Home Blog Page 5654

After losing Luhansk, Ukraine forces regather for defence of Donetsk

Army soldier figurines are displayed in front of the Ukrainian and Russian flag colors background in this illustration taken, Feb. 13, 2022. — REUTERS/DADO RUVIC/ILLUSTRATION

 – Russian forces set their sights on their next objectives in Ukraine‘s eastern Donetsk province, after President Vladimir Putin claimed victory in neighboring Luhansk province as the five-month long war entered a new phase.

The capture of the city of Lysychansk on Sunday completed the Russian conquest of Luhansk, one of two regions in Donbas, the industrialized eastern region of Ukraine that has become the site of the biggest battle in Europe in generations.

Both sides have suffered heavy casualties in the fight for Luhansk, particularly during the siege of the twin cities of Lysychansk and Sievierodonetsk. Both cities have been left in ruins by the relentless Russian bombardment.

“The city doesn’t exist any more,” said Nina, a young mother who has fled Lysychansk to take refuge in the central city of Dnipro.

“It has practically been wiped off the face of the Earth. There is no humanitarian aid distribution center, it has been hit. The building which used to house the center does not exist any more. Just like many of our houses.”

Ukrainian forces on Tuesday took up new defensive lines in Donetsk, where they still control major cities, while Putin told his troops to “absolutely rest and recover their military preparedness,” while units in other areas keep fighting.

Since the outset of the conflict, Russia has demanded that Ukraine hand both Luhansk and Donetsk to pro-Moscow separatists, which have declared independent statelets.

“This is the last victory for Russia on Ukrainian territory,” Oleksiy Arestovych, adviser to President Volodymyr Zelenskiy, said in a video posted online.

“These were medium-sized cities. And this took from 4th April until 4th July — that’s 90 days. So many losses…”

Mr. Arestovych said besides the battle for Donetsk, Ukraine was hoping to launch counter offensives in the south of the country.

“Taking the cities in the east meant that 60 percent of Russian forces are now concentrated in the east and it is difficult for them to be redirected to the south,” he said.

“And there are no more forces that can be brought in from Russia. They paid a big price for Sievierodonetsk and Lysychansk.”

Some military experts reckoned the hard fought victory had brought Russian forces little strategic gain, and the outcome of what has been dubbed the “battle of the Donbas” remained in the balance.

“I think it’s a tactical victory for Russia but at an enormous cost,” said Neil Melvin of the RUSI think tank in London. He compared the battle to the huge fights for meagre territorial gains that characterized World War One.

“This has taken 60 days to make very slow progress,” he said. “I think the Russians may declare some kind of victory, but the key war battle is still yet to come.”

Mr. Melvin said the decisive battle for Ukraine was likely to take place not in the east, where Russia is mounting its main assault, but in the south, where Ukraine has begun a counter-offensive to recapture territory.

“This is where we see the Ukrainians are making progress around Kherson. There are counter-attacks beginning there and I think it’s most likely that we’ll see the momentum swing to Ukraine as it tries to then mount a large-scale counter-offensive to push the Russians back,” he said.

 

‘SUPERHUAMN EFFORT’

Mr. Zelenskiy said on Monday that despite Ukraine‘s withdrawal on Sunday from Lysychansk, its troops continued to fight.

“The Armed Forces of Ukraine respond, push back and destroy the offensive potential of the occupiers day after day,” Mr. Zelenskiy said in a nightly video message.

“We need to break them. It is a difficult task. It requires time and superhuman efforts. But we have no alternative.”

The battle for Luhansk is the closest Moscow has come to achieving one of its stated objectives since its forces were defeated trying to capture Kyiv in March. It marks Russia’s biggest victory since it captured the southern port of Mariupol in late May.

Putin launched his invasion of Ukraine on Feb. 24 , calling it a “special military operation” to demilitarize its southern neighbor and protect Russian speakers from what it calls “fascist” nationalists. Ukraine and the West say this is a baseless pretext for flagrant aggression to seize territory.

