Ayala Corporation

...KIA Motors Tongue

Ayala targets to sell over 10,000 Kia vehicles in 2019

THE AUTOMOTIVE UNIT of Ayala Corp. (AC) targets to sell over 10,000 units of Kia vehicles in 2019, while also preparing for the introduction of three new models in the local market.

AC Automotive Business Services, Inc. said on Monday that it plans to exceed the record annual volume sold under its previous distributor.

Presenting Kia’s 15-year performance since 2003, AC Automotive Deputy Chief Executive Officer and Kia Philippines President Emmanuel A. Aligada noted that the most number of Kia vehicles sold was in 2015 at 10,010 units, translating to a market share of 3.1%.

“We’re looking at north of 10,000 by next year (for target sales)… In terms of volume, it is the lower priced vehicles. You saw that we are in 60% of the critical segments, and we are working to be competitive in several aspects,” Mr. Aligada said in a press briefing in Makati City on Monday.

Should the target be realized, this would show more than a 316% surge from 2018’s forecast sales of 2,400 units with a market share of 0.6%. Mr. Aligada said market share would also increase to 2% based on next year’s target sales.

The units will be imported from South Korea, where the Kia brand originated.

The company said it will also be unveiling three new models during its relaunch of the Kia brand on Jan. 30, 2019, bringing in models that were previously unavailable in the Philippines.

Kia Philippines currently has nine models in its 2018 lineup, with the cheapest one priced at about P635,000 to P798,000 called the Picanto. This is also the company’s best-selling model.

To support its target sales for next year, the company plans to add more dealers and outlets to its current network of 37 across the country.

Mr. Aligada said the company is setting its sights on 10 new outlets in Metro Manila alone. This will be in addition to the existing 10 outlets in the area, since more than half of the auto industry’s total sales come from Metro Manila.

The company also sees opportunities in provincial areas as far as Mindanao.

“We are working on two fronts, one is expand and improve the current setup because if we are to bring in volumes of sales therefore the current facilities must be worked on to allow for the incoming customers,” Mr. Aligada said.

“Beyond that, we’re also looking at areas where we are not: way up north, somewhere in South Luzon, even in Mindanao there are opportunity areas.”

Mr. Aligada also said they will work on strengthening partnerships with banks to ensure that they can offer customers competitive pricing packages for their units.

The Kia brand is the sixth under AC Automotive’s portfolio, following Honda, Isuzu, Volkswagen, KTM motorcycles, and Maxus which will be introduced next year. 

source: https://www.bworldonline.com/ayala-targe...s-in-2019/


Ayala energy unit to focus on growing RES customer base

AYALA-LED AC Energy, Inc. is looking at its retail electricity supply (RES) unit as a long-term business whose growth in the near term is meant largely to establish a respectable customer base, its top official said.

“We don’t want to grow for growth’s sake because this is a long-term business. I don’t think anyone is making money on RES. It’s really more of acquiring the customers and hope to build a long-term relationship base with that,” AC Energy Chief Executive Officer Eric T. Francia told reporters.

“It’s still a competitive market out there,” he said. “So to us, when we started this business, we wanted to establish our base.”

Mr. Francia said to be a “respected” player in retail electricity supply, one must have a minimum scale of power sales and a “good customer base.”

“I think 100 megawatts (MW) is a good size,” he said. “[It] puts us in the top five or six players. So it’s a good position especially if you combine it with the rest of the Ayala group. We’re probably the third or fourth largest as a group. So that’s a good position.”

The RES business is governed by rules on retail competition and open access (RCOA), which calls for contestable customers to move away from being part of the captive market of a distribution utility. These are customers whose electricity consumption for the past 12 months has reached the threshold set by the Energy Regulatory Commission (ERC).

RCOA rules have been questioned by some sectors. The resolution of a court case on the matter remains pending with the Supreme Court. For now, retail electricity suppliers are competing to corner a bigger share of the 1-MW contestable customers, which are not covered by the temporary restraining order issued by the court.

The switch to a licensed retail electricity supplier is meant to allow greater participation from new players, thus spurring competition and lowering power costs. RCOA is called for under Republic Act No. 9136 or the Electric Power Industry Reform Act of 2001 (EPIRA), the law that restructured the power sector.

Based on data from the ERC, AC Energy is one of three Ayala-led companies in the RES business. The other two are Ecozone Power Management, Inc. and DirectPower Services, Inc.

