Sunday, 28 March 2010

JG Summit hikes spending on improving economy

by Ian C. Sayson and Cecilia Yap
Manila Standard

JG Summit Holdings Inc., which will triple its cash from selling shares in its airline unit, will set aside a record budget for expansion plans as it bets a rebound in the economy will lift Philippine consumer spending.

“All the businesses we’re in right now have a lot of growth opportunities,” president Lance Gokongwei said in an interview. JG Summit would expand its bank unit and might revive a plan to build the country’s first naphtha cracker plant, he said. “There’s no lack of opportunity in what we have.”

JG Summit will increase capital expenditure to more than P30 billion as the government forecasts economic growth will range between 2.6 percent and 3.6 percent this year after slowing to 0.9 percent in 2009, the weakest in more than a decade. The company cut its expansion budget last year in expectation slow growth would curb demand.

“The group has done the right thing,” Marvin Fausto, chief investment officer at Banco de Oro Unibank Inc., which manages $9.6 billion, said in a phone interview. “The numbers they are showing are much better.”

JG Summit, which had P13 billion in cash and near cash at the end of September, can get as much as P10.5 billion from its planned initial public offering in Cebu Air Inc., the second biggest airline.

The sale, planned for next month, may raise P22.4 billion and Cebu Air will collect the balance of the proceeds.

Gokongwei said JG Summit might build a naphtha cracker plant to expand its petrochemical venture, which makes polyethylene and polypropylene. The plant might cost more than $500 million and would take 30 months to complete, he said.

The plant expansion was drawn up in 1996, a year after JG Summit began its foray into petrochemicals. The venture was shelved in 1999 because the company said it couldn’t compete with cheap imports. JG Summit postponed a plan to revive the project in 2005 so it could focus on building its telephone and airline assets, Gokongwei said Thursday night. Bloomberg


  1. JGS Stocks are now a hot buy. trading at the local philippine bourse as of 3/29/10 is P10.75 and at todays US dollar rate is .023558. The last trade of this stock in the OTC(US)exchange is .15 US cents and that was last Sept. 2009!

  2. Excellent exposure in the emerging markets!

  3. kahit anong sabihin nila (paninira kay willie) ay kay wellie parin ako. marunong siyang host and walang makakatulad sa kanyang kagalingan at katalinuhan sa stage. sana ay makarating na sa america ang programang "welling wellie. more power to tv5, maghihintay kami na balang araw ay makakarating na rin ang aming pinakahihintay namin programa na ginagampanan ni wellie.