Investing Stocks in Philippines: SMC

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Friday, March 8, 2013

Stock News 2013: SMC puts airport plan on hold

English: Termainl 3 at Manila Airport (Photo credit: Wikipedia)

San Miguel Corp. (SMC) is putting on hold its proposal to build a new airport in Metro Manila in reaction to the government’s evolving policies that have delayed the implementation of key projects three years into President Aquino’s term.

SMC president Ramon S. Ang on Wednesday told reporters that the government should open up projects to all bidders instead of introducing restrictions that would hamper the participation of certain major players.

He was referring to the Department of Transportation and Communication’s (DOTC) inclusion of restrictions on the participation of airline companies or owners from bidding for the P17.5-billion Mactan Cebu International Airport (MCIA) project.

The policy was later relaxed to allow airline owners to have a 33-percent stake in a consortium interested in the project. This was included in the pre-qualification requirements for interested parties to avert possible conflicts of interest, with the airport operator giving more favorable terms to its affiliates over rivals.

“I don’t understand that 33-percent restriction. If the government really wants to get the best deal, then they should open up the bidding. That’s real transparency,” Ang said. “If you want the best deal, you have to let everyone join. It will maximize the potential of the project.”

SMC earlier said it would build a new 2,000-hectare international airport near Manila to complement the existing Ninoy Aquino International Airport (Naia).

He said the new airport could co-exist with both Naia and the Clark International Airport in Pampanga, which the government wants to develop into a major hub for Northern and Central Luzon.

Ang said that SMC has lost its enthusiasm to participate in the MCIA bid because of the government restrictions.

http://business.inquirer.net/111015/smc-puts-airport-plan-on-hold

Tuesday, August 14, 2012

Stock News 2012: SMC income jumps 31% to P14.1 B in H1

PAL's third logo was applied to aircraft during the 1970s, in concurrent use with the second one. The typeface used here was later applied to the second logo. (Photo credit: Wikipedia)
Diversified conglomerate San Miguel Corp. (SMC) jacked up its net income 31 percent in the first half to P14.1 billion, powered by strong performance across most of its businesses.

In a financial report released yesterday, SMC said its revenues grew 25 percent to P329.5 billion although operating income slid 20 percent to P25.1 billion on increased prices of crude oil and raw materials.

Despite the rise in input costs for some of its businesses, SMC chairman and chief executive officer Eduardo M. Cojuangco Jr. said the group’s highly-diversified portfolio provided fresh growth drivers that allowed them to deliver good results.

“Our first semester financial results provide a glimpse of the importance of a diversified portfolio and the continuing value of our core businesses to the overall stability of the group,” Cojuangco said.

Consolidated recurring earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to P38.4 billion.

Flagship firm San Miguel Brewery Inc. turned in revenues of P36.9 billion, four percent higher than a year ago, with the brewery’s international operations registering double-digit revenue growth as a result of higher volumes in Hong Kong, Indonesia and Thailand. Consolidated operating income rose six percent to P10.8 billion.

Hard liquor unit Ginebra San Miguel Inc., on the other hand, reported a 12 percent drop in revenues to P7.2 billion as sales volumes declined by 15 percent to 11.7 million cases. As a result, it recorded an operating loss of P157 million.

San Miguel Pure Foods Co. Inc. continued its upward traction with net sales improving seven percent to P45.3 billion on strong showing of the agro-industrial cluster, value-added meats and milling segments.

Higher raw material prices and limited supply of cassava in the earlier part of the year weighed down on its operating income, which was at P1.9 billion in the first semester. However, the second quarter improvements in the pork and chicken supply-demand scenario and raw material prices almost doubled its operating income to P1.2 billion from P659 million in the first quarter.

Meanwhile, revenues from the San Miguel Packaging Group slightly decreased to P11.9 billion, weighed down by the lingering global economic crisis. Operating income, however, improved five percent to P1.1 billion.

With better utilization of all plants and increased demand from bilateral customers, SMC Global Power’s consolidated net revenues went by 11 percent to P39.5 billion, resulting in a 17 percent rise in operating income to P8.8 billion.

Its net generation volume for the first semester reached 8,081 gigawatt hours, up 12 percent.

Net earnings of its major sales contributor, Petron Corp., slid 93 percent to P432 million due to the volatility in global oil markets and the consolidation of its Malaysian operations. It completed the purchase of Esso Malaysia Bhd. in March. Excluding the second-quarter loss of the Malaysian business, Petron posted a net profit of almost P2 billion in the first semester.

