Megawide Construction Corp.

GMR-Megawide 'quite alarmed' by NAIA consortium’s plan to tweak proposal

MANILA, Philippines — Listed builder Megawide Construction Corp. and its Indian partner, GMR, on Thursday said they’re “quite alarmed” by competitor “super” consortium’s plan to tweak their submitted proposal to rehabilitate the 70-year-old Ninoy Aquino International Airport.
“An unsolicited proposal, once submitted, should be evaluated as is,” GMR-Megawide said in a press statement. “Their suggested ‘tweaks’ involve changing cornerstones of their proposal.”
The remarks came after a team of seven conglomerates that is also eyeing to upgrade Manila’s aging airport said they’re willing to shorten their earlier proposed concession period to fit the government’s preference.
Last month, the NAIA consortium, which has a combined capitalization of more than P2.2 trillion, announced they submitted a $6.7-billion offer to upgrade the country's main international gateway. It proposed a concession period of 35 years.
GMR-Megawide later announced they want to give NAIA a $3-billion makeover with an 18-year concession, which includes construction of taxiways and extension of secondary runway, among others.
GMR-Megawide has in the past been awarded the contracts for upgrades to international airports in Cebu and in Clark, Pampanga.

Integrity of the process
In the same statement, GMR-Megawide said NAIA consortium’s proposal should be properly revised and re-submitted to the government. 
“We are very much concerned that this tweaking of proposals after they have submitted and deemed complete will put into question the integrity of the process for evaluation of all unsolicited proposals,” the pair said.
“We encourage the NAIA consortium to commit to the proposal that they have submitted.  It will now be up to the government to evaluate and decide which proposal best serves the needs of its people,” they added.
Once approved, an unsolicited proposal will undergo a Swiss challenge system, whereby third parties can submit competing offers while the original proponent will be given the right to match these offers. 


Megawide ’17 profit jumps 14%

Megawide Construction Corp. grew its net profit last year by 14 percent to P1.78 billion on higher earnings from construction and airport operations.

Including earnings attributable to minority interest, Megawide’s 2017 net profit rose by 17 percent to P2.2 billion on the back of consolidated revenue which went up by 9 percent to P19.2 billion.

Construction revenue hit P16.7 billion last year, 6 percent up from a year ago. Quarter-on-quarter, construction revenue rose by 24 percent to P4.3 billion.

Construction remained the core revenue contributor, accounting for 87 percent of consolidated revenue. Net income from the construction business grew by 7 percent to P1.1 billion.

New contracts booked from the private sector totaled P10.8 billion in 2017, with P6.25 billion booked in the last quarter. At the end of 2017, order backlog reached P32.6 billion.

Revenue from airport operations rose by 23 percent to P2.3 billion as a result of a 12-percent increase in passenger throughput. International and domestic passenger traffic at the Mactan Cebu International Airport grew by 24 percent and 7 percent, respectively.

The airport operations posted a 24-percent growth in net profit last year to P1.1 billion, representing 50 percent of the firm’s consolidated net earnings.

Commercial revenue accounted for P723 million or 31 percent of the total, up 36 percent. Revenue from passenger service charges went up by 16 percent to P1.3 billion, or 56 percent of total airport revenue. The remaining 13 percent came from aero-related revenues which grew by 27 percent to P295 million.


Megawide spending for regional airports bid 

MEGAWIDE Construction Corporation has spent a total of P110.5 million as of March 31 this year, taken from the net proceeds of its P4-billion preferred share issue in 2014, to pursue a proposal to design, build, operate and maintain six regional airports in the Philippines.

The proposal covers six airports located in Davao, Palawan, Iloilo, Bacolod, Bohol, and Laguindingan.

In a disclosure to the Philippine Stock Exchange (PSE) on Monday, Megawide said that as of March 31 this year, P2.08 billion of the net proceeds of P3.94 billion had been disbursed, with P1.9 billion remaining.

“The remaining balance of the Preferred Shares Net Proceeds amounting to P1.9 billion as of March 31, 2018 is expected to be applied on costs to be incurred in accordance with the revised planned use and estimated timing as disclosed in the Offering Circular and to the PSE,” it said.