Serhiy Gaidai, the Ukrainian governor of Luhansk, acknowledged his entire province was now effectively in Russian hands, but told Reuters: “We need to win the war, not the battle for Lysychansk … It hurts a lot, but it’s not losing the war.”

Gaidai said Ukrainian forces that retreated from Lysychansk were now holding the line between Bakhmut and Sloviansk, preparing to fend off a further Russian advance.

Reuters could not verify the battlefield accounts.

Ukraine‘s hopes for a sustained counter-attack rest in part on receiving additional weapons from the West, including rockets that can neutralize Russia’s huge firepower advantage by striking deep behind the front line.

“It is a matter of how quickly the supplies come,” said Mr. Arestovych.

“In the West, there just aren’t enough weapons to be supplied. This is after all the biggest conflict since 1945…so more weapons have to be produced, and that production is on now. And at such a pace that by autumn there will be a very considerable set of weapons.” – Reuters

China rejects NASA accusation it will take over the moon

STOCK PHOTO | Image by Ponciano from Pixabay

 – China on Monday rejected as an irresponsible smear a warning from the chief of NASA that China might “take over” the moon as part of a military program, saying it has always called for the building of a community of nations in outer space.

China has stepped up the pace of its space program in the past decade, with exploration of the moon a focus. China made its first lunar uncrewed landing in 2013 and expects to launch rockets powerful enough to send astronauts to the moon towards the end of this decade. Read full story

“We must be very concerned that China is landing on the moon and saying: ‘It’s ours now and you stay out’,” NASA Administrator Bill Nelson told German newspaper Bild in an interview published on Saturday.

The U.S. space agency chief said China‘s space program was a military one and that China had stolen ideas and technology from others.

“This is not the first time that the head of the U.S. National Aeronautics and Space Administration has ignored the facts and spoken irresponsibly about China,” said Zhao Lijian, a spokesman at the Chinese foreign ministry.

“The U.S. side has constantly constructed a smear campaign against China‘s normal and reasonable outer space endeavors, and China firmly opposes such irresponsible remarks.”

China has always promoted the building of a shared future for humanity in outer space and opposed its weaponization and any arms race in space, he said.

NASA, under its Artemis program, plans to send a crewed mission to orbit the moon in 2024 and make a crewed landing near the lunar south pole by 2025.

China is planning uncrewed missions to the moon‘s south pole some time this decade. – Reuters

S.Korea to lift nuclear share of energy mix to 30% by 2030 from 27% last year

STOCK PHOTO | Image by Markus Distelrath from Pixabay

 – South Korea plans to increase the contribution of nuclear power in the country’s energy mix to 30% or more by 2030 from 27% in 2021, the industry ministry said on Tuesday, pledging to resume stalled construction work on two reactors.

South Korea’s new president, Yoon Suk-yeol, has rejected the idea of phasing out nuclear energy and made it a key pledge of his campaign to boost investment in the industry and revive its status as a key exporter of safe reactors. Read full story

The U-turn in Asia’s fourth-largest economy towards a pro-nuclear energy policy comes after Yoon won the March presidential election by the smallest margin in South Korea’s democratic history.

The previous Seoul administration sought to reduce the role of nuclear power in the wake of Japan’s Fukushima disaster in 2011, which triggered a global downturn in the nuclear power industry.

The ministry said on Tuesday South Korea will resume construction work on two new reactors, Shin Hanul 3 and 4, and extend the operations of existing reactors.

While boosting the role of nuclear energy, the country plans to reduce its reliance on fossil fuel imports from 81.8% in 2021 to around 60% by 2030, the ministry said.

“As the global carbon neutrality trend continues and global energy supply chain instability increases due to the Russia-Ukraine crisis and other factors, the role of energy policy in achieving energy security and carbon neutrality goals is more important than ever,” it said in a statement.

Meanwhile, the ministry will also revisit the previous administration’s renewable energy goals, and decide on new targeted portions for solar and wind power.

