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SMC plans tender offer for Holcim PHL minority shareholders

DIVERSIFIED conglomerate San Miguel Corp. (SMC) will have to conduct a tender offer to minority shareholders of Holcim Philippines, Inc. (HPI) in relation to its $2.15-billion acquisition of the listed cement manufacturer.

SMC disclosed on Friday that it will acquire 5.531 million common shares in HPI, representing 85.73% of the company’s total outstanding and issued capital stock.

The acquisition will be made through First Stronghold Cement Industries, Inc., a wholly-owned unit of SMC’s subsidiary San Miguel Equity Investments, Inc.

“As a result of the Transaction, the Purchaser is required to conduct a tender offer of the shares of HPI held by its minority shareholders who hold 14.27% of the total issued and outstanding capital stock of HPI,” SMC said.

SMC said it plans to request for exemptive relief with the Securities and Exchange Commission (SEC) to allow the tender offer to be conducted after the final purchase price has been determined and paid.

The company said the purchase price was negotiated and determined based on the valuation of HPI’s business through a discounted cash flow method, “as well as other methodologies customary for transactions of this nature.”

The $2.15-billion purchase price is also inclusive of fees for transitional service arrangements.

In a separate statement, HPI’s parent LafargeHolcim said it expects to close the transaction by the fourth quarter of 2019 and is seen to improve its debt ratio by around 0.3 times.

The group’s sale of its Philippine assets follows its divestment from Indonesia, Malaysia, and Singapore, worth a total enterprise value of $4.9 billion.

“With the divestment of our activities in the Philippines, we are completing our exit from the increasingly hyper competitive arena in South East Asia. While this decision is based on our strategic portfolio review, we have reached very attractive valuations allowing us to achieve a new level of financial strength,” LafargeHolcim Chief Executive Officer Jan Jenisch said in a statement.

The transaction also require the approval of the Philippine Competition Commission (PCC), as it exceeded the transaction value of mergers and acquisitions that should be reported.

“The PCC has not yet received the notification by San Miguel Corp or Holcim / LaFarge Philippines for mandatory review. The parties have 30 days after signing of their definitive agreement to submit the notification,” PCC Chairman Arsenio M. Balisacan said in a text message on Friday.

“The transaction shall be treated as a separate review given our ongoing enforcement case in the cement industry.”

Shares in SMC dropped 2.81% or P5.50 to close at P190 each at the stock exchange on Friday, while shares in HPI jumped 6.10% or 88 centavos to close at P15.30 apiece. — Arra B. Francia with input from Janina C. Lim

Earnings of LT Group jump 22% in first 3 months

By Arra B. Francia, Senior Reporter

LT Group, Inc. (LTG) generated a 22% attributable profit increase in the three months ending March, following a double-digit profit growth in its banking, tobacco, liquor, and real estate businesses.

The holding firm of tycoon Lucio Tan, Sr said in a statement Friday that net income attributable to the parent stood at P4.42 billion as of end-March, higher than the P3.63 billion it posted in the same period a year ago.

The tobacco business accounted for 64% of LTG’s total earnings, followed by the banking segment through Philippine National Bank (PNB) which contributed 24%. Contributions from Tanduay Distillers, Inc. (TDI), Eton Properties Philippines, Inc., Asia Brewery, Inc. (ABI), and Victorias Milling Company, Inc. were at 5%, 3%, 2%, and 2%, respectively.

LTG’s equity in net earnings from its 49.6% stake in PMFTC, Inc. stood at P2.69 billion, 18% higher year on year. The company attributed this to improved volume mix and the price increases implemented last December.

The company however said that the passage of higher excise taxes on tobacco products may slow down volumes. It noted that the industry’s volume has declined by 33% to about 73 billion sticks in 2018 over the last six years.

For PNB, net income under the pooling method jumped 30% to P1.95 billion. The listed lender grew its assets by 21% to P1.03 trillion by end-March, against P854 billion from the same period a year ago.

TDI’s net income surged 73% to P234 million, on the back of a five percent increase in volume. Its bioethanol sales also improved during the period. The liquor manufacturer said its nationwide market share is now at 28.1%, against 26.1% in March last year.

Eton Properties also delivered a 54% jump in earnings to P149 million, as revenues increased by 11% thanks to higher leasing income and residential sales. The property unit’s recent projects include Eton Square Ortigas, a pocket retail development in Ortigas Avenue, San Juan City completed in 2018, that is now fully leased out.

