt-A-Site watershed rehabilitation project in partnership with the Davao City Water District. Lastly, internally, we continue to promote the health and -- health safety and wellbeing of our team members. We -- through various activities and we proactively engage them through various virtual engagements. That's the end of my presentation. Thank you.

Thank you for that report, Cosette. And now to present for Cement, I'd like to call on Nabil Francis.

Yes. Good afternoon, everybody, I hope that you can hear me well. And I hope also that this presentation finds you well and safe. So when it comes to the construction industry, it's clear that we have been affected by the COVID-19 crisis. From a strong start in 2020, the construction activities in Luzon and in some part of the VisMin stopped for 2 months during the ECQ lockdown. We have faced strict health protocols and limited transportation availability, which are also unfortunately contributing to the slowdown. Some investors also are still waiting for the sanitary crisis for the sanitary situation to improve in order to proceed with major investments. But despite this, the cement market has bounced back pretty well in Q3. I have to say that the cement market in Q3 has printed a 7% growth compared to last year. Of course, on a year-to-date basis, the growth remained negative at 15%. But what we have faced in Q3 is a clear stock replenishment effect getting to 7% growth. What has been moving well is what we call the IHB segment, the Individual House Builder segment. But on the other hand, the nonresidential segments with offices, malls as well as the infra segment are still not performing well. But on the other hand, the nonresidential segments with offices, malls as well as the Infra segment are still not performing well. Now looking at the end of the year, we are remaining cautiously optimistic. [ SCBM ] has put in place some very rigid procedures to mitigate against the spread of the COVID-19 in the workplace. We have a health screens in place, social distancing, sanitation of the work areas and of course, strict observance of the PPE. We have also put in place a mass testing strategy in order to secure to make sure that our personnel is safe. As a result, I'm happy to say that our 6 plants now are up and running, and happy also to say that we have managed, despite the sanitary crisis to finalize the erection of the new equipment of our so-called debottlenecking projects. So all our forklifts now in Luzon have been driven, they are up and running. Same with the finish mill. We are just finishing the ramp-up, but all the new equipment is up and running. Now to conclude, we believe that the -- as we said during the last meeting, our future in the cement industry is not canceled by COVID, it's just postponed. And the fundamentals of the industry are remaining pretty healthy. As a matter of fact, we already believe that the total demand next year will get back to the level of 2019 in the Philippines. Of course, what we are hoping is a prompt passage of next year budget. Any delay could be detrimental to the demand. But we also believe that the acceleration of the "Build, Build, Build" program will give a boost to the cement demand. Now I'll conclude by saying that we are, as Republic Cement, strongly supporting the Buy Pinoy campaign initiated by DTI. I think our economy now is in dire straits, our economy is suffering. And the best way to help the economy to recover is to buy local products. I think it's time now to be patriotic and we are encouraging everybody to buy locally-manufactured cement. We have calculated the direct economic impact of buying locally manufactured cement. It means that 1 locally manufactured bag is injecting directly PHP 150 to the economy when imported cement is 3x less. So let's be patriotic and let's favor locally-manufactured cement against the one imported by traders. Thank you very much.

Thank you. Thank you for your presentation, Nabil. And now to present AEV's consolidated financial performance, I'd like to call on Dmi Lozano.

Can you hear me, Judd?

Yes. Very well.