As of September 2018, AC Energy had a total of 71 customers with a total consumption of 106.43 MW, taking the lead for the Ayala group ahead of Ecozone Power’s 102.40 MW and DirectPower’s 95.93 MW.

As group, the Ayala companies have a combined market share of 10.6%, trailing Manila Electric Co.’s 31.56% share from its three RES units and the Aboitiz group’s 19.67% from five different entities.

“One of our focus is to retain and keep our customers satisfied and then we will be happy to win new customers. But we’re not very aggressive in getting others and dropping price. That’s not our strategy,” Mr. Francia said. 

source: https://www.bworldonline.com/ayala-energ...omer-base/


Ayala acquires Phinma Energy

AC ENERGY, Inc. is taking control of Phinma Energy Corp. through a “mutually strategic agreement” that gives the Ayala-led company a 51.48% stake in the listed energy firm for P3.42 billion.

In a joint statement on Wednesday, the two groups said the Ayala’s energy platform will acquire the combined stake of Phinma Corp. and its parent Philippine Investment Management, (Phinma) Inc. in Phinma Energy subject to regulatory approvals.

Jaime Augusto Zobel de Ayala, chairman and chief executive of Ayala Corp., described the Phinma group as “one of our early partners when Ayala was new to the power sector.”

“This partnership has prospered over the last eight years and we welcome the opportunity to now integrate Phinma Energy into AC Energy’s platform as we grow our presence in the power generation sector,” he said.

Ramon R. del Rosario, Jr., Phinma president and chief executive, said the two groups “have always enjoyed a strong partnership, making this agreement a welcome culmination of our joint initiatives in the energy sector, as we believe AC Energy is best-positioned to grow the business and take it to the next level.”

Mr. del Rosario said Phinma will now focus on its education and construction materials business.

The agreement, which was approved by both groups on Tuesday, involves the sale by listed holding firm Phinma Corp. of its 1,283,422,198 shares or 26.25% in Phinma Energy for P1.75 billion based on the unit’s implied 100% equity value of P6.65 billion. The shares will be sold through the stock exchange.

Phinma Corp. and its parent will then cause Phinma Energy to approve the issuance of 2,632,000,000 in new shares, to which AC Energy will subscribe.

Parent firm Phinma will also sell its 25.23% interest in the energy subsidiary.

“The estimated proceeds from the sale in the amount of P1.7 billion will be used to focus investments in other sectors such as education and construction materials as opportunities arise,” Phinma Corp. said.

The groups said the valuation date was as of Dec. 31, 2018 and is subject to adjustments.

The transaction will result in a loss on sale of P368 million subject to adjustments but will allow Phinma Corp. to avoid significant losses from the energy business in the future, it said.

The deal’s closing is subject to the satisfaction of certain conditions, such as regulatory approvals, including the approval of the Philippine Competition Commission, and compliance with applicable tender offer requirements.

AC Energy and Phinma Energy first teamed up in 2011 when they developed, built and started operating the 244-megawatt (MW) net capacity coal power plant in Calaca, Batangas under South Luzon Thermal Energy Corp.

Eric T. Francia, AC Energy president and chief executive, said the transaction was an “important step” for the company in hitting its 5-gigawatt (GW) renewable energy installation target by 2025.

He said the Phinma Energy platform “has significant operating and developmental renewable energy assets, and its large diesel capacity will complement the scaling-up of our renewable projects.”

Sought for comment, Luis A. Limlingan, business development head at Regina Capital Development Corp., said the deal is indeed an important step for AC Energy to achieve its target energy capacity.

On AC Energy’s possible entry into the stock market, he said: “That may be one angle to look at as a possible backdoor listing but does not seem likely yet.”

On Wednesday, shares in Phinma Corp. rose 1.21% to close at P8.99 each, while those of Phinma Energy gained 8.46% to end the trading day at P1.41 each.

AC Energy owns around 1.7 GW of generation capacity in operation and under construction based on its equity interest in power generation businesses. It generated 2,800 GW-hours of energy last year, of which 48% was from renewable sources, the company said.

Phinma Energy has an attributable generation capacity of 472 MW. It is the third-largest stand-alone retail electricity supplier serving 378 MW of customer demand.

