Business World

Philippine builders may benefit from state’s renewed infra dev’t plan

- By Ashley Erika O. Jose Reporter

LISTED constructi­on companies are expected to post better results this year amid a growing state focus on infrastruc­ture developmen­t and with the Philippine central bank widely expected to start cutting interest rates, analysts said.

“There will be faster growth this year as government public-private partnershi­p projects pick up and easing inflation lowers constructi­on and funding costs,” Cristina S. Ulang, research head at First Metro Investment Corp., said in a Viber message on Tuesday.

Infrastruc­ture spending increased by 66% to P122.1 billion in August from a year earlier as the government fasttracke­d projects, the Budget department said in October.

“If the government maintains or increases its focus on infrastruc­ture developmen­t, as indicated by ongoing projects and future plans, listed constructi­on companies may experience positive growth,” Globalinks Securities and Stocks, Inc. head of sales trading Toby Allan C. Arce said in a Viber message.

“Continued government support often translates to a steady flow of projects, contributi­ng to the constructi­on sector’s overall performanc­e. Conversely, economic challenges or uncertaint­ies may impact the willingnes­s of both public and private sectors to invest in constructi­on projects,” he added.

Constructi­on industry growth could improve this year amid faster economic growth, easing inflation and possible Fed rate cuts, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., separately said via Viber.

Inflation likely eased to 4% in December, according to a median estimate of 13 analysts in a Business World poll last week, amid lower prices of fruits and vegetables, electricit­y and fuel.

The Monetary Board in December kept its benchmark rate at a 16-year high of 6.5% for a second straight meeting. From May 2022 to October this year, it raised borrowing costs by 450 basis points to tame inflation.

“The government’s budget on infrastruc­ture continues to be significan­t, while a potential drop in interest rates that would result from a sustained decline in inflation could encourage the private sector to boost capital expenditur­es,” April Lynn LeeTan, chief equity strategist at COL Financial Group, Inc. said in a Viber message.

Listed constructi­on companies had mixed earnings results in the third quarter. Megawide Constructi­on Corp.’s net loss narrowed to P29.85 million from P319.58 million a year ago on higher revenue.

Megawide’s attributab­le net income in the nine months to September hit P333.31 million, a turnaround from the P445.25million net loss a year earlier.

EEI Corp. reported an attributab­le net income of P406 million for the third quarter, higher than P33.08 a year earlier, while revenue rose by 5.3% to P4.35 billion. But it posted an attributab­le net loss of P294.97 million in nine months from a P149.68-million profit a year ago.

During the quarter, Phinma Corp.’s attributab­le net income rose by 40.5% year on year to P582.77 million on higher revenue. Its attributab­le net income fell by 3.7% to P791.53 million in nine months.

The growth of constructi­on companies would also be driven by renewable energy projects, Mr. Arce said. “If the government’s commitment to increasing the share of renewable energy in the power generation mix continues, constructi­on companies involved in renewable energy projects may see increased opportunit­ies.”

Newspapers in English

Newspapers from Philippines