Renewable energy‘s share in the country’s energy mix will be “realistically adjusted to below 30%” by 2030, an industry ministry official told Reuters, compared with 6.3% last year, and the previous administration’s lofty 2050 projection of 60.9-70.8%. He declined to be identified as he was not authorized to speak to media.

Coal will be “reasonably” reduced, while keeping supply-and-demand conditions in consideration, the ministry added.

South Korea is the world’s fourth-largest oil importer after China, India and Japan, according to state-run Korea National Oil Corp (KNOC), while its state-run Korea Gas Corp (KOGAS) is the world’s largest single corporate buyer of liquefied natural gas (LNG), according to a KOGAS spokesperson. – Reuters

June inflation soars to 6.1%

Inflation soared to the highest in more than three years in June, fueled by higher food and transport costs, the Philippine Statistics Authority (PSA) reported on Tuesday morning.

Headline inflation in June surged by 6.1% year on year from 5.4% in May and 3.7% a year ago, preliminary data from the agency showed.

This was slightly higher than the 6% median estimate in a BusinessWorld poll conducted last week. It also settled within the 5.7%-6.5% forecast range of the Bangko Sentral ng Pilipinas (BSP) for that month.

June’s print matched the pace recorded in November 2018 and was the fastest growth since the 6.9% print in October 2018.

It was also the third consecutive month that inflation went above the BSP’s 2-4% target range.

Month on month, inflation picked up 0.9%. Adjusting for seasonality factors, month-on-month inflation rose by 1% in June.

Year to date, inflation averaged 4.4%, higher than the 4% seen in the six months to June a year ago. This was lower than the central bank’s revised 5% inflation forecast this year.

Heavily weighted food and beverages grew 6% year on year in June from 4.9% in May. Transport likewise picked up 17.1% from 14.6%.

Meanwhile, inflation as experienced by the poor households, under 2012-based prices, increased by 5% in June, higher than the 4.3% both in May and in June last year. — Abigail Marie P. Yraola

Philippine Business Bank announces schedule of annual stockholders’ meeting on July 27

 


Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

Join us on Viber to get more updates from BusinessWorld: https://bit.ly/3hv6bLA.

Bayan Telecommunications, Inc. to conduct annual stockholders’ meeting virtually on August 2

 


Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

Join us on Viber to get more updates from BusinessWorld: https://bit.ly/3hv6bLA.

Radio Communications of the Philippines, Inc. to hold annual meeting of stockholders virtually on August 2

 


Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

Join us on Viber to get more updates from BusinessWorld: https://bit.ly/3hv6bLA.

Balisacan downplays currency fall

PHILIPPINE STOCKS inched lower while the peso continued to rise against the dollar on Dec. 27, the last trading day of 2024

By Diego Gabriel C. Robles

THE COUNTRY’S Socioeconomic Planning chief on Monday belittled the peso’s free fall against the dollar, saying there is nothing to worry about.

“It’s not something that we need to worry much [about] because we still have to see how that depreciation relates with our neighbors, with our competitors and with our economic fundamentals,” Socioeconomic Planning Secretary Arsenio M. Balisacan told reporters.

The peso closed at P55.08 on Monday, a centavo stronger than its near-17-year low on Friday.

Mr. Balisacan said he “completely agrees” with central bank Governor Felipe M. Medalla, who had also dismissed the peso’s depreciation.

“I would not question the wisdom of our Bangko Sentral ng Pilipinas (BSP),” he said. “They’ve been closely watching the market and adjusting in ways that would be appropriate for our case.”

Last week, the BSP governor did say they might consider a more aggressive rate hike at their Aug. 18 meeting if consumer prices continue to spiral out of control.

“One thing is clear: In the experiences of many countries, if you are deviating for a prolonged time and much from market fundamentals, then we are likely going to suffer the consequences,” Mr. Balisacan said. “Now, we don’t think that we are at that point.”

He noted that keeping local interest rates low despite persistently high rates globally could lead to capital flight. “When that happens, it affects all other variables like our exchange rate and inflation.”

The central bank needs a balancing act, Mr. Balisacan said. “The strategy of the BSP is to adjust with the global market situation, and adjust in a way that is also appropriate for us because we have to look at other variables like inflation.”

