MPIC readies more investments in logistics and infrastructure
METRO PACIFIC Investments Corp. (MPIC) announced plans to infuse more capital into its logistics business and submit more unsolicited proposals after sustaining a double-digit growth in core net income in the first three months of 2017 despite delays in implementing tariff adjustment.
MPIC Chief Finance Officer David J. Nicol said in a briefing on Wednesday the logistics business will need up to P8 billion in the next couple of years to fund acquisitions and organic expansion.
The infrastructure conglomerate is looking at “several prospects” for acquisition, MPIC President Jose Ma. K. Lim said, without confirming if the company is in talks with the Air21 Group of businessman and former Customs Commissioner Alberto D. Lina.
“In terms of logistics, we are really looking at transportation solutions, warehouse management and order fulfillment. I don’t think we have any particular aspiration to be in the shipping business,” Mr. Nicol said.
Metro Pacific previously controlled Negros Navigation Co., Inc. (Nenaco), which Mr. Lim described as a “very challenging” and “difficult” experience for the company.
“It’s a small market and you have to have the efficiencies right. At the same time, you must provide daily or at least three times a week service to different parts of the country. You can’t hope to survive if you don’t make your presence felt. You have to have the right number of ships but not so large that you can’t fill them up,” Mr. Lim said of MPIC’s experience in running Nenaco.
The logistics business — the latest arena for conglomerates given the recent entry of SM Investments Corp. and Ayala Corp. — is seen to become a “major” contributor to MPIC given strong demand and the prospect of attractive returns that the lightly regulated sector offers.
MORE UNSOLICITED PROPOSALS
Likewise, Metro Pacific is keen on participating in the government’s infrastructure drive. It is setting its sights on airport, rail and toll road projects through unsolicited proposals and joint ventures (JVs).
“We’re preparing. We’re busy with unsolicited proposals and JVs,” Mr. Lim said.
Asked if it will take part in the Ayala and SM Group’s proposal to build a P25- billion elevated tollway from Manila to SM Mall of Asia, Metro Pacific Tollways Corp. CEO Rodrigo E. Franco said: “We have not been invited to that project.”
MPIC continues to remain interested on the unbundled regional airports project, but finding a technical partner will be a challenge given the size of the development, Mr. Lim said.
The conglomerate reported a 14% increase in consolidated core net profit to P3.1 billion in the January to March period from P2.7 billion in the same period a year ago, mainly driven by an expanded power portfolio through higher investment in Beacon Electric Asset Holdings, Inc. and Global Business Power Corp.
Robust traffic volumes on the toll roads and continuing expansion in the hospital group also boosted earnings, MPIC said.
Consolidated reported net income attributable to owners rose 14% to P3 billion from P2.6 billion.
“Our earnings growth reflects our increased investment in the power sector last year together with strong volume growth for our toll roads and hospital businesses,” MPIC President Jose Ma. K. Lim was quoted in the statement as saying.
The first quarter of 2017 held one less billing day for its power and water businesses versus a year ago, which slightly reduced their headline volume growth for the quarter, Mr. Lim noted.
The MPIC executive said the government is “not moving fast enough” on the tariff issues, with the continuing delay becoming an area of increasing concern for investors.
“Our headline core income growth is satisfactory but the translation of this to earnings per share needs more momentum. While our businesses continue to drive efficiencies, it is apparent that the combination of sizeable capital expenditures and cost reduction programs in recent years must be matched with contracted tariffs for our shareholders to receive the returns they are due,” MPIC Chairman Manuel V. Pangilinan said in the same statement.
Meanwhile, Metro Pacific is close to sealing a deal with an Asian entity for the sale of its 10% stake in Maynilad Water Services, Inc. worth P12 billion.
“We can sign a provisional term sheet in two to three weeks then it will be subject to confirmatory due diligence which we will give them up to 90 days,” Mr. Nicol said.
MPIC likewise plans to build another waste- to- energy facility outside Metro Manila after its consortium with Covanta Energy, LLC. and Macquarie Group, Ltd. was granted original proponent status by the Quezon City government for a 42-megawatt project, Mr. Lim said.
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.