The oil industry saw a steep and continuous decline in crude and finished product prices from April to the first week of July, which resulted in 13 weeks of consecutive price rollbacks in local pump prices. Margins also narrowed as higher cost inventory were sold at lower prices. But while margins were contracting, Petron’s total domestic sales expanded nine percent 21.81 million barrels.

In other businesses, SMC said its infrastructure projects are progressing as planned and it expects revenues to come in by the first quarter of 2013.

Philippine Airlines (PAL) also recently took delivery of its third long-haul Boeing 777-300 ER. PAL has also started implementing its new growth strategy that includes the modernization of its fleet, the expansion of its network, and improvements in passenger service. Looking forward, the airline has several initiatives in place aimed at increasing profits by generating revenue growth and controlling costs.

“Across the San Miguel Group, we will be working hard to harness potential synergies from recent acquisitions and new businesses so that markets can be developed, revenue streams can be increased, costs can be reduced, and efficiency improved,” Cojuangco said.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=837747

Tuesday, June 26, 2012

Stock News 2012: Meralco to source power from SMC unit

Power (Photo credit: Chewy Chua)
Manila Electric Co. (Meralco) will secure part of its electricity requirements from a subsidiary of diversified conglomerate San Miguel Corp. (SMC).

“The company’s board of directors, in its regular meeting yesterday, approved the grant of authority for the company to enter into a power supply agreement with San Miguel Energy Corp. (SMEC),” Meralco told the local bourse.

However, the company has yet to specify how much electricity it will buy from the SMC subsidiary.

In February, the country’s largest power distributor said it is in talks with SMC for a power supply agreement to ensure continued supply of power to its customers.

Early this year, Meralco signed a seven-year supply deal with Therma Luzon Inc., a subsidiary of Aboitiz Power Corp. Meralco will source 350-megawatts (MW) of electricity from Therma Luzon’s 764-MW coal-fired plant in Quezon province.

Meralco wants to secure electricity from SMEC, which holds the independent power producer contract administrator license for the 1,200-MW Sual coal plant in Pangasinan.

The power distributor is locking up power supply deals amid expectations of higher electricity demand from its customers.

Meralco added 40,000 new customers in the first quarter, bringing the total to a record 5.07 million as of end-March. Meralco is indirectly controlled by Hong Kong-based First Pacific Co. Ltd. and partly owned by SMC.

Meralco, through unit Meralco PowerGen Corp., is building a 600-MW coal-fired power plant at the Subic Bay Freeport Zone in Zambales in partnership with Aboitiz Power Corp. and the local unit of Taiwan Cogeneration International Corp.

It is targeted to start commercial operations in 2015, increasing available electricity in the Luzon grid.

http://www.philstar.com/Article.aspx?articleId=820919&publicationSubCategoryId=66

Tuesday, June 19, 2012

Stock News 2012: Gov't to sell P80-B SMC preferred shares

The government will eventually sell its preferred shares in diversifying conglomerate San Miguel Corp., saying that businesses are better off in the hands of the private sector, the Department of Finance (DOF) said yesterday.

If SMC exercises its right to redeem this year the non-voting preferred shares held by the government, the state has no choice but to give this up, Finance Officer-in-Charge and Undersecretary for Privatization John Philip Sevilla said.

Whichever comes first, Sevilla said the end result is an eventual sale of the government’s stake because the government has been trying to leave to the private sector those businesses outside its expertise.

The government’s preferred shares in San Miguel, estimated at roughly P80 billion belong to coconut farmers as ruled by the Supreme Court.

“We are not in a hurry to sell the preferred shares but eventually we will because the government wants to get out of private businesses,” Sevilla said.

The government holds 753.8 million preferred shares in the diversifying conglomerate. This was equivalent to 24 percent common shares that were converted into non-voting preferred shares in 2009.

SMC has the option to redeem the shares this year, which Sevilla said is a possibility.

“If they redeem it, we have no choice but to just get the cash,” he said.

Proceeds of the redemption or an eventual sale would be used to help coconut farmers, Sevilla said.

In a disclosure to the Philippine Stock Exchange (PSE) early this month, SMC said it was looking to refinance the preferred shares it issued in 2009.

SMC is reportedly looking to raise P80 billion in a preferred shares offering in September, proceeds of which will be used to redeem the shares held by the government.

http://www.philstar.com/Article.aspx?articleId=818599&publicationSubCategoryId=66

Friday, June 15, 2012

Stock News 2012: Meralco says customers to see lower bills

GMA Network, Inc. (Photo credit: Wikipedia)
San Miguel Corp. (SMC) is betting big on the airline space with plans to invest in a regional carrier in line with its goal to double annual revenues to P1 trillion in the next few years through expansion beyond its traditional food and drink business.

