InterAksyon, 23 December 2013
By Krista Angela M. Montealegre
MANILA – Megawide Construction Corp expects a significant change in its earnings mix as the contribution of its infrastructure ventures is seen to account for half of the business in the next four years.
Megawide chief financial officer Oliver Tan last week told reporters that recurring earnings will contribute 30 percent to income in the next two years, with its share likely to increase to 40-50 percent by 2017 when the Philippine Orthopedic Center and Mactan Cebu International Airport become fully operational.
“The complexion will change because right now 100 percent of our earnings are derived from construction profits. Two years from now, we will be having earnings from the special purpose vehicle from the hospital and barring any surprises, from the airport,” Tan said.
Megawide and partner World Citi Inc were issued a Notice of Award for the construction, operation and maintenance of the P5.7-billion Philippine Orthopedic Center in the next 25 years. The consortium submitted the lone offer for the project.
A separate consortium that Megawide formed with India-based GMR Infrastructure topped the bidding of the P17.5-billion Mactan Cebu International Airport Terminal Project. The Department of Transportation and Communications Bids and Awards Committee’s technical working group is evaluating the financial bids.
“That is the strategy of management, to really chase for asset portfolios that will give us stable recurring earnings stream because construction is cyclical. We’re really enjoying the boom but we have to prepare for cyclicality,” Tan said.
Megawide has bought the bidding documents for the P60-billion LRT 1 Cavite Extension Project, but its role and participation in the project have yet to be firmed up.
After clinching the airport bid, the construction firm’s stock has risen among other players in the infrastructure sector.
“We’re enjoying the attention now. Mas pinapansin na kami. Some companies are trying to set meetings with us,” said Megawide chief information officer Louie Ferrer.
For the entire 2013, Megawide is projecting a 20 percent increase in profit to P1.2 billion and a 34 percent growth in revenues to P11 billion.
At end-September, the construction firm’s net income climbed 55 percent to P983.24 million from P633 million last year. Gross revenues advanced 29 percent to P7.22 billion from P5.61 billion in the same nine months of last year.
Megawide is one of the most active participants of the government’s Public-Private Partnership program. Besides the hospital and airport deals, the company also secured two of the five contracts under the second phase of the School Infrastructure Project worth a combined P25 billion.
Incorporated in July 28, 2004 to engage primarily in general construction, Megawide began as the contractor of the SM group, particularly for its high-rise condominiums under SM Development Corp.
Megawide has since diversified by taking on contracts with other property developers and by venturing into the manufacture of pre-fabricated materials. The company, which went public two years ago, is also eyeing construction ventures overseas.
“I believe investors or analysts should look at Megawide on a very unique perspective. Before, Megawide was the only local construction company that has a manufacturing plant. Now, we’re the only local construction company with a manufacturing plant and infrastructure play. There’s no comparable company locally and that should set us apart in terms of valuation,” Tan said.