It holds interests in the following entities: Phinma Power Generation Corp. (100%); Phinma Renewable Energy Corp. (100%); CIP II Power Corp. (100%); One Subic Power Generation Corp. (100%); One Subic Oil Distribution Corp. (100%); Phinma Solar Corp. (60%); Phinma Petroleum and Geothermal, Inc. (50.74%); Palawan Exploration and Production Corp. (30.65%); South Luzon Thermal Energy Corp. (45%); and Maibarara Geothermal, Inc. (25%).

source: https://www.bworldonline.com/ayala-acqui...ma-energy/


...Mercury Drug should list na and build clinics too beside its existing drug stores

AC Health to boost expansion of FamilyDoc clinics

THE health care unit of Ayala Corp. (AC) looks to end the year with more than 80 FamilyDoc clinics, as it continues to be on the lookout for partnerships to expand its existing facilities.

Ayala Healthcare Holdings, Inc. (AC Health) Chief Executive Officer Paolo Maximo F. Borromeo said the company is on track with its expansion plans, which involves putting up 1,000 Generika drugstores and 100 FamilyDoc clinics by 2020.

“We’re on track with our expansion plans. We’re very excited about where we are with Generika and with FamilyDoc, we have over 50 clinics now. And by (2019), we should have over 80 clinics. Our target is still 100, but that’s only here in Greater Manila Area,” Mr. Borromeo told BusinessWorld on the sidelines of the AC Health Leadership Summit in Makati last month.

AC Health holds a 50% stake in Generika Drugstore following its partnership with the Ferrer family in 2015, which owns the other half.

“We invested in Generika drugstore to help expand the reach of generic medicines, which provide Filipinos up to 80% savings versus branded equivalents,” AC President and Chief Operating Officer Fernando Zobel de Ayala said in a speech during the event.

“We also believe that Filipinos deserve quality, primary care, and as such, have been investing to expand our FamilyDoc clinics across more communities where access to basic health services have historically been limited.”

Asked if the company is planning to put up FamilyDoc clinics in the provinces, Mr. Borromeo said they have yet to draw up such plans.

“We haven’t thought of it yet. But if we do go outside of Metro Manila, our focus will be the big cities like Cebu, Davao, Iloilo, and in those cases, what I’d like to do is work with someone, with a local partner preferably that will give us large health care in those municipalities,” Mr. Borromeo explained.

The AC Health executive noted that while they cannot disclose any agreements yet, they continue to look for partnership opportunities that will allow them to invest in existing hospitals, or to build new facilities from the ground up.

“Moving forward, we’re looking at investing in the hospital and specialty care space to complete the continuum of care for our patients. We believe this ecosystem view is important in delivering integrated quality, and affordable services,” Mr. Zobel said.

AC Health has been steadily expanding its portfolio. Last December, it acquired a 75% stake in Negros Grace Pharmacy, Inc., broadening its footprint in the Visayas.

The company is also investing in technologies that could potentially disrupt the health care industry in the future. For instance, the company acquired a minority stake in a home health app called Aide, which allows patients to book doctors, nurses, and other medical professionals to provide health care services at home. It also has investments in online pharmacy MedGrocer.

AC booked a net income attributable to the parent of P23.86 billion in the first nine months of 2018, 3% higher year-on-year, on the back of an 18% uptick in gross revenues to P201.68 billion.

source: https://www.bworldonline.com/ac-health-t...c-clinics/


PSEi sinks by 2% in morning trade led by AC, SM Prime

Share prices on the Philippine Stock Exchange (PSE) plunged during the morning session Wednesday, led by heavyweights SM Prime Holdings Corp. and companies related to the holding firm Ayala Corp.

The benchmark PSEi was down 160.53 points or 2.00 percent at 8,852.89 by the noon recess. The broader All Shares was down 72.80 points or 1.52 percent at 4,715.82.

The plunge was led by Ayala Corp. (AC), the holding company of the Ayala Group of Companies, said Aniceto Pangan, equities trader at Diversified Securities Inc.

“The PSEi declined this morning, brought about by news of the private placement on Ayala Corporation, as Mitsubishi Corp. sold 13.0 million shares of Ayala Corp. through a private placement last night at P900 per share, a 7.83 percent discount,” said Christopher San Pedro, equities trader at  Unicapital Securities Inc.

The Ayala group has interests in real estate and hotels, financial services, telecommunications, and infrastructure, among other businesses.