Inflation probably hit 6% in June amid spiraling oil and food prices and higher electricity rates, according to a median estimate of 16 analysts in a BusinessWorld poll last week, boosting the case for bigger increases in key interest rates.

This would be the quickest since 6.1% in November 2018, and faster than 5.4% in May and 3.7% in June last year, according to data from the Bangko Sentral ng Pilipinas (BSP). It would also breach the central bank’s 2-4% target and the Development Budget Coordination Committee’s (DBCC) 3.7-4.7% estimate this year.

Record gasoline prices paired with unrelenting food and commodity costs are adding a strain to Filipinos’ cost of living, suggesting that the BSP might have to increase rates further to slow economic growth.

The Philippine Statistics Authority (PSA) will release June consumer price index (CPI) data on Tuesday (July 5).

Crude oil prices have spiraled out of control amid concerns over supply since Russia invaded Ukraine on Feb. 24.

Gasoline, diesel and kerosene prices had jumped by P30, P45.90 and P39.75 a liter as of June 28, according to data from the Energy department.

The Monetary Board at its June 23 meeting raised the key rate by 25 basis points to 2.5%. The BSP is prepared to “take all necessary policy action to bring inflation toward a target consistent path over the medium term and deliver on its primary mandate of price stability,” former central bank governor and now Finance Secretary Benjamin E. Diokno said then.

The central bank also raised its average inflation forecast for this year to 5% from 4.6% and to 4.2% from 3.9% for next year. The average inflation is expected to slow to 3.3% by 2024.

The BSP will hold its next policy review on Aug. 18.

OUTPUT GROWTH
Meanwhile, Mr. Balisacan said he expects the economy to grow by more than 6% this year, days before economic managers review macroeconomic forecasts.

“We’re expecting a little above 6% for this year,” he said. “Our priority is to recover quickly from the pandemic and go back to the high-growth trajectory, mindful that we would want to make that growth more inclusive and more resilient.”

This would ensure that “the next time we have pandemics like this [or] any disruptions, technological or global, the economy should not be sharply affected,” he added.

The DBCC, which in May projected growth of 7-8% this year — well above Mr. Balisacan’s estimates — will review macroeconomic estimates on Friday.

Mr. Balisacan said the government of President Ferdinand R. Marcos, Jr. would try to revive job creation and poverty reduction, while addressing government debt and rising inflation.

Despite headwinds in the near term, “we are targeting, for the entire duration of the administration, while that is not officially set yet by the [DBCC], 6.5% to 8% [growth],” Mr. Balisacan said.

The DBCC is composed of the Budget and Finance departments, National Economic and Development Authority (NEDA) which Mr. Baliscan heads, and the Office of the President. It approves macroeconomic targets including revenue projections, the borrowing and budget levels, and spending priorities.

“Understandably, we may need to revisit the targets given the setbacks caused by the pandemic,” Mr. Balisacan said in a speech at the NEDA turnover ceremony on Monday.

“Nonetheless, the aspirations and vision remain relevant, guiding us to stay the course toward improving the welfare of Filipinos,” he added.

He noted that 7% to 8% is “spectacular” in itself, and it is “even more spectacular” if it comes with improved inclusive growth.

“Particularly significant to me is the Philippines being on investors’ radars and climbing the ranks based on globally recognized comparative indicators in economic performance and institutions, technology, preparedness and fundamentals such as ease of doing business.”

San Miguel to build Bulacan airport despite veto of economic zone bill

SAN MIGUEL CORP.

By Kyle Aristophere T. Atienza, Reporter

SAN MIGUEL CORP. would proceed with building an international airport north of the Philippine capital even after a presidential veto of a bill that would have created a special economic zone there, the company said on Monday.

“San Miguel remains fully committed to continuing on its path of growth through nation-building, and building the New Manila International Airport — seen as the solution to decades of air traffic and land congestion that have severely limited the country’s growth,” it said in a statement.

