Alliance Global to diversify for new revenue sources
ALLIANCE GLOBAL GROUP, Inc. (AGI) is embarking on an earnings diversification and digitalization strategy to help support recovery from the impact of the coronavirus pandemic.
In the company’s annual stockholders’ meeting held virtually on Thursday, AGI Vice-Chairman and CEO Kevin Andrew L. Tan introduced a five-point recovery strategy which centers on opening new revenue streams to support its finances.
“While sticking to our core competence in real estate and consumer sectors, we are diversifying and expanding our revenue mix to provide for future growth without sacrificing earnings stability,” he said.
Mr. Tan did not specify how AGI will do this, but he mentioned how the diversification of Megaworld Corp. and Emperador, Inc. have involved offering new projects and entering new markets while sticking to their core businesses.
Megaworld started boosting its recurring revenue streams in 2015 with the opening of more office buildings and lifestyle malls to complement its real estate sales. It also acquired more properties outside Metro Manila, which helped cushion its revenues from localized dips.
On the other hand, Emperador has started bringing international markets into its portfolio, as it strengthened the sale of its products in countries such as China, United Kingdom, Russia, United States, Sweden, Spain and Indo-China.
Apart from diversification, the other elements in AGI’s five-point strategy are digitalization, financial flexibility, adaptability, and sustainability and well-being.
Megaworld has recently announced forming a digital subsidiary, AGILE Digital Ventures, Inc., which would invest in technology startups to adapt to the changing market.
It is pouring $5 million (about P250 million) in its own startup brand PICK.A.ROO, an on-demand lifestyle delivery mobile app that will launch on Aug. 18.
As part of keeping its financial flexibility, AGI has cut its 2020 budget for capital expenditures by almost half to P42 billion, most of which will go to Megaworld’s residential, office and mall projects that are already committed for completion.
While its priority is to preserve cash, Mr. Tan said the company remains open to opportunities that may arise, particularly in land banking and acquisitions.
“All throughout (several) milestones in our company’s history, one underlying factor that allowed AGI to take advantage of those opportunities was its strong balance sheet, which was achieved through years of financial discipline and prudence,” he said.
“Businesses should pave the way in coexisting with the virus in order to survive,” Mr. Tan added.
AGI earnings dropped 32% to P3 billion in the first quarter as a result of the Taal Volcano eruption in January and the coronavirus-related lockdown in March.
AGI is the holding firm of tycoon Andrew L. Tan, who also has interests in hotel and casino through Travellers International Hotel Group, Inc., and in McDonald’s Philippines through a joint venture with the Yang family.
Shares in AGI at the stock exchange dipped seven centavos or 1.25% to P5.53 each on Thursday.