In connection with its regional airports proposal, Megawide said it would use a portion of the preferred shares net proceeds “to fund the bid preparation, project feasibility studies, value engineering services, technical and planning, engineering analysis and designs as well as fund a portion of the projected initial capital outlay requirements of the project.”

Megawide and its consortium with GMR Infrastructure had been declared a qualified bidder of the regional airports project in September 2015 when the airports were still offered as a bundle.

“With the change of government administration in 2016, the airports were unbundled, and the consortium is considered as pre-qualified for each airport, having qualified in the previous bid. In May 2017, the government terminated the plan to bid out the project to private sectors. Accordingly, expenses incurred for this project in the fourth quarter amounting to P104 million pertain only to final billings on fees and services mainly rendered by GMR Infrastructure to the consortium,” Megawide said.

“As of March 31, 2018, P110.5-million from the preferred shares net proceeds were released and used for this purpose.” it added.

In 2014, the company issued 40 million perpetual preferred shares, generating net proceeds of P3.9 billion to be used for public-private partnership projects, development of renewable energy projects and bid preparation and preliminary works for PPP projects that Megawide would bid for.

These projects included the Mactan-Cebu International Airport. a regional prison facilities, the Southwest Integrated Transport System, and a public school infrastructure project phase 2.


Megawide nets P475M or 8%

The consortium of Megawide Construction Corp. and India’s GMR Infrastructure Ltd. took over the concession to operate and expand Mactan Cebu International Airport, the country’s second-busiest air facility, in 2014. 

Engineering and infrastructure group Megawide Construction Corp. grew its attributable first quarter net profit by 8 percent year-on-year to P475.29 million, driven by in increased contribution by its Cebu airport operation business.

Including net income attributable to non-controlling interest, Megawide’s first quarter net profit rose by 16 percent year-on-year to P635.8 million.

The airport business segment now contributes 62 percent of consolidated net earnings while the construction business segment accounts for 38 percent.

Consolidated revenues amounted to P4.4 billion, with the construction business contributing 84 percent to total, while the airport accounted for the balance of 16 percent. First quarter revenues were 7 percent lower year-on-year, which the company attributed to the cyclical nature of the construction business segment.

Megawide chair and chief executive officer Edgar Saavedra expressed optimism on the year ahead. “We are optimistic about the company’s growth prospects in 2018 with the increasing contribution from our airport business and the expected pick up of our construction business towards the end of the year,” he said.

The construction business segment posted P3.7 billion in revenues, 11 percent lower than the comparable period. This was due to projects in varying stages of construction in the order book and the scheduled start of construction for new projects booked towards the end of 2017. These include: Hampton O&P, Cold Storage Caloocan, 8990 Ortigas, Ascott-DD Meridian Park, and Double Dragon Tower Phase 3.

New contracts bagged during the first three months of the year amounted to P13.3 billion, 124% percent of the total new contracts booked in the full year of 2017. Majority of awarded projects are from the private sector with one big-ticket infrastructure project to construct the expansion of Clark International Airport. New projects also include Gateway Mall 2 Hotel, Golden Bay Tower, Taft East Gate and Space Ubelt.

“The push of the government’s build, build, build program is a key revenue driver for our construction business. Given our competitive advantage as a quadruple A contractor, a concession operator and a fully integrated engineering company, we are in the best position to participate in these projects,” Saavedra said.

Meanwhile, airport operations posted P646.1 million in revenues, 13 percent higher year-on-year. This was on the back of an 11-percent growth in passenger volume, with international outperforming domestic in terms of passenger growth at 14 percent and 10 percent, respectively. Non-aero or commercial revenues – which contributed 33 percent to the total – grew by 18 percent to P212 million.

Passenger service charge, representing 55 percent of airport revenues, increased by 11 percent year-on-year to P357 million, driven by the double-digit growth in passenger throughput.