Thank you. Yes. So good afternoon, everyone. We start off here with a snapshot of the 9-month performance for AEV. I just wanted to highlight specifically our AEV's revenues. You can see here, we recorded PHP 137 billion for the first 9 months of the year of 2020. This is 10% lower compared to the same period last year. One of the key drivers clearly was the lower demand brought about by COVID-19 and the lockdowns, as it affected most of the industries that we're in. And you heard a lot about that from our SBUs earlier. We can go to the next slide, so I can go into more detail on EBITDA and net income. For the 9-month EBITDA, we have a decline of 11% for the consolidated -- or the beneficial EBITDA. Performance of power, as mentioned by Manny, was impacted by lower demand, again, due to COVID-19 and the resulting shutdowns. And real estate was also down, but most of this really was because of fair value gains that we booked in 2019. Our third quarter performance, as usual, as probably you guys have noticed in the past, was stronger compared to the first 2 quarters. The third quarter was 54% better than our second quarter results earlier this year. And again, this is due to the better performance and an upward trend for both power and financial services. However, having said that, our third quarter performance was still 9% lower versus last year. And this was mostly due to lower energy demand and fair value -- and the fair value gains that I mentioned for the real estate business earlier. Going to the consolidated EBITDA, our EBITDA declined by 13% and basically, for the same reasons as mentioned in the earlier slides. For the 9-month 2020 core net income, the group's core income decreased by 48%, mainly due to the increase in interest expense and taxes. Interest expense increased by 12%, mainly due to the following, which was basically the retail bonds, both issued by AP and AEV last year to fund our growth. And also additional loans for food, infrastructure and the power businesses, who also continue to have CapEx for their growth projects. Taxes and others increased mainly due to the expiration of the ITH for a couple of our power businesses. Depreciation and amortization also increased, and this is mainly due to the full year take-up of Therma Visayas, which came online only in the second quarter of last year. AEV recognized nonrecurring losses of PHP 5 billion for the first 9 months of this year. This is in comparison to the PHP 155 million loss that we had in the same period last year. As a result, net income for the first 9 months for AEV was PHP 8 billion. This translates on earnings per share of PHP .0148. On the balance sheet, the consolidated level, cash and cash equivalents increased by 41%, primarily due to the proceeds of the dollar bonds that we issued in January this year. AEV currently has approximately PHP 65 billion in cash on a consolidated basis and over PHP 40 billion in available short-term facilities with its relationship banks. This is important so we can project that we have sufficient liquidity to sustain our growth initiatives and our businesses even under the prolonged community quarantines. Consolidated assets increased by 3%, mainly due to the cash increase, and total liabilities were higher by 60 -- 6%, sorry, due to the issuance of the retail bonds and the increase in long and short-term borrowings for the power and parent parts of the group. With that, our net debt stayed level at 1.2x net debt to equity. The decrease in parent net debt was mainly due to the cash proceeds from the redemption of AEVs -- AEV International's preferred shares. On a side note, the more recent development, last week, AEV received a certificate to offer -- received its certificate to offer and issue the second tranche of retail bonds from which SEC registered PHP 30 billion fixed retail bond of shelf registration. The offering we have starts off with a base amount of PHP 5 billion and an oversubscription option of up to additional PHP 5 billion, and this will be completed on November 16. The proceeds will be used to partially refinance the other retail bonds that we have that are maturing later this month and partially finance the equity contributions to Apo Agua for the construction of the hydroelectric-powered bulk water treatment facility in Davao. Almost 8 months into this new normal, we have obviously become more accustomed to new ways of delivering and creating value for our stakeholders, and you heard a lot about that from our business units earlier. With our digital infrastructure as a key enabler, our business continuity plans and our agile management team are proving to be effective, and our balance sheets are also exhibiting resilience. Across our group, our focus continues to be conserving cash, managing the balance sheet and being opportunistic at looking at new opportunities for growth. A new year is just around the corner. While we have seen pockets of renewed activity here in the third quarter, we will approach 2021 with the same prudence and caution that we have exercised in managing the challenges of COVID in 2020. Thank you, and good afternoon.

Thank you very much for your presentation, Dims. Now we go to the exciting part, the Q&A. So we have received advanced questions, as you all know. And so we are going to take them up first here in the floor. Please feel free to send your questions here in our platform. And then if we are not able to address all your questions with the time that we have left, we assure you that we are going to respond to every one via email. And now for the first question, this is directed to food. This is for our Food group. And the question is, what is the Food Group's outlook on volumes and ASPs for the rest of the full year 2020 across the 3 segments? This is a question for the Food Group, Hubert or...?

Yes. John, I'm here and -- I mean I can comment. I don't want to give any specific figures because I don't want to give any forward-looking guidance, right? But I'd say that we anticipate volumes and selling prices to remain stable, moving forward for the rest of the year and tracking basically input costs, right?

All right. Okay. Thanks a lot. Thank you for that, Tristan. Can we have our second question? Are this -- all right. This is also for food. What was the impact of ASF in your farms business? Was your livestock affected?

Yes. Again, I can take this question. Well, the impact actually was quite severe. I think you saw it in the numbers year-to-date so far, right? Just broadly speaking, selling prices were definitely impacted to the negative side, right? This is basically due to an excess supply of pork in the market, as ASF kind of dawned on the country, farmers were quick to try and deplete their stocks, right? And that led to an excess amount of pork on the market. And when you add in actually the impact of COVID-19, which had a negative effect on demand, right, due to the shutting down of hotels, of restaurants, catering companies, which are large institutional customers for pork. You kind of had a perfect storm that affected prices on the negative end, right? We also incurred higher OpEx across our farms division, and this is a result of proactively culling our herd and at the same time, slowing the breeding of our -- in our breeding farms. And this is basically to reduce the amount of animals on our sites to bring down the risk of infection and increase the coverage of our biosecurity protocols, right? And then lastly, we -- the higher spending as it relates to biosecurity, right? So a number of initiatives were implemented across our farm sites, including keeping staff on-site, ensuring that we limited the amount of access for trucks into our farms to just to those that are absolutely necessary, including feed trucks. Customers or traders that picked up animals from our farms for us [ had ] to do so on a separate site, which we had to maintain. Obviously, there was an increased amount of testing for the virus on site. We had to bring in PPE for our team to ensure that when they enter our barns that they are dressed to ensure -- to limit the spread of the virus. We had to set up nets across all our facilities to ensure that insects could not fly into our barns. So you can imagine the amount of money spent here, no? So overall, ASF has had a very negative impact as it relates to our farms numbers. But we're hopeful that the worst is behind us. And we're doing everything we can to ensure that our herd is adequately protected from the virus.