At the company’s annual stockholders meeting yesterday, SMC president Ramon S. Ang said the conglomerate is looking at several airlines in the region as it further builds up its position in faster-growing and high potential industries such as power, mining, infrastructure, travel and possibly, broadcasting.

“We’re looking at several opportunities that will allow us to create synergy within the airline sector.

We’re planning to invest in a regional airline, a move that will allow us to eventually fly to Europe and other countries,” said Ang, who was credited by management for steering SMC to greater heights.

SMC acquired a substantial stake in flag carrier Philippine Airlines in April in a deal worth around $500 million. The conglomerate plans to support PAL’s fleet modernization and expansion program.

Ang said PAL is now in talks with aircraft manufacturers to acquire at least 100 new planes in the next five to seven years in line with its bid to turn around Asia’s oldest airline in two years. To achieve its goal, the company is seeking to restructure its operations to a low-cost carrier.

He said the group is also seriously considering breaking into the broadcasting industry but declined to give more details, pointing out they are open to participating in government auctions to spur faster growth. Ang earlier said they are open to acquiring state-owned stations IBC 13 and RPN-9.

When asked whether GMA Network Inc. is on its radar, Ang said: “We’d rather not comment. We’d like to keep things confidential.”

The group of telecommunications magnate Manuel V. Pangilinan earlier expressed interest to acquire GMA, which is keeping its options open with respect to the possibility of putting it up for sale.

SMC chairman and chief executive officer Eduardo Cojuangco Jr. said that while the group’s P1-trillion sales target may be ambitious, this can be done through further acquisitions, pointing out that the group’s infrastructure projects will begin generating significant growth by 2015.

“From the period 2011 to 2015, we expect San Miguel to post strong double-digit compounded annual growth rate, driven primarily by the earnings contributions from our new businesses, mainly power and Petron,” Cojuangco said.

In 2011 alone, consolidated sales revenues reached P536 billion, more than double the previous year’s P246 billion.

New businesses contributed over P345 billion or an estimated 63 percent of the groupwide sales last year.

Expected to contribute significantly to SMC’s bottomline are investments in Exxon Mobil’s downstream oil business in Malaysia and its stake in the firms operating Skyway and South Luzon Expressway.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=817225

Saturday, April 28, 2012

Stock News 2012: SMC to pour $750-M investment in PAL

Air Phillipines Boeing 737 (Photo credit: Wikipedia)
San Miguel Corp. (SMC) is investing $750 million in Philippine Airlines (PAL) and affiliate Air Philippines Corp. to help finance a $1-billion refleeting plan for the flag carrier.

In an interview with The STAR, SMC and soon to be PAL president Ramon S. Ang said they plan to order at least 100 new planes for PAL and Air Philippines.

The 100 new planes, including single-aisle and twin-aisle models, will be divided across PAL and Air Philippines. Ang didn’t say how many aircraft the carriers would retire.

Ang also disclosed that they will be doing more business with Boeing Co.

PAL also plans to resume flights to Europe and bolster services to the United States, although the latter will have to wait until after US federal aviation authorities return the Philippines to Category I from its current Category 2 status.

PAL’s long-haul expansion plans depend on the Philippines improving safety standards, Ang said. The country is blacklisted by the European Union and has a Category 2 rating from the US Federal Aviation Administration, meaning it does not meet international regulations.

PAL will “immediately” resume flights to Europe once Philippine carriers are allowed in, Ang said, listing Paris, London and Spain as possible destinations. In the U.S., the carrier is looking at New York, Chicago and Florida, he said. It already flies to San Francisco, Los Angeles, Las Vegas and Vancouver in North America.

SMC and PAL majority owner Lucio Tan earlier signed investment agreements that will result in the issuance of new shares to the former for a minority stake in PAL and low-cost partner Air Phil.

Under the agreement, Trustmark Holdings Corp. and Zuma Holdings and Management Corp., the holding companies of PAL and Air Phil will issue new shares to San Miguel Equity Investments Inc., a wholly-owned subsidiary of SMC.

Trustmark and Zuma are majority owned by Tan.