“The solid performance of our airport segment will be supported by the completion of Terminal 2 in June of this year,” spoke Saavedra. “This will open more opportunities to steer this segment to even greater heights. Thriving tourism will also help boost growth as we position MCIA (Mactan Cebu International Airport) as the country’s main tourist hub with its strategic geographic location at the center of the Philippines.”

At the end of the first quarter, MCIA handled 2.7 million passengers, with domestic passengers representing 65 percent and international passengers at 35 percent. Air traffic volume increased by 21 percent, with a 15-percent and 22-percent growth in international and domestic traffic, respectively.


Megawide inaugurates P17.5-billion Cebu terminal

Cebu City―GMR Megawide Cebu Airport Corp. on Thursday inaugurated the P17.5-billon Mactan-Cebu International Airport Terminal 2, dubbed as the country’s first resort airport.

“For the past years, MCIA’s demand has exceeded the physical capacity of its terminal. With the addition of Terminal 2, not only will be able to sustainably cope with the steadily increasing number of passengers, we will also be able to open Cebu to more international flights,” GMCAC president Louie Ferrer said.

“We are committed to delivering a world-class travel experience to the public with our signature Filipino warmth,” he said.

The MCIA Terminal 2 will start commercial operations on July 1.  It will cater to international flights, while the existing Terminal 1 will handle domestic flights. The terminal building has a capacity of about 13 million passengers annually.

“Terminal 2 is a testament of GMR Group’s credentials as a leading global airport developer and operator. We are optimistic about the Philippines growth story, specifically in aviation, and look forward to contributing further to its ongoing ‘Build, Build, Build’ program,” GMAC chairman Srinivas Bommidala said.

The MCIA, the gateway to the Visayas and Southern Philippines, is currently handling 5.9 million passengers a year, beyond its capacity of 4.5 million passengers.

GMR-Megawide Consortium also won a 25-year concession agreement in December 2013 that involved the renovation of Terminal 1 of Mactan Cebu airport and the design, financing, construction and operation of a second terminal. 

It submitted the highest bid of P14.4 billion. 

Project funding for MCIA was completed in 2014 through a consortium of led by BDO Capital and Investment Corp. and the Asian Development Bank.

The consortium also won the engineering, procurement and construction contract for the Clark International Airport new terminal building. 

Megawide-GMR submitted the lowest financial proposal for the airport expansion project at P9.36 billion on Dec. 14.

The new terminal building broke ground on Dec. 20, 2017 at Clark Civil Aviation Complex in Pampanga. The new terminal will accommodate an additional eight million passengers a year.

Clark International Airport is envisioned to become Asia’s next premier gateway and is expected to help decongest Ninoy Aquino International Airport. 

Clark airport currently has an annual capacity of four million passengers. Airlines operating in Clark include Qatar Airways, Cebu Pacific, Tigerair, Jin Air, Asiana Airlines, Dragon Air, AirAsia Berhad, Philippine Airlines and Emirates Airlines. 

These airlines mount flights to Hong Kong, Singapore, Bangkok, Macau, Pudong, Incheon, Doha, Dubai, Davao, Cebu, and Kalibo. 

...this a company that is positioned for growth talaga, and hold

Megawide aims to book P24-B contracts this year

MEGAWIDE Construction Corp. targets to book P24 billion worth of new construction contracts this year, driven by projects from the private sector.

The diversified engineering conglomerate said this is the second highest value of contracts it has signed to-date, following the P38 billion worth of deals it bagged back in 2015, and more than twice the P10.8 billion it secured in 2017. More than half of the contracts were signed during the first quarter of the year.

“Malaki dun yung Clark, P4.9 (billion) yung Clark. The others typical, mga buildings, commercial, mga private,” Megawide Chief Executive Officer Edgar B. Saavedra said in a press briefing before the company’s annual shareholders’ meeting in Mandaluyong City yesterday.

Megawide and GMR Infrastructure Ltd. signed the contract for the engineering, procurement and construction of the new terminal building for Clark International Airport last Jan. 29.

This year, Megawide expects revenues to grow 12% to P21.37 billion, of which P18.59 billion will come from the construction segment.