On top of that, another PSEi heavyweight, SM Prime Holdings Inc., added to the selling pressure, San Pedro noted. “The news on the recommendation of the DILG Secretary Año to scrap the Manila Bay reclamation projects also contributed to the decline of index heavyweight SMPH.”

“Para sa akin, ‘di na dapat matuloy ang reclamation [projects sa Manila Bay]. Lalo lang darami ang tao, ang mga establishment ... lalong mababarhan ang tubig. Paano ‘yung cleanup kung dadagdagan mo ang problema?,” Año said.

It was not a formal recommendation of DILG chief Eduardo Año, but market players took it as an opportunity to sell, market sources said.
SM Prime Holdings Inc. declined by P2.35 or 5.91 percent to P37.40 per share, from the previous close of P39.75 on Tuesday. SMPH accounts for 8.82 percent of the PSEi.

AC lost P46.00 or 4.74 percent to P924.50 at the close of the morning session. AC accounts for 6.60 percent of the PSEi.

Shares of Ayala Land Inc. fell by P1.35 or 3 percent to P43.65. BPI was down P0.85 or 0.91 percent at P92.9. Globe telecom was down P38.00 or 1.82 percent at P2,048.00.

Japanese firm Mitsubshi Corp. sold some 13 million shares of Ayala Corp. at P900 per share, a discount of 7.83 percent.

“They sold 13 million shares at a price of P900 per share. The price yesterday was around P970.50, so it’s undergoing correction right now …” Pangan noted.

Ayala Land Inc., accounts for 8.85 percent of the PSEi, while Bank of the Philippine Islands accounts for 5.29 percent, and Globe for 1.58 percent.

source: https://www.gmanetwork.com/news/money/ec...ime/story/


ADB, IFC invest in Ayala energy unit’s green bonds

AC Energy, Inc. has attracted two of the world’s biggest development lenders International Finance Corp. (IFC) and the Asian Development Bank (ADB) to the Ayala-led company’s multi-million dollar green bond offering that will fund regional renewable energy projects, company officials said.

“In total now, we have $410 million from the green bond offer,” Eric T. Francia, AC Energy president and chief executive officer, told reporters in a briefing on Monday.

The principal amount of AC Energy’s green bonds was initially at $225 million, with a five-year maturity and a coupon of 4.75% per annum, the company said on Jan. 25.

IFC, a sister organization of the World Bank, provided an anchor investment of $75 million, completing the public placement and supporting the raising of a total $300 million from Philippine and international investors.

Separate 10-year bonds amounting to $100 million with a 5.25% coupon were issued through private placement, with ADB as one of the main investors with $20 million.

The initial offering was listed on the Singapore Stock Exchange on Jan. 30. The additional bonds will also be listed on that bourse. The bonds were issued through the company’s wholly owned subsidiary, AC Energy Finance International Ltd., and guaranteed by AC Energy.

“We’re excited about this because this is the first climate bond-certified publicly listed, US-dollar green bond in Southeast Asia. So it’s a first of its kind,” Mr. Francia said.

“Obviously, this will go to fund our renewables expansion both onshore in the Philippines as well as around the region,” he said.

AC Energy aims to install 5 gigawatts (GW) of energy capacity by 2025, with renewables accounting for at least 50% of its total energy output. It has generated 2,800 GWh of attributable energy last year, of which 48% was from renewable resources.

“[The bond issuance] is particularly meaningful to us because of the strong support of these multilateral development institutions. It shows the confidence in our ability to really develop renewables across the region,” Mr. Francia said.

In a statement, AC Energy quoted IFC Director for East Asia and the Pacific Vivek Pathak as saying that the group was proud to support Ayala “in greening its power generation portfolio by helping fund its aggressive growth in renewable energy.”

“We are delighted that our partnership, leveraging IFC’s extensive global experience in green bonds, successfully mobilized substantial international investment in the public placement of the company’s” five-year bond, he said.

“This demonstrates the excellent potential of the green bond asset class as a tool for mobilizing international institutional capital into infrastructure assets, and we look forward to expanding our support of such issuances across Asia, advancing the integration of regional power and financial markets,” he added.

Michael Barrow, director general of ADB’s private sector operations department, said the green bond will “contribute to ASEAN’s target of drawing 23% of its energy mix from modern, clean, and sustainable renewable sources by 2025.”