Great. Thank you, Tris. Thank you very much. Our next question is for UnionBank. What is the management's outlook on loan growth, NIMs and NPLs for the rest of 2020 and for 2021? I think Toto, this is for you.

So for our NIMs, we think that it would be -- remain at these levels for the rest of the year, given that overnight rates are expected to remain steady at 2.25%. In terms of the NPL ratio, we did see a drop of the NPL ratio to about 3% in the third quarter, coming from about 4 -- 3.7% in June this year. So as I initially mentioned, we wrote off about PHP 4.6 billion in NPLs, which were fully provided. If we did not write off, I would say that the credit deterioration in terms of NPL ratio from June of this year would have been about 0.6, 60 basis points. But because we wrote off, that went down to 3%. Now as for the outlook on the NPL ratio, it's quite difficult to project what could happen because, as we all know, there was, again, another variant of the Bayanihan Act, so Bayanihan Act 2. So most likely, based on what we have seen, the new NPLs, if ever, will kick in, in the first quarter of next year when the Bayanihan Act 2 expires. So it's really hard to project the deterioration, how the 3% could evolve. But suffice me to say that if there will be any deflation, it will be either in the cards portfolio or the mortgages.

All right. Thank you, Toto. Coming up the next question. Still for UnionBank, does management still expect to increase its provisioning for the rest of 2020 and 2021? And by how much?

For this year, we took upfront provisioning of about PHP 4 billion last June. So we think that for the rest of the year, the provisions that we have done for about PHP 7.5 billion will be sufficient, especially if you compare that in 2019, our provisioning was only about PHP 0.5 billion. So we think that PHP 7.5 billion should be more than sufficient for this year. 2021 is another story. As I said, definitely we could see some deterioration on the consumer finance side. But it's really hard to give guidance there. But given the level of the portfolio and given the state of the economy, it's probably possible that we could see, at least probably, I would say, PHP 1 billion, PHP 1.5 billion more on the consumer side. But that's really a rough estimate. It's really no basis until that thing is lifted.

Okay. Thank you for that, Toto. Can we see our next question, please? For RCBM, so I think this is for Nabil. What is management's outlook on its cement sales volumes and ASP for the rest of 2020 and 2021?

Well, Yes, that's an interesting one. I think as mentioned, if I look at the total market, 2020 will close at minus 15%. But for 2021, the total market will get back to the level of 2019. So it should be close to 35 million ton, more or less.

Okay. Yes. Thanks for that, Nabil. Can we have our next question. With construction activities already sporadically restarting, has Republic Cement already started seeing a slight recovery?

Well, yes, that's -- it's a very contrasted recovery. The -- we -- there is a clear recovery when it comes to individual house builders. So the bag market is, as of today, more or less at the level of last year already. In July, we -- after the lockdown, we have seen a surge in the demand, but that was the stock replenishment. Now what is lagging behind? 2 segments, that are still representing 50% of the total demand. One is the nonresidential, and which we are talking there about malls, offices, the projects that had already started prior to the COVID. Of course, those projects will go to completion. But when it comes to the number of new projects in the pipeline, it's less than anticipated. And 1 of the main reason is that some investors have still cold feet. They are waiting for the dust to settle, they are waiting for the situation to -- and they're waiting to get more visibility into the future before engaging into major investments. And the other one is infrastructure. So there in infrastructure, some of the projects have restarted, and there is -- the pipeline is loaded with new projects. However, for the big tickets project of the "Build, Build, Build," most of them will really restart, in our opinion, at the very beginning of next year, because some of the contractors, they'll be reluctant to mobilize their workers just now and prior to Christmas. So yes, there will be a recovery. And as mentioned also in the presentation, the fundamentals are still there. We still have a strong demand for housing. Of course, we have a drop in terms of overseas workers' remittances, but the -- what's going to give vitamins to our market next year is definitely infrastructure.