“Per segment, construction (revenues) will grow 11% year on year compared to that of 2016 to 2017, wherein we only posted growth of 6%,” Megawide Chief Financial Officer Oliver Y. Tan said during the briefing.

Meanwhile, revenues from airport operations are expected to grow by 21% to P2.78 billion for the year.

Megawide on July 1 commenced operations for the Mactan Cebu International Airport (MCIA) Terminal 2, which will bring capacity to 12.5 million passengers from 8 million passengers before. The new terminal will service solely international flights.

“The operation was according to plan. (The first flight) was from Shanghai… The passengers we have about 19,000 a day for the total terminals 1 and 2, of which 30% will come from international,” GMR Megawide Cebu Airport Corp. President Manuel Louie B. Ferrer said at the same briefing.

From an average aircraft movement of 10 per hour, Megawide said the MCIA Terminal 2 will bring aircraft movement to 12 per hour with the addition of more carriers. The company said the terminal can serve up to 18 aircrafts during peak hours.

The company is also seeking to add a second runway at the MCIA. It has already received original proponent status for its proposed second runway project, which is now being evaluated by the National Economic and Development Authority board.

Megawide is also planning to bid for the operation and management of Clark International Airport for 25 years, after the provision that would have disqualified the company from participating was lifted last month.

An information memorandum by the Bases Conversion and Development Authority said a company could not qualify if it holds a majority equity interest in a concession holder of an international airport in the Philippines.

“Before there was a clause that could disqualify us, they lifted it two days before the June 7 inauguration of MCIA. But our partner is disqualified because of the Skytrax. We have the option to partner with someone else, but we haven’t considered that option yet,” Mr. Ferrer said.

The Bangalore-based GMR group was supposed to be Megawide’s partner for the project, but technical qualifications of the airport partner, however, specified that it should be included in SkyTrax’s Top 20 Best Airports. Skytrax is a United Kingdom-based airline rating organization.

Mr. Ferrer said Megawide may get a new partner, noting that they are currently in talks with one Asian and one European firm for the project. The deadline for the bidding is on July 20.


Megawide, Filinvest agree to settle dispute on P800-million fees

Construction company Megawide Construction Corp. and developer Filinvest Land Inc. are close to signing an amicable settlement over an P800-million collection case.

Megawide chief finance officer Oliver Tan said a settlement could be finalized within the third quarter, with FLI agreeing to pay the construction company.

“I think we were able to come into a compromise agreement, so we should be disclosing the detail of that this third quarter,” Tan said.

Both parties are expected to sign the amicable settlement soon, he said.

Tan said while the structure of the amicable settlement was still being finalized, FLI, the property arm of the Gotianun family, was now willing to pay Megawide for the unpaid receivables from various projects it had undertaken for the property firm.

“They will pay something. The structure of the settlement will mend the relationship in such a way that we will not incur losses for the projects and they will walk away their good reputation still intact,” Tan said.

He said with the amicable settlement forthcoming, Megawide would no longer pursue any legal action against FLI.  In 2017, Megawide said it was claiming roughly P800 million in unpaid receivables from various projects it had undertaken for FLI.

FLI said it was also demanding payment from Megawide for its failure to complete several projects.

The issue stemmed from the claim of FLI that Megawide failed to deliver the projects based on an agreed timetable.

Megawide, however, said the five high-rise projects it constructed for FLI were completed within the timetable, based on the approved extension and well within the new turnover schedule.

FLI said Megawide was liable for liquidated damages amounting to P793.5 million, plus another P72.24 million and other costs allegedly incurred by the property developer for rectification works, takeover works, importation and other expenses.

FLI said it had to take-over the projects to ensure completion, which resulted in substantial liquidated damages and other actual damages for costs of rectification, take-over works and lost income.

The rift between Megawide and Filinvest group started when Filinvest-Changi consortium lost to Bangalore’s GMR Infrastructure Limited-Megawide consortium in the auction for the P17.5-billion Mactan-Cebu International Airport contract.


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