The property developer also looks to complete the retail and office components of Eton WestEnd Square in Makati by the end of the year.

Meanwhile, ABI’s net income dropped by 45% to P82 million, despite a 13% increase in revenues to P3.86 billion.

“The lower income was largely due to higher PET (polyethylene terephthalate) packaging costs and as the Company spent more on advertising and promotions,” LT Group said.

Shares in LTG added 0.24% or four centavos to close at P16.92 each at the stock exchange on Friday.

Chelsea 1st quarter income rises 21%

EARNINGS of Chelsea Logistics and Infrastructure Holdings Corp. jumped by 21% in the first three months of the year, driven by robust revenues from its logistics business.

The Dennis A. Uy-led company said in a statement Friday its net income stood at P139 million in the first quarter, as revenues rose 33% to P1.6 billion.

The bulk or 90% of revenues came from the shipping segment which saw a 32% increase to P1.5 billion.

The logistics segment also contributed P118 million, more than double the P58 million it posted last year.

“We are thrilled with the remarkable partial results of our logistics expansion program in terms of top and bottomline, and this is just the beginning. We are continuously expanding and optimizing our logistics assets and seizing opportunities to extend our reach,” Chelsea President and Chief Executive Officer Chryss Alfonsus V. Damuy was quoted as saying.

The company said its shipping revenues were boosted by a 36% rise in passage revenues to P296 million, a 35% increase in tankers and tugs revenues to P663 million, and a 28% growth in freight revenues to P522 million.

Costs and services grew 33%, operating expenses increased 21% and other charges up 128% due to the new vessels acquired by the company, namely the M/V Stella del Mar, M/V Salve Regina and M/V Trans-Asia which were all operating in the January to March period. — Denise A. Valdez

JG Summit creates digital equity ventures unit

JG Summit Holdings, Inc. is diving further into the digital space, pouring $50 million into a unit that will invest in digital ventures and emerging technologies in Southeast Asia.

The Gokongwei-led conglomerate said in a statement Friday that it established JG Digital Equity Ventures (JG DEV), which will deploy capital to early stage startups and successful portfolio companies raising funding at later stages.

The listed firm said JG DEV’s investments will be within the new media, consumer sector, retail and financial services verticals. It will also look at technology platforms that could power future industries such as digital health, data, and logistics.

The aim is to invest in startups that can either augment or disrupt JG Summit’s core businesses, which cover air transport, real estate, banking, telco, power generation, agro-industrial and commodities, and petrochemicals.

“Digital is a key pillar to JG Summit’s future. There is no shortage of ideas in the digital space, so we must focus on a few big bets that generate the most value,” JG Summit President and Chief Executive Officer Lance Y. Gokongwei said in a statement.

JG Summit has already invested at least $40 million in technology startups in the past. This includes SEA Limited, the firm behind online marketplace Shopee, as well as digital lender Oriente which operates in Indonesia, Vietnam, and the Philippines.

“JG is known to have very strong offline businesses. Our group is behind the pack in this digital journey, so our challenge is to leapfrog from where we are,” JG DEV Chief Executive Officer Bach Johann M. Sebastian was quoted as saying.

So far, JG DEV’s portfolio already includes Cashalo, a mobile app that allows users online and offline financing using their smartphones; Growsari, a retail startup that gives sari-sari stores direct access to suppliers; and Snapcart, which provides analytics services to brands by processing offline date like grocery receipts.

JG DEV will also be tasked to build digital businesses in-house and enter into joint ventures that will help its parent firm’s other subsidiaries, such as Cebu Pacific, Robinsons Retail Holdings, Inc., Universal Robina Corp., and Robinsons Land Corp.

“Given the unique combination of the JG’s extensive ecosystem, massive customer base and its forward-thinking leadership, I’m confident that JG DEV will emerge as a digital leader in Asia,” JG DEV Chief Operating Officer Ian Estrada said in a statement.

Shares in JG Summit firmed up 1.32% or 80 centavos to close at P61.50 each at the stock exchange on Friday. — Arra B. Francia

Swiss challenge for CTBEx seen before end-2019

THE Metro Pacific Tollways Corp. (MPTC) said it is expecting to conduct the Swiss challenge for the Cavite-Tagaytay-Batangas Expressway (CTBEx) project before the year ends.

