Aboitiz sets expansion plans

By Katlene O. Cacho
Monday, May 21, 2012

AMID economic challenges in the international and domestic fronts that caused a decline in revenues in 2011, Aboitiz Equity Ventures (AEV) will embark on various expansion programs to facilitate growth in all of its businesses this year.

During the stockholders’ meeting yesterday at the Radisson Blu Hotel Cebu, AEV president and chief executive officer Erramon Aboitiz said growth of the company will come from new greenfield and brownfield projects of its core business, AboitizPower (AP), as well as strong expansion from its banking business. Greenfield projects involve building new facilities while brownfield projects are those that need rehabilitation of existing facilities.

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Aboitiz said the company will pour in P170 billion in investments in the next three to five years for their power generation business. Some P35 billion worth of projects are set aside for Mindanao.

Power capacity

According to Aboitiz, the company is looking at putting up 354 megawatts (MW) in new power capacity by 2015 to help address the critical power shortage in the region. The new capacity will come from a 300 MW clean coal facility of Therma South and 54 MW from run-of-river hydro plants of Hedcor.

AP will also add 1,000 MW of capacity to the Luzon grid with the company’s partnership with the Meralco group, Taiwan Cogeneration Corp. and Team Energy Philippines Corp.
The company has yet to disclose additional capacity in the Visayas grid, saying the
region has a fair amount of capacity for the next four to five years.

Aboitiz added AEV will continue to participate in the bidding for the remaining assets of the National Power Corp. when that resumes this year.

“We are interested in bidding for hydro assets,” Aboitiz said during the press conference. “We will also keep a watchful eye for acquisition opportunities in both the generation and distribution sectors,” he said.

AEV’s consolidated revenue was close to P72 billion last year, a slight decline from 2010’s P75 billion in revenues.

AEV is the publicly-listed holding company of the Aboitiz Group. Its consolidated net income in 2011 was at P21.2 billion compared to P21.9 billion in 2010.

AboitizPower’s net income stood at P16.5 billion, while Union Bank of the Philippines (UnionBank) and City Savings Bank (CitySavings) posted P3.4 billion and Pilmico Foods Corp. at P1.2 billion.

According to the company, lower net generation, soft spot market prices and increased coal costs brought on lower margins of their power generation business. Its food business was likewise affected by the increased input costs last year.

However, Aboitiz said, the slight decline was offset by the strong growth of its banking business. Aboitiz said UnionBank will continue to strengthen its customer franchise through enhanced retail focus and stronger sales management approach. The bank will also pursue investments in technology and rationalize branch network expansion in strategic areas to maximize growth channels for deposits and loan accounts. UnionBank currently has 190 branches.

Meanwhile, CitySavings will expand this year as it intends to become the preferred lending institution of the public school teachers across the country. According to Aboitiz, CitySavings will open six more branches in Luzon this year, in addition to its existing 34 branches.

Investments

“We are looking at P10 million to P15 million investments per branch,” Aboitiz said, adding that they will open five to six branches every year.

For its food business, Aboitiz said Pilmico is already planning for a third feedmill in support of the growth of the feeds business. The company will also increase the percentage of owned farms to grow the sow and swine inventory.

“We are looking at an investment of P4 billion to P5 billion in the next few years to grow the food business unit of the company,” he said.

AEV reported a net income of P5.9 billion in the first quarter this year, 27 percent higher over the same period last year. The power business contributed P4.3 billion, the banking group at P1.3 billion while the food group contributed P219 million.

The company meanwhile expressed interest to participate in the government’s public-private partnership (PPP) programs. “We haven’t made a decision yet but we will look into it. We are interested in infrastructure projects such as airport and water-projects,” Aboitiz said.

Published in the Sun.Star Cebu newspaper on May 22, 2012.

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Ayala group to build P4B project

By Katlene O. Cacho

Sunday, May 20, 2012

AYALA Land Inc. (ALI) and affiliate Cebu Property Ventures Development Corp. (CPVDC) have earmarked P4 billion for the five-tower condominium development spread in the next four to five years at the Cebu IT Park.

