LT Group allots P10 B for expansion, new projects

MANILA, Philippines – LT Group Inc. (LTG), the investment holding firm of taipan Lucio Tan, is setting aside P10 billion in capital expenditures this year to fund the expansion of its beverage business, land acquisition, new projects of the property unit and technology upgrade for its banking arm.

In a briefing following the company’s annual stockholders meeting yesterday, LTG president Michael Tan said the group is bullish on this year’s prospects especially with plans of the incoming administration on peace and order and countryside development which would benefit the group’s different businesses.

“All operating units will continue to grow. We’re looking at tobacco and banking as main growth drivers,” Tan said.

At the same time, he appealed to the incoming government to address the problem of cigarette smuggling and sale of counterfeit products, saying this could easily boost state coffers by P10 billion to P15 billion.

“Our main concern as a group is that we want a level playing field and we want the government to crack down on illicit cigarettes and smuggling and non-tax payment of cigarette companies here. It’s not difficult to enforce. There are only a few cigarette companies to look out for,” Tan said.

“The government can collect P10 billion to P15 billion more. It’s a low-hanging fruit,” he added.

The group has proposed the installation of closed-circuit TV surveillance in the production lines of cigarette companies as well as the use of a 24/7 third-party monitoring system to ensure there is no smuggling of cigarettes.

LTG businesses include beverage company Asia Brewery Inc., property developer Eton Properties Philippines Inc., cigarette firm PMFTC Inc., banking giant Philippine National Bank (PNB) and liquor company Tanduay Distillers Inc.

During the stockholders meeting, Tan said the company sees bright prospects for the property business given the continued demand.

Early this year, LTG announced a joint venture with Ayala Land for the development of a 35-hectare township spanning Pasig and Quezon cities.

“Development of the master plan is ongoing and this project will provide LTG additional source of earnings from the property sector, as well as give Eton opportunities to further increase its product offerings,” Tan said.

Asia Brewery Inc. (ABI) has partnered with Heineken International to form AB Heineken Philippines Inc. which will drive the premiumization of its beer brand portfolio, he added.

PNB, on the other hand, announced the acquisition by Allianz of a 51 percent stake in PNB Life Insurance Inc., which includes a 15-year bancassurance agreement.

In the tobacco sector, Tan said there is much room for margin improvement when illicit trade is substantially reduced.

“We’re ready to work closely with incoming president Duterte’s handpicked finance team led by incoming secretary Carlos Dominguez to fight illicit trade and increase tax collection especially in the tobacco and alcohol sectors,” Tan said.

On distilled spirits, he said Tanduay plans to improve earnings through new product offerings targeting the youth and cost-efficiency measures like energy-saving initiatives that may also provide additional sources of revenues.

Eton Properties, meanwhile, will be putting up more BPO office buildings to expand its leasing portfoio, Tan said.

LTG’s earnings reached P6.6 billion in 2015 or 50 percent more than the P4.4 billion reported the year before.

In the first quarter of 2016, LTG’s attributable net income amounted to P2.23 billion, 40 percent higher than the P1.59 billion realized in the first quarter of the year.