Saturday, 20 June 2009

Philippines' Megaworld still expecting higher profits


Andrew L. Tan-led property company Megaworld Corp. expects lower reservation sales this year but remains optimistic that it will close the year with higher profits.

"We feel some effect of the global crisis but we are confident that we will meet our P4 billion net income target this year," Megaworld Executive Director Kingson U. Sian told reporters at the sidelines of the company’s stockholders meeting on Friday. The P4-billion target is higher than the P3.8 billion in profits posted in 2008.

Mr. Sian however said Megaworld does not expect a repeat of last year’s reservation sales performance because of the economic slowdown, but sees the company equalling its 2007 sales.

"Last year was the best year in our over 20-year history. Reservation sales will likely be slower this year as people are nervous and tend to hold back a bit," he said. "Still, we are quite happy with the rate that we are going now and we will likely meet or exceed our reservation sales in 2007 which is another record year."

Megaworld’s reservation sales hit P24 billion last year, higher than the P19 billion posted in 2007. For the first three months of the year, Megaworld’s reservations stood at P7 billion, already higher than the P5 billion posted in 2007.

Megaworld plans to spend around P8 billion to P9 billion for projects this year, lower than the P10 billion spent last year. It also plans to launch five new residential projects worth P12 billion, namely Two Central in Makati City, another project in Eastwood City, Palmtree in Newport, and phase two of The Venice and Morgan Suites in Taguig’s Fort Bonifacio.

Mr. Sian also said Megaworld is finalizing plans for its 40-hectare project at the entertainment complex being built by the state gambling monopoly, and is already completing a plan to build an "iconic building" on a five-hectare lot at Paseo de Roxas in Makati.

Megaworld will also build two new Richmonde Hotels in Quezon City’s Eastwood commercial center and in Binondo, Manila. The company already has one in Ortigas.

The Richmonde Hotel in Eastwood will have 150 to 175 rooms and is expected to open next year while plans for the Manila-based Richmonde have yet to be finished. Mr. Sian said the project cost for each room in Richmonde would be around $70,000.

Aside from Richmonde, Megaworld, through unit Travellers International Hotel Group, Inc., will also venture into budget hotels. This will be under the Remington brand, with up to 800 rooms.

"We are already finalizing the design and hope to complete it this year. By end of next year or early 2011, we expect it to be complete," he said.

Megaworld is among the many property companies that have started venturing into "economic"-type hotels to take advantage of high demand. The SM group has already launched its SM Inns while the Gokongweis are expected to open their first Go Hotels next year.

Mr. Sian said Remington would be built along with its other high-end hotels — six-star Maxim and Marriott located near the Ninoy Aquino International Airport.

"We want to target all segments of the market," Mr. Sian said. Shares in Megaworld closed at P1 per share on Friday, 0.64% lower.

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