Filipino billionaire and San Miguel President Ramon S. Ang said the government stands to lose $200 billion (P11 trillion) in yearly export revenue from the planned economic zone that President Ferdinand R. Marcos, Jr. rejected.

“We respect and abide by the government’s decision,” he said in the statement. “We thank him for recognizing where the proposed Freeport bill can be further improved, and we look forward to working with his administration towards perfecting this.”

Mr. Ang expressed optimism that the vision for the ecozone could still be realized after the presidential veto “given the many benefits it will bring to the country.”

He said the state could reap about $200 billion in export revenue annually from potential foreign investors in the aviation, manufacturing, technology, education, healthcare and tourism industries.

“We are eager to continue working with government and play an active role in helping our country reach its goals — as we have faithfully and consistently done,” he added.

In his veto message last week, Mr. Marcos said the bill, which gives tax incentives to ecozone locators, would “significantly narrow” the country’s tax base. He added that it is not “aligned with the government’s objective to develop a tax system with a broad base and low rates.”

Eligible enterprises outside economic zones could apply for tax perks provided by a Singapore-inspired tax law that significantly cut corporate income tax, he added.

Mr. Ang said the ecozone would be managed by the government and any tax incentives to be given to investors would still pass through the Department of Finance’s Fiscal Incentives Review Board to ensure these are aligned with the 2021 Corporate Recovery and Tax Incentives for Enterprises (CREATE) law.

He said the ecozone’s long-term benefits far outweigh any supposed “losses” due to the incentives.

San Miguel, one of the country’s biggest and most diversified companies, is investing P740 billion to turn a 2,500-hectare property in Bulacan province into an aerotropolis featuring a world-class gateway that can handle 100 million passengers yearly.

“Among our plans for the ecozone is to help create science and technology export hubs with the cheapest logistics cost, because these will be close to the airport and seaport,” Mr. Ang said.

MULTIPLE AIRPORTS
“We are looking to attract world-class semiconductor manufacturers, battery power storage system manufacturers, electric vehicle makers and even modular nuclear power assemblies and other new and emerging tech industries,” he added.

Another reason cited by Mr. Marcos for the veto is the Bulacan ecozone’s proximity to the special economic zone in Clark, Pampanga.

But Mr. Ang said there’s a considerable distance between the two. Large and progressive cities all over the world have multiple airports, such as Tokyo and New York, he added, noting that Clark is about 100 kilometers from Metro Manila.

He said the government should anticipate the long-term population and economic growth of Metro Manila and the main island of Luzon in the next 20-30 years and take into consideration the limited expansion opportunities for the current gateway, Ninoy Aquino International Airport (NAIA).

NAIA has space for only one runway operating at any given time, compared with the Bulacan airport’s four parallel runways, he added.

“The country would need several airports to efficiently serve Filipinos, tourists, and industries,” he said.  “What we don’t want is to repeat the mistakes of the past where we were not quick enough to develop new infrastructure, giving rise to overcapacity and congestion on our aging roads, ports and other facilities, and even in our skies.”

Analysts at the weekend mostly welcomed the veto, saying it sent a message that public interest should trump business gains.

Meanwhile, the Presidential Palace said Mr. Marcos is still open to supporting the ecozone once lawmakers fix the “defects” of the bill.

“We understand the feelings of disappointment, but this is the stand of the President: Let’s fix this now, so we don’t wait for it to be challenged later on,” Press Secretary Trixie Cruz-Angeles told a news briefing.

“It is his commitment to sharpen the law, so when this is indeed passed, then he can fully support it.”

Also on Monday, Albay Rep. Jose Maria Clemente S. Salceda said the House of Representatives would require a cost-and-benefit analysis of the proposed Bulacan economic zone and will introduce safeguards to address Mr. Marcos’ concerns.

“As early as now, I am telling potential investors and other proponents to give us a sense of their plans so that we can already weigh the costs versus the benefits,” he said in a Viber message. “What I can assure the President and the public is that we will make sure that the concerns in the veto message are addressed.”