“We’re hoping by at least third or fourth quarter it will be undergoing Swiss challenge already. It’s already May, and hopefully by second quarter it will be cleared for Swiss challenge so we can do the Swiss challenge by the third quarter, at the latest fourth quarter,” MPTC President Rodrigo E. Franco told reporters last Tuesday.

The CTBEx proposal of MPTC’s MPCALA Holdings, Inc. is currently being evaluated by the National Economic and Development Authority (NEDA). It was given original proponent status by the Department of Public Works and Highways (DPWH) in July 2018.

MPCALA Holdings proposed to build a P22.43-billion, 50.42-kilometer toll road that would connect the Cavite-Laguna Expressway at the Silang East Interchange to Tagaytay City and Nasugbu, Batangas.

It is expected to reduce travel time from Governor’s Drive to Nasugbu by 58 minutes, and from Sta. Rosa to Tagaytay by 1 hour and 15 minutes.

Under the Swiss challenge, third parties are invited to submit competing offers, while the original proponent will be given the right to match them.

If MPCALA Holdings prevails during the Swiss challenge, it will be awarded the concession for the CTBEx project.

MPCALA Holdings is under MPTC, the tollways unit of Metro Pacific Investments Corp. (MPIC). MPIC is one of three key Philippine units of Hong Kong based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

Cosco Q1 profit hits P8.53B thanks to sale of Liquigaz

COSCO Capital, Inc. reported its net income attributable to equity holders of the parent company surged by 605% to P8.53 billion in the first quarter, thanks to the gain from the sale of Liquigaz Philippines Corp.

In a statement issued Friday, the retail holding firm of tycoon Lucio L. Co said core net income attributable to the parent increased by 9% to P1.32 billion, riding on the back of the country’s economic growth and higher consumer spending.

Cosco completed its divestment from Liquigaz last January, selling its entire stake in the liquefied petroleum gas firm to Fernwood Holdings, Inc. The company did not disclose the value of the transaction, but noted that it is less than 12% of total assets as of December 2017 or P111.61 billion.

The listed firm’s grocery retailing business through Puregold Price Club, Inc. and S&R Membership Shopping Club, delivered consolidated revenues of P34.8 billion, 12.8% higher year on year. Consolidated net income accordingly grew 11.9% to P1.5 billion.

Same-store sales growth stood at 6.9% for Puregold stores, while S&R’s ended at 9.4%.

“Our SSSG in the first quarter of 2019 is driven by higher consumer spending fueled both by minimum wage inflation in 2018 and easing inflation in 2019,” Puregold said in a separate statement.

The company opened a total of eight new Puregold stores and one S&R Warehouse Club during the period, bringing its total store count to 417 by end-March. Its total net selling area is now at about 550,000 square meters.

Cosco’s liquor distribution business recorded a 28.3% increase in net income to P230 million, after consolidated revenues climbed 24% to P2.1 billion. The company benefited from higher sales of Alfonso Light Brandy and Alfonso Brandy.

Office Warehouse, Inc., the company’s specialty retailing business segment, posted a 212% profit jump to P29 million. Revenues likewise grew 24.5% to P621 million. Same-store-sales growth was healthy at 18% from across 88 operating stores.

Meanwhile, the commercial real estate segment posted a net income of P313 million, 10.5% higher year on year, following a 5.4% uptick in total revenues to P641 million. — Arra B. Francia

Developer CPG posts 36% higher profit in Q1

Asian Century Center
CENTURY PROPERTIES GROUP, INC.

CENTURY Properties Group, Inc. (CPG) saw its earnings grow by 36% in the first quarter, on higher real estate sales and leasing revenues.

In a regulatory filing Friday, the Antonio-led property developer reported its net income attributable to equity holders of the parent company stood at P367.8 million in the January to March period.

Revenues went up 2.3% to P2.773 billion year on year.

Broken down, real estate revenues grew by 4.44% to P2.447 billion during the first quarter, “coming from the company’s affordable housing business and the additional substantial progress in construction and sales take up of its on-going in-city vertical developments.”

Leasing revenues also increased by 29.52% to P108.85 million due to the revenues generated from the start of operations of its new Asian Century Center, a 21-storey office building in Bonifacio Global City, Taguig.

“We continue to improve on our operational efficiencies while implementing the company’s expansion programs. The goal is to grow CPG’s new allied real estate businesses to have a diversified net income mix with more sustainable cash flow and recurring income. The company’s hard work has started showing positive results that will drive its growth in the medium to long term,” Ponciano S. Carreon, Jr., chief finance officer and head for investor relations of CPG, said in a statement.

