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Alliance Global plans bigger capex

Posted on December 04, 2012 09:53:21 PM [ BusinessWorld Online ]
HOLDING FIRM Alliance Global Group, Inc. will increase its capital budget next year to over P40 billion to bankroll spending for its principal business units, the firm’s top official said recently.
“It will be more than P40 billion for the whole Alliance Global, higher than this year,” Andrew L. Tan, Alliance Global chairman and chief executive officer, told reporters at the sidelines of the Philippine Stock Exchange 20th Thanksgiving Anniversary and 1st Bell Awards ceremony at the Makati Shangri-La last Monday night.
“I don’t have the breakdown right now, but it will be divided among gaming, tourism, real estate, and consumer products,” Mr. Tan added, referring to Alliance Global’s main operating units: Travellers International Hotel Group, Inc., Global-Estate Resorts, Inc., Megaworld Corp., as well as Emperador Distillers, Inc. and Golden Arches Development Corp.
Bulk of next year’s budget will be financed by internal funds as the company still holds at present a significant amount of cash at its disposal, he said.
“Most of this will be internally generated funds. We still have about P65 billion in cash at the moment which we have not yet spent. We can deploy that if needed,” Mr. Tan explained.
Last March, Alliance Global; bared capital expenditure (capex) for 2012 amounting to approximately P35 billion, bulk of which was allotted for its real estate and tourism operations.
‘VERY GOOD GROWTH’
The company expects to replicate next year the robust profit growth it hopes to achieve this year.
“We are seeing very good growth for our business next year. I won’t be able to tell you a percentage of growth, but I think we will be better than this year. I think we will have a double-digit growth next year in net income,” Mr. Tan said without elaborating.
In a separate development, Mr. Tan declined to provide details on the residential joint venture deal recently forged among Empire East Land Holdings, Inc. -- a listed subsidiary of Megaworld -- Tiger Resorts Leisure and Entertainment, Inc. and Eagle 1 Landholdings, Inc., two firms owned by controversial gaming tycoon Kazuo Okada.
“It is Empire East that is talking with them. I cannot comment, but I think it’s still in progress,” he said when asked for updates on the talks between Empire East and the Okada group.
Empire East signed last July a partnership agreement with Tiger Resorts and Eagle 1 for the development of a P45-billion, 25-tower luxury residential resort project at the state-run Bagong Nayong Pilipino Entertainment City near Manila Bay; Tiger Resorts is one of the four gaming groups granted operating licenses by the Philippine Amusement and Gaming Corp. in Entertainment City.
Alliance Global was incorporated in 1993 and listed on PSE in 1999 with an initial business investment in glass-container manufacturing in Canlubang, Laguna.
The company grew its net income by 9.88% to P13.46 billion as of September from P12.25 billion in the same nine months last year, driven by the robust growth of Megaworld, Travellers International, and Emperador Distillers.
In the same comparative nine-month periods, revenues -- mostly from the sale of goods and gaming revenues -- gained 69.69% to P78.09 billion from P46.02 billion, year on year, while costs and expense rose by a faster 76.09% to P61.12 billion from P34.71 billion in 2011.
For this year, Alliance Global expects to boost its net income by around 20% from the P8.5 billion booked last year, Kingson U. Sian, Alliance Global president and chief operating officer, said last September.
Shares of Alliance Global gained 40 centavos or 2.52% to P16.30 apiece at the closing of trades yesterday from their P15.90 finish last Monday, while those of Empire East were traded unchanged at P1.03 apiece. -- Franz Jonathan G. de la Fuente       
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