The agreement will result in SMC owning more than 40 percent of PAL.

http://www.philstar.com/Article.aspx?articleId=801320&publicationSubCategoryId=66

Monday, April 16, 2012

Stock News 2012: SMC sells 60% of Bank of Commerce

San Miguel Corp. has finalized a deal to sell a controlling stake in medium-sized lender Bank of Commerce to Malaysian banking giant CIMB Group for more than $200 million.

An Inquirer source privy to the transaction said SMC had agreed to sell “almost 60 percent” of the banking unit to CIMB for a consideration of between $200 million and $250 million. The final agreement was targeted for signing within the next few days, the source added.

The buy-in deal with CIMB was seen to allow San Miguel to focus on new ventures such as power generation and infrastructure while still participating in the growth of the bank as a minority investor. The San Miguel group, through San Miguel Properties and San Miguel Retirement Fund, owns about 79 percent of Bank of Commerce, which means that the transaction will keep the local conglomerate as a strategic partner in the bank.

The deal was finalized after CIMB’s due-diligence audit on the bank during the past few months.

“Given the aggressiveness of SMC to reconsolidate its holdings with the takeover of Philippine Airlines, power assets and other possible acquisitions overseas, it needs such liquidity to help acquire more businesses,” said Astro del Castillo, managing director at local fund management firm First Grade Holdings. “It seems like SMC continues to roll out the barrel, disposing some assets and using cash to focus on what will be good for it in the long run.”

For Bank of Commerce, Del Castillo said CIMB’s entry could make the local bank “a player to keep an eye on.”

“It will be major player. Definitely, it will help Bank of Commerce be at par with the big banks. The financial and technical expertise of the new investor will definitely be an exciting event in the years to come,” he said.

CIMB, Malaysia’s second-biggest bank, has about $98 billion (P4.12 trillion) in assets, or bigger than the resources of the top three Philippine banks combined. It has long been seeking to gain a foothold in the Philippine banking system as part of its ambition to become a strong regional player especially as the Association of Southeast Asian Nations (Asean) veers toward economic integration by 2015.

CIMB claims to have the widest retail branch network across the region and packages itself as an “indigenous Asean investment bank.”

The Malaysian bank is likewise buying most of the Asia-Pacific units of the Royal Bank of Scotland, which has been rationalizing its operations in the region.

Based on the fourth quarter 2011 statement of financial condition, Bank of Commerce had assets of P96.03 billion, making it the 16th-largest in the country in terms of resources.

Bank of Commerce is capitalized at P19.44 billion. It has a deposit base of P71.81 billion and a loan book of P44.57 billion.

The entry of CIMB is also seen allowing Bank of Commerce to improve its profitability and asset quality ratios. The local bank has a return on equity of 4.38 percent and an above-industry non-performing loan ratio of 10.47 percent.

http://business.inquirer.net/53791/smc-sells-60-of-bank-of-commerce

Friday, October 21, 2011

Stock News 2011: SMC to complete purchase of 77% of ETPI from Ongpin

Image via Wikipedia
Diversifying giant San Miguel Corporation is completing its acquisition of Roberto V. Ongpin-controlled ISM Communications Corporation’s 77 percent stake in Eastern Telecommunications Philippines Inc.

In a disclosure to the Philippine Stock Exchange, SMC said its wholly-owned subsidiary San Miguel Equity Securities Inc. has executed a share purchase agreement with ISM for the purchase of 37.7 percent of ETPI.

The purchase was authorized by the SMC board of directors during its meetings held on December 16, 2010 and September 22, 2011.

SMC had earlier acquired a 40 percent stake in ETPI from ISM through wholly-owned unit Vega Telecom Inc.

Vega has executed a Share Purchase Agreement with ISM last December 30 for the purchase by Vega of 100 percent of the outstanding and issued shares of stock of A. G. N. Philippines, Inc. (AGNP).

AGNP is the registered and beneficial owner of approximately 40 percent of Eastern Telecom. SMC said the acquisition of AGNP was authorized by its Board of Directors during its meeting held on December 16, 2010.

ISM president Eric Recto said earlier that SMC is in talks with his company for the sale of the ISM’s entire 77-percent stake in Eastern Telecoms.

For his part, Eastern Telecoms head for marketing and business development Edwin Domingo said the company plans to create a synergy with SMC-led Liberty Telecom Holdings Inc.

Later on, ETPI, Express Telecommunications Inc. and Liberty may be folded into one company. “It could be like a San Miguel telecom company,” Domingo said.

In the meantime, Domingo said ETPI is helping Liberty set up parts of the Liberty’s infrastructure.

http://mb.com.ph/articles/338493/smc-complete-purchase-77-etpi-ongpin

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