The company announced that its affordable housing brand PHirst Park Homes sold more than 3,000 housing units with value at about P4.4 billion from three projects as of end of April this year. — V.M.P.Galang

Max’s income grows by 18% in Jan-March

Max’s Group, Inc. (MGI) grew its net income by 17.6% in the first quarter of 2019, as the company benefited from its strategic shift to franchising and other cost stabilization efforts.

In a statement issued Friday, the listed casual dining restaurant group said net income reached P146 million in the first three months of the year following a 4.2% rise in revenues to P3.4 billion. Systemwide sales also firmed up 3.4% to P4.6 billion.

“Our improved year on year performance is attributed to the effectiveness of our reshaped growth strategies in 2018, particularly our focus on franchising, cost stabilization, and customer-centric activities,” MGI President and Chief Executive Officer Robert F. Trota said in a statement.

The company noted that franchising income jumped 47.5% to P225.1 million against the P152.6 million seen in the same period a year ago. Commissary sales also went up seven percent to P404.1 million.

This came after MGI’s decision to have more franchised stores by 2022, with a ratio of 70% to 30% versus company-owned stores. Company-owned stores currently account for 60% of total stores, while the remaining 40% are franchised.

The strategy is also seen to accelerate its long-term expansion.

“Through the strategic capabilities that we have built over the years, notably analytics, restaurant systems and an integrated supply chain, we are generating a more profitable mix and increasing operational efficiencies,” MGI Group Chief Operating Officer Ariel P. Fermin said in a statement.

MGI opened a total of 14 new stores in the first quarter, two of which are located in the United Arab Emirates, one in Saudi Arabia, and one in Canada. This brings the company’s total store count to 706 outlets. — Arra B. Francia

Philippine Seven income drops 41% in 1st quarter

THE local licensee of 7-Eleven convenience stores reported a 41% profit decline in the first quarter of the year, as it used a new accounting rule that changes the recognition of leased properties.

Philippine Seven Corp. (PSC) said in a statement Friday that net income stood at P112.2 million, lower than the P190.5 million it posted in the same period a year ago. Systemwide sales meanwhile went up 18% to P12.54 billion.

The company noted that the International Financial Reporting Standards on Leases (IFRS 16), which took effect at the start of the year, pulled down profitability since most of its stores are under long-term lease agreements.

“IFRS 16 requires lessees to recognize an asset on the right to use the leased property (the right-of-use asset) and a liability, for the obligation to make lease payments…Unlike, the previous accounting policy, rental payments are recognized as expense evenly or on a straight-line basis over the life of the lease,” the company explained.

Without IFRS 16, net income would have grown 48.3% to P282.6 million.

PSC was supported by a 6.8% same store sales growth and higher number of operating stores. The company ended the quarter with 2,593 7-Eleven stores, following the addition of 56 branches and closure of 13. — Arra B. Francia

Peso strengthens after BSP rate cut

THE PESO strengthened against the greenback on Friday after the central bank cut policy rates amid easing inflation expectations.

The local currency strengthened by 18 centavos to close at P52.12 against the dollar on Friday from P52.30 a day before.

The peso was stronger the entire session, opening slightly higher at P52.225 versus the dollar. It slipped to as low as P52.27 intraday, while its best showing was at P52.085 against the greenback.

Trading volume declined to $1.002 billion from the $1.038 billion that exchanged hands the previous day.

Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. (RCBC), said in a text message that the peso strengthened “after the latest monetary easing by way of a 25 basis points cut in policy rates amid sustained easing trend in inflation.”

The BSP’s policy-setting Monetary Board reduced key rates by 25 basis points on Thursday on the back of a “manageable” inflation outlook. Officials said a possible cut in big banks’ reserve requirements will be discussed in the policy-setting body’s meeting next week.

Likely faster economic growth following the 2019 budget’s passage, as well as the continuing trade talks between US and China, resulted in improved risk appetite that supported the peso, Mr. Ricafort added.

The successful euro bond sale of the government, through which it raised €750 million via eight-year global bonds, well above its initial offer of €500 million due to oversubscription, also improved sentiment, he added.

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc., also attributed the peso’s strengthening to the Bangko Sentral ng Pilipinas’ move to loosen its policy.