Senator Juan Miguel F. Zubiri, who is poised to lead the Senate majority, made a similar assurance. The Senate would “give due priority in correcting the deficiencies pointed out by the Executive department,” he said in a Viber message.

New BSP chief to sustain reforms

FELIPE M. MEDALLA / COURTESY OF BANGKO SENTRAL NG PILIPINAS
FELIPE M. MEDALLA / COURTESY OF BANGKO SENTRAL NG PILIPINAS

PHILIPPINE CENTRAL BANK Governor Felipe M. Medalla would continue the “game-changing” reforms of the central bank, including its digitalization initiatives amid challenges to the country’s financial system, his predecessor said on Monday.

“I am confident that with the leadership of your new team captain — Governor Medalla — and the Monetary Board, you will continue to deliver game-changing reforms and bring the Bangko Sentral ng Pilipinas (BSP) even closer to the Filipino people,” former BSP governor and now Finance Secretary Benjamin E. Diokno said in a speech at the BSP’s 29th anniversary and turnover ceremony.

The central bank’s transformation road map on digital payments would make significant strides under Mr. Medalla’s leadership, he added.

The BSP launched the road map for 2020 to 2023, charting its initiatives toward an efficient, inclusive, safe and secure digital payment ecosystem.

The promotion of digital transformation is at the forefront of the BSP’s policy agenda as the country transitions into a cash-lite society.

Digitalization of payments has allowed households, businesses and the government to do business online amid lockdowns spurred by a global coronavirus pandemic.

Mr. Diokno recounted uncertainties and how the central bank provided “a sense of confidence and predictability” at the height of the pandemic that has killed more than 60,000 Filipinos and 6.4 million worldwide.

“We have gone through a crisis like no other, with no emergency response playbook to which we could refer,” he said. “But we kept our eyes on the ball. We remained agile and innovative. We boosted market confidence. We implemented extraordinary liquidity measures.”

The central bank worked closely with other agencies and stakeholders in enforcing financial reforms including consumer protection, he added.

These reforms provided relief to pandemic-hit sectors and safeguarded consumers from unethical and fraudulent financial schemes, Mr. Diokno said.

He also cited the BSP’s help in the approval of the Gold Law, Philippine Identification System Act, Islamic Banking Law and changes to the BSP charter before the pandemic.

Under the former governor’s leadership, the central bank promoted green finance, studied the feasibility of a central bank digital currency and released the country’s first polymer banknote.

“We have kept a patient hand on our monetary policy levers in the face of rising inflation to allow our economic recovery to gain a stronger foothold,” Mr. Diokno said.

“Our banking sector continues to be sound and stable — the result of good corporate governance and appropriate risk management practices, as well as sound banking sector regulations and a robust supervisory framework,” he added. — Keisha B. Ta-asan

Razon firm completes first phase of Wawa water project

RAZON-LED Prime Infrastructure Capital, Inc. through its unit WawaJVCo, Inc. announced that it completed the Tayabasan weir, which is the first phase of its Wawa bulk water supply project.

“True to our fast and lean management approach, Prime Infra through WawaJVCo has delivered a critical water infrastructure that supports the country’s infrastructure development agenda with speed. As you all know, this phase of the project was finished ahead of schedule in the middle of a pandemic,” Prime Infra President and Chief Executive Guillaume Lucci said in a statement on Monday.

The water infrastructure project aims to provide ample water supply to Metro Manila and the province of Rizal.

The Tayabasan weir is a 25-meter roller-compacted concrete structure designed to deliver 80 million liters per day (MLD).

It comprises three parts: the weir, where water is impounded; the pumping station, which brings the bulk water to the water treatment plant; and the buried water pipeline, where the bulk water passes to get to the water treatment plant.

In June, the Tayabasan weir filled up its reservoir ahead of its completion in October.

Meanwhile, second phase of the project or the upper Wawa dam is expected to be completed by 2025 and will deliver at least 518 MLD to off-taker Manila Water Co., Inc. and the Metropolitan Waterworks and Sewerage System.