AC Energy has been selling some of its thermal assets, while increasing its investments in renewable energy.

In April 2017, the company and its joint venture partners completed the acquisition of Chevron Corp.’s geothermal assets and operations in Indonesia, further boosting AC Energy’s renewable energy portfolio in that country after earlier investing in a wind farm.

In September last year, it announced Aboitiz Power Corp.’s acquisition of a 49% voting stake and 60% economic stake in AA Thermal, Inc., AC Energy’s thermal platform in the Philippines.

In November, its international unit invested in Singapore-based renewable energy company The Blue Circle Pte. Ltd. through a 25% ownership acquisition as well as co-investment rights in the latter’s projects. They are to jointly develop around 1,500 megawatts (MW) of wind projects across Southeast Asia, including about 700 MW in Vietnam.

In January this year, AC Energy said it was investing in Phinma Energy Corp. through a “mutually strategic agreement” that gives the Ayala energy arm a 51.48% stake in the listed energy company with ownership stake in solar, wind and geothermal energy projects.

source: https://www.bworldonline.com/adb-ifc-inv...een-bonds/


Ayala unit expects to sign Phinma Energy deal soon

AC Energy, Inc. expects to sign in a few days the definitive agreement to acquire the majority stake in Phinma Energy Corp. to move the deal forward for approval by the antitrust watchdog ahead of the “specific strategies” for the acquired assets, including a stalled liquefied natural gas (LNG) import terminal, its top official said.

“We expect to sign the definitive documents fairly soon, within the next few days, so that’s the next step and then soon after that we will file for PCC (Philippine Competition Commission) approval,” Eric T. Francia, AC Energy president and chief executive officer, told reporters.

Mr. Francia said the company expects to complete the deal for Phinma Energy by mid-year.

“So we’re probably looking at the middle of the year — May, June, July maybe, that area — in terms of getting PCC regulatory approval and then we have to make the mandatory tender offer, which typically takes 90 days,” he added.

On Jan. 9, AC Energy announced that it had signed a “mutually strategic agreement” with Phinma Energy that gives the Ayala-led company a 51.48% stake in the listed energy company for P3.42 billion.

Mr. Francia said PCC takes about 60 to 90 days in approving a project before it moves to a second phase of approval process that takes another 60 days or so.

“It will really depend on the results of the tender offer because if no one tenders, the minimum that AC Energy would effectively be guaranteed is around 68%. That’s how the deal was structured,” he said.

The deal calls for the sale by listed holding firm Phinma Corp. of its 1,283,422,198 shares or 26.25% in Phinma Energy for P1.75 billion based on the unit’s implied 100% equity value of P6.7 billion.

Phinma Corp. and its parent Philippine Investment Management (PHINMA) Inc. will then prompt Phinma Energy to approve the issuance of 2,632,000,000 in new shares, to which AC Energy will subscribe. The parent firm will also sell its 25.23% interest in the energy subsidiary.

Mr. Francia said the resulting stake of AC Energy after the subscription to the new share could reach 68%, “and then on top of that as and when the public tenders, that 68% can go up.”

He declined to say how the deal would result in beefing up the installed energy capacity attributable to the company, citing the pending approvals.

“Phinma Energy is about a little over 400 megawatts (MW) on a 100% basis, so it really depends on how much Phinma Energy we will get, post tender offer,” he added.

Asked about the pending LNG project of Phinma Energy, Mr. Francia said: “We will study that. We’ve always been keeping our minds and eyes open to LNG although I could tell you that there’s nothing imminent or specific.”

“It’s still very challenging to justify project economics, especially in a competitive market situation. You really need very big or strong balance sheets to back that in the absence of long-term power purchase agreements. It makes it very very challenging. But we keep an open mind,” he added.

In April last year, Phinma Energy unit Phinma Petroleum and Geothermal, Inc. told stockholders that it was developing an LNG facility with a 120-MW power plant in Argao, Cebu province, which company officials expected to be completed by 2022 to 2023. They later said the project was on hold ahead of better electricity prices. 

source: https://www.bworldonline.com/ayala-unit-...deal-soon/

I find that this is one very good and very diversified holding company, let along that it is partially owned by the state. One of my favourite picks for investment this year
The best time to buy AC is NOW, buy below 900, quick recovery at 950-970

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