“Generally, the BSP cut is a sign that the economy has potential to go higher than it has,” Mr. Asuncion said. — R.J.N. Ignacio

Pag-IBIG Fund books higher income in Q1

THE HOME Development Mutual Fund (Pag-IBIG Fund) booked a higher net income in first quarter on improved loan demand and collections.

In a statement, Pag-IBIG said its net income reached P8.96 billion in the first three months of 2019, climbing 10.5% year-on-year.

Gross income, on the other hand, also rose 7.3% to P12.05 billion in the quarter from the year-ago level.

“While the first three months of the year are usually slow for most companies, we have once again bucked the trend as we continue to achieve double digit growth. The demand for our home loan and cash loan programs exceeded our projections by a considerable margin and marked increases from the same period last year,” Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti was quoted as saying in the statement.

In the January to March period, Pag-IBIG’s home loans releases went up 22% year-on-year to P17.21 billion while the number of borrowers increased 13% to 19,696.

Meanwhile, short-term loans (STL) or cash loan releases rose 8% year-on-year to P12.05 billion in the quarter as the number of borrowers grew to 593,269, also higher by 12% from the previous year’s total.

On the other hand, collections stood at P40.24 billion in the period, up 13% from the comparable year-ago period.

Collected members’ monthly savings went up 16% to P11.15 billion. Payments for home loans grew 15% to P15.25 billion, while STL payments went up 8% to P13.67 billion in the first quarter.

Pag-IBIG Fund’s total assets reached P552 billion as of March, 12% higher versus the previous year’s level.

“Our Q1 financials prove once again how robust the workers’ fund really is. We achieved our best year yet in 2018. If the upward trend continues in the next three quarters, we may well be on the way to achieve another best year in 2019,” Mr. Moti said. — GMC

Shares decline further as US-China trade woes deepen

SHARES slipped on Friday as investors focused on the US’ tariff hike on $200-billion worth of Chinese goods.

The bellwether Philippine Stock Exchange index (PSEi) shed 0.17% or 13.42 points to close at 7,742.20, continuing the bloodbath seen in the previous session after a disappointing Philippine first-quarter gross domestic product (GDP) reading.

The broader all shares index likewise dropped 0.34% or 16.59 points to 4,791.26.

“Philippine shares whipsawed between gains and losses today before settling the red with the trade tension at the center,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile phone message on Friday.

The United Sates increased tariffs to 25% from 10% on $200 billion worth of Chinese goods at 12:01AM ET on Friday amid ongoing trade negotiations in Washington. Beijing was reported to say that it “deeply regrets” the implementation of the tariff hikes, adding that it will take countermeasures.

Philstocks Financial, Inc. also attributed the PSEi’s decline to the tariff hike, saying in a market note on Friday: “US-China trade war escalation and dismal Q1 2019 GDP sent local stocks lower today.”

The country’s first quarter GDP growth was recorded at 5.6%, lower than the previous quarter’s 6.3% and the 6.5% recorded in the same period a year ago.

Despite the tariff hike, Chinese indices soared on Friday as investors went bargain hunting after several sessions in the red. The Shanghai Composite index jumped 3.1% or 88.26 points to 2,949.21 while the Shenzhen Component firmed up 4.03% or 358.08 points to 9,235.39.

The Hang Seng index also edged higher by 0.84% or 239.17 points to 28,550.24, while other Asian indices finished lower.

Wall Street indices meanwhile incurred losses overnight, as the Dow Jones Industrial Average retreated 0.54% or 138.97 points to 25,828.36. The S&P 500 index went down 0.3% or 8.70 points to 2,870.72, while the Nasdaq Composite index tumbled 0.41% or 32.73 points to 7,910.59.

Back home, four sectoral indices stayed in negative territory, including mining and oil which plunged 1.88% or 140.80 points to 7,325.28. Holding firms fell 0.92% or 68.36 points to 7,345.91; services slumped 0.66% or 10.75 points to 1,595.57, while property dipped 0.01% or 0.74 point to 4,118.

In contrast, financials jumped 1.17% or 20.27 points to 1,738.83 and industrials rose 0.2% or 23.92 points to 11,528.32.

Some 817.38 million issues switched hands valued at P7.55 billion, lower than Thursday’s P9.1-billion turnover.

Decliners outpaced advancers, 101 to 78, while 64 names were unchanged.

Foreign investors remained in net selling mode at P688.25 million, although lower than the previous session’s P1.63-billion net outflow. — Arra B. Francia

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