AYALA Corp. (AC) is expecting to post 25 to 30 percent growth in net income for 2014 on the back of increased projects in power and infrastructure and the strong performance of its telecommunications business.
“Last year, we have about P14 billion [core]net income. So this year, we want to have about 25 to 30 percent increase on that,” Paolo Borromeo, AC’s head of Corporate Strategy and Development, told reporters after the listing of AC’s P13.5-billion preferred class B shares.
AC is projecting its core net income to reach P19 billion this year from P14.8 billion last year, while net income is seen hitting P16 billion to P16.5 billion from P12.8 billion a year ago.
Borromeo said that growth will come from AC’s investments in power and infrastructure projects, as well as the sustained telecommunications business.
AC Chief Finance Officer Delfin Gonzales Jr. said in the same briefing that the company is set to borrow $1.6 billion to fund its additional 1,600-megawatt (MW) power capacity, which is targeted to go online by 2018.
Gonzales said the 1,600 MW plant will be composed of two coal-fired power projects: the 600 MW Kauswagan plant in Lanao del Norte, and the capacity expansion of its 660 MW Bataan plant to 1,000 MW. The company’s existing capacity is 350 MW.
“When these two big plants come into operation, we will presell the output through power service agreements. Once operating, we’ll start to book revenues and income,” Gonzales said.
“Certainly in 2019, we’ll be seeing significant contributions coming from these investments. We look forward to the [return on equity]in the high teens on a levered basis,” he added, noting the company will reap bulk of the power revenues by 2017 to 2019.
Borromeo said the 1,600 MW target by 2018 is a revision to the company’s previous target of 1,000 MW capacity by 2016.
The financial closing of its Lanao del Norte plant is expected before the year ends, while the Bataan plant will financially close in mid-2015.
The Bataan plant will be built in partnership with GNPower Mariveles Coal Plant Ltd. Co., Power Partners and Sithe Global Power LLC, a unit of the Blackstone Group.
AC Infrastructure Holdings Corp. (AC Infra) is active in public private partnership projects where it won the bidding for the Light Rail Transit (LRT) Line 1 Extension project through joint venture company Light Rail Manila Corp. (LRMC).
LRMC is a joint venture firm of AC Infra, the Pangilinan-led Metro Pacific Investments Corp., and Macquarie Infrastructure Holdings
(Philippines) PTE Ltd.
AC’s property unit Ayala Land Inc. (ALI) and water utilities subsidiary Manila Water Company Inc. are involved in overseas projects in Vietnam, Myanmar and Indonesia.
For ALI, it is involved in mixed-use community projects in Vietnam and Myanmar in partnership with local investors.
For Manila Water, it is involved in joint venture projects in Myanmar, and is currently bidding for bulk water projects in Ho Chih Minh, Vietnam, while its plans to enter the Indonesian market is being finalized.
AC’s net income from January to September rose 35 percent to P14.1 billion on strong performances of ALI, telecoms subsidiary Globe Telecom Inc., and Manila Water. Revenues on-year increased 17 percent to P134.5 billion.
Founded in 1834 and incorporated in 1968, AC is the holding company of the Ayala family’s businesses, which include water (Manila Water Company Inc.), telecom (Globe Telecom Inc.), property (Ayala Land Inc.), semiconductor (Integrated Micro-Electronics Inc.), banking (Bank of the Philippine Islands), and education (LiveIt Investments) among others. It is 50.56-percent owned by Mermac Inc., 10.52-percent by Mitsubishi Corporation and 38.92-percent by the investing public.