LT Group sets aside up to P11B for capex this year

By Arra B. Francia, Reporter
LT GROUP, Inc. (LTG) plans to spend P10-11 billion for capital expenditures in 2018, the bulk of which will be allocated for its property unit in a bid to expand its recurring income.
The holding company of tycoon Lucio C. Tan, Sr. has allocated P3 billion for Eton Properties Philippines, Inc. (EPPI) this year.
“It’s just a steady building up of our recurring, rental portfolio which is offices and commercial establishments… We are hopeful that BPO (business process outsourcing) will still be strong enough in the coming years,” LTG President Michael G. Tan said in a press briefing after the company’s annual shareholders’ meeting in Century Park Hotel in Manila yesterday.
EPPI will be opening its fifth BPO tower in Centris, Quezon City this year, adding more than 20,000 square meters (sq.m.) of leasable space to its portfolio. The company currently has 140,000 sq.m. of leasable space under its network.
The company is currently constructing Eton West End in Makati City, which will feature a BPO office on top of a retail mall. In Ortigas Center, EPPI will be building a strip mall located beside Xavier School.
Mr. Tan said EPPI is also looking at hotel ventures with potential partners in the future.
Part of the capex for EPPI has been allocated for its partnership with Ayala Land, Inc. The two firms earlier said it will be investing P53 billion for the first phase of Parklinks, a 35-hectare mixed-use estate covering areas in Quezon City and Pasig City.
Philippine National Bank (PNB) will corner P2.5 billion of the group’s capex this year. Mr. Tan said this will be used for upgrading the lender’s information technology systems.
Asia Brewery, Inc. (ABI), which produces beverage brands such as Cobra, Absolute, and Summit, will get P2 billion for capex, while rum-manufacturer Tanduay Distillers, Inc. will have P500 million.
LTG’s capex for this year is 35% higher than the P7.4 billion it spent in 2017.
Mr. Tan noted that 2018 will be a better year for the company, given the government’s efforts to address illicit tobacco trade involving cigarette firms not registered under the Bureau of Internal Revenue (BIR) in the country.
“We’re still hopeful that enforcement will continue, and that government could put a lid on these illegal and illicit activities. Enforcement is continuing,” Mr. Tan said.
The LTG executive, however, noted the outlook for the tobacco business remains mixed, given the additional taxes to be imposed on the sector under the Tax Reform for Acceleration and Inclusion (TRAIN) law.
The beverage business has also been hit with the passage of TRAIN, with the P6 additional tax on sugar-sweetened beverages affecting its Cobra brand. Cobra is the highest contributor to AIB’s revenues.
“Losers (from TRAIN) will be those affected by sugar tax, so Cobra is affected. Water and dairy are not taxed, that will be good. So I think it will just even out. Our portfolio is naturally hedged,” Mr. Tan explained.
He added that the company has seen a growth in water and dairy products with the implementation of TRAIN, as consumers shift to healthier drinks to avoid taxes on sugary drinks.
LTG posted a net income of P10.83 billion in 2017, 15% higher following the growth of PNB which accounted for almost half of earnings.