Mr. Lucci said that the firm was able to secure the necessary permits and obtain the seal of approval for the social aspects of the project, which “further demonstrates our capability to deliver not only critical water infrastructure, but also provide economic upliftment of local communities and environmental conservation.”

In March, WawaJVCo obtained the approval of the Dumagat or Remontado indigenous people for the upper Wawa dam.  This marked the fourth and final memorandum of agreement in the free and prior, informed consent process for the project.

The firm added that it also secured the necessary permits from various government agencies, including the Department of Environment and Natural Resources, Environmental Management Bureau, the Protected Area Management Board of the Upper Marikina River Basin Protected Landscape, and the concerned local government units.

In June, Prime Infra filed for a P28.2-billion initial public offering with the Securities and Exchange Commission.

The firm plans to offer around 1.76 billion common shares at an offer price of up to P14.60, with an overallotment option of up to 175.58 million shares.

Net proceeds from the offer will be used to fund projects in the group’s energy and water as well as waste and sustainable fuels businesses. — Luisa Maria Jacinta C. Jocson

Fruitas to use part of one-off Balai gain for Ling Nam deal

FRUITAS Holdings, Inc. plans to use part of its one-time gain from selling existing shares in subsidiary Balai ni Fruitas, Inc. to fund its latest acquisition, Ling Nam Wanton Parlor and Noodle Factory.

In a disclosure on Monday, Fruitas said the sale of the Balai shares “will result in an increase of its equity.” It added that at the Fruitas level, proceeds “will be deployed into new strategic initiatives, including the acquisition” of Ling Nam.

On June 30, Balai listed 1.49 billion primary and secondary shares, along with 37.5 million option shares at 70 centavos apiece during its initial public offering (IPO).

Fruitas raised around P203.8 million in net primary proceeds for the unit and minimum gross proceeds of P35 million for Fruitas, “with additional proceeds potentially coming after the price stabilization period.”

“The IPO proceeds and the company’s strong cash generation from our operations will allow us to aggressively grow our business,” Balai ni Fruitas, Inc. President and Chief Executive Officer Lester C. Yu said.

Currently, Balai has three active brands, namely: Buko Ni Fruitas, Fruitas House of Desserts, and Balai Pandesal.

Fruitas has aggressively expanded the Balai Pandesal brand from five stores at the time of acquisition to 38 stores as of June 2022. It has opened new stores in different parts of Metro Manila, including a community store in Brgy. Fairview Park, the first Balai Pandesal local bakery in Brgy. Krus na Ligas, and the first Balai Pandesal kiosk in Ayala Malls Cloverleaf.

Balai targets to grow its store network to 130 by 2023, and 200 by 2026.

The company reported revenues of P148.9 million for 2021, a 35% increase from its 2020 revenue of P110.1 million. It recorded a net profit of P8.5 million last year, without disclosing a comparative figure, which it said was driven by the addition of the Balai Pandesal brand and the strong performance of its stores.

For the first quarter of 2022, Balai posted revenues of P60.6 million and a net profit of P6.4 million, which it said were 41% and 75% of expected full-year 2021 levels, respectively.

“This was achieved despite stricter mobility restrictions particularly in January 2022,” it said, adding that the company “expects even faster growth in subsequent quarters.”

Balai started its operations in August 2005 when it opened its first Buko Ni Fruitas kiosk in Robinsons Place Manila serving fresh coconut-based beverages and desserts. Since then, the company has expanded to create and acquire new brands.

Fruitas aims to replicate the organic expansion that it has done for other small acquisitions such as de Original Jamaican Pattie, Sabroso Lechon, and The Tofu Store, which was rebranded into Soy & Bean, and successfully integrate them into the group.

Through the Balai IPO, Fruitas said it “continues its objective to be a ubiquitous food and beverage company with increased penetration and scalability in the market.”

Its latest acquisition target, Ling Nam, was built in the 1950s. The restaurant is known for its Cantonese dishes such as noodles, congee, and other dim sum products.

At the stock exchange, Balai shares were unchanged on Monday at P0.67 apiece. — Justine Irish DP. Tabile