A top official said the expansion of the Avida brand in Cebu was buoyed by the success of its first condominium project, Avida Towers Cebu, which has 1,045 units and was launched in 2010.

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“We had brisk sales for Avida Towers Cebu, prompting us to boost expansion with this new project, Avida Towers Riala,” said Avida Land Corp. president Christopher Maglanoc in a press briefing last Friday.

Biggest

Officials said Avida Riala, which sits on a 21,000-square meter property, will be the biggest residential development yet at the Cebu IT Park. It is located right across eBlock Tower 1, which is the home building of the American firm JPMorgan & Chase Co.
The five-tower condominium development will have a total of 3,300 units.

According to Maglanoc, the shift to a bigger residential community is due to the increasing demand for condominium properties in the area, which has a rapidly growing outsourcing sector.

Last Friday, Avida formally launched the first tower of Avida Riala, which has 621 units and 27 residential floors.

Maglanoc said the estimated project cost of Tower 1 is P800 million. It is targeted to be completed in the first quarter of 2016.

Seventy percent of Tower 1 are studio units at 23 sq. m; 20 percent are one-bedroom
units at 41 sq. m and the remaining ones are two bedroom units at 57 sq. m, with prices ranging from P1.8 million to P5.5 million.

Avida Riala project is a mixed-used development that is done in partnership with the landowners, VH Properties.

On top of the residential amenities, the company will also add shopping and dining outlets to the property and a 5,000-square meter amenity area that includes a grand lawn, lounge pool, shooting court and jogging trail.

Live, work, play

Maglanoc is confident Avida Riala would also get a similar reception as that of Avida Towers Cebu. He said Cebu has evolved into a cosmopolitan city.

“The acceptance (of the Cebu market) is already there. Given this, national players like ALI are coming here to offer condo products that are affordable to the middle-income market,” he said.

Maglanoc identified tourism, business process outsourcing and overseas remittances as key drivers that propelled the strong growth of the real estate sector, in addition to the low interest rates offered by banks.

According to CPVDC, the establishment of Avida Riala is part of its live, work and play concept. The project will complement eBloc 2 and 3 and other office buildings for the work component built within the Cebu IT Park.

Published in the Sun.Star Cebu newspaper on May 21, 2012.

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Cebuana brings bar business back home

By Katlene O. Cacho

Saturday, May 19, 2012

AUSTRALIA-based Cebuana entrepreneur Nadith Veloso hopes to build three more coffee shop outlets in Cebu in three years’ time. She also intends to open another outlet in Sydney.

Veloso recently opened her first coffee shop outlet, Brewmance Café Bar, in the Skyrise 1 at Cebu IT Park. This shop offers coffee, burgers, tea, continental meals at prices that Veloso describes as “competitive”.

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Brewmance was Veloso’s first business in the Philippines. She also manages two other outlets located in Brisbane and Melbourne. She spent P2 million for the establishment of Brewmance here.

“What really prompted me to expand the business here is my family. I have been staying in Australia for 28 years and what I think is a good payback to my country and to my family is this business,” Veloso said, adding that she will have her family manage the business.

Opportunities around BPO sector

Brewmance currently has 20 employees.

When asked how she would position her coffee shop given the presence of other coffee shop players in Cebu, Veloso said: “This will be exciting considering that we will be offering something new and fresh for Cebu.”

Apart from the usual coffee shop ambiance, Veloso also thought of converting the place into a hangout during the night with its acoustic band.

This way, she said, the shop would cater to those customers who just want to relax and unwind after the workday. Veloso also pointed out that the shop’s location is a big advantage, considering the number of BPO locators at the IT Park.

Retail businesses, such as food, coffee, and clothing among others, are likely to remain strong with the growth of the BPO industry in the country.

Real estate advisor CB Richard Ellis Philippines (CBRE) said that retail firms should take the BPO boom in Cebu as a “cue to expand their businesses and partake of the growth opportunity.”

Published in the Sun.Star Cebu newspaper on May 19, 2012.

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