Okay. All right. Thanks for that, Nabil. Can we see our next question. This for Aboitiz Power, how does the recent DOE moratorium impact AP's projected pipeline that is growing to more than 9,000 megawatts in capacity by 2029? I think this is for you, EVR.

Thank you, Judd. Thank you for the question. We -- as we have responded to questions from the media, the minute this was shared by the DOE Secretary. And we have -- we already had some early, early notification of this moratorium, and we welcome it. It's in line with our strategy of growing our renewable energy portfolio, AP Energy. And we know that thermal, specifically coal generation is under pressure. We're feeling the pressure. Where we're getting higher insurance costs. There is some level of uncertainty with regard to financing. Although we still believe that until we see -- well, we haven't seen the guidelines yet. So we need to -- we really cannot comment with regard to whether or not we can achieve our capacity of 9,000 megawatts. But 1 thing for sure, though, is that the country will need the capacity, the base oil capacity in the next 10 years. We are going -- we are aiming for renewables to be about 1,800 megawatts by 2025. It's fueled by the green energy auction pricing of DOE. We believe that it's a good value to actually sell the renewable capacity for RPS, in case where the BUs wouldn't want to conduct their own CSPs for 1 reason or the other. But the demand will be aggregated in the green energy auction pricing, which [ actually ] are really good. We are looking at gas. We have been looking at gas, but I think now more than ever. I think the case for gas is [ happily ] gaining ground given the forward curves for gas pricing, getting to be competitive compared to coal or as competitive as coal. So let's see. I think let's -- I'll wait for the guidelines before I really can comment on the full impact of the new [ EU ] moratorium on coal and our growth strategy. But I'm confident that we'll be able to achieve stellar targets by 2030 in terms of capacity, with this -- even with the moratorium [ checkular ].

Okay. Next question. Okay. What is management's vessel price and energy demand outlook for the rest of 2020 and 2021?

Yes. Our forecast for demand is that we believe that demand will be back at 2019 levels, probably by mid-2021, right? Barring any major second wave, right, or any imposition of a stricter quarantine protocols than GCQ, I think we are on our way to recovery, albeit slowly, but I think we're getting there. But having said that, we will -- we are commissioning -- we will be commissioning GNP, the unit 1. It will be injecting additional capacity to the grid starting December, and then unit 2 after that. So we will be expecting more than 1,300 megawatts of additional capacity. So we expect vessel prices to remain soft up to the end of 2021.

Okay. Thank you for that, sir. Still for AP, what's the update on Meralco's 1,800 megawatts grid.

Well, they've published their terms of reference. We actively, we will participate. We bought the big documents through GNPD. As you well know, based on the TOR, we have plants that will qualify actively for the bid, at least 2 units of GNPD can actively participate given that the age of the plant should have been declared [ COD ], not earlier than January 2020, if I remember it correctly. We have some questions. We're waiting for the big conference to happen, but we're interested, very interested. And I believe we have one of the more competitive plants that can participate.

Okay. All right. Next question. Still for AP, how much insurance claims did you recognize for the quarter? How much more are you expecting for fourth quarter 2020? And how about for 2021?

In 2020, we've recognized PHP 363 million as a BI income. The total BI income as of September 20 is PHP 595 million. And in October 2020, we were able to collect PHP 481 million, bringing the total collections of this claim to PHP 1.1 billion. And by the end of the year, we expect to collect the balance. We're aiming for PHP 1.8 billion of claims from PSI. For GMCP, we have a claim that we recognized for PHP 106 million as a BI income. And by year-end, I think we expect this to be around PHP 470 million as negotiations are happening with insurers.

Okay. Thank you for that answer, sir. Next also for AP. What was AP's earnings and EBITDA ex forced outages in the third quarter, 9 months 2020?

Yes. I think I've mentioned in my presentation, we have been able to resolve the issues that we have, at least in the 100% AP-operated facilities, particularly TSI. Although we've had outages in GMCP, Pagbilao, your normal boiler tube leaks early in the third quarter. Because of the lower vessel prices, the net effect actually is neutral, right? And for GMCP, we have allocated a CapEx of about $35 million for a rehabilitation of the balance of plants starting January 2021 to ensure and to make sure that the availability rate of GMCP also gets into the 90% level in the next 3 to 4 years.

Right. Thank you, sir. For AP again, please specify the earnings impact of each of the factors you mentioned, which resulted in a decline of AP's net income during 9 months 2020? Which is the expiration of the income tax holiday incentives of TSI and GMCP and the additional interest expense from the company's bond and loan.