MPIC income up 69% to P23.9 billion

MANILA, Philippines — Metro Pacific Investments Corp. (MPIC), the tollways and infrastructure conglomerate chaired by tycoon Manuel V. Pangilinan, reported a consolidated net income of P23.9 billion, up 69 percent year-on-year.

Despite its steady income growth, MPIC plans to redirect its discretionary investments to less riskier businesses such as warehousing, real estate and tourism amid the regulatory risks it is facing.

Last year, the power, tollways and hospitals businesses  all contributed to growth, but higher interest cost pulled down core net income, MPIC said in a disclosure yesterday.

Power accounted for P11.6 billion or 55 percent of net operating income, while the tollroads business accounted for P5.2 billion or 25 percent. The water segment contributed P3.6 billion or 17 percent, while the growing hospitals business provided P867 million or four percent.

On the other hand, the rail, logistics and other businesses combined for a net loss of P352 million.

MPIC president and chief executive officer Jose Ma. Lim  said: “Our seven percent growth in contribution from operations reflects a decade and more of sustained capital investment to enable meaningful volume increases in all our major businesses. Our high-quality management and thousands of dedicated frontline employees work hard to deliver world-class service levels and improve operating efficiencies.”

Despite the expansion of the company’s overall service coverage and attempted constructive engagement on tariffs, such efforts have not endeared MPIC to the government, Lim said.

MPIC’s Maynilad Water Services Inc., the west zone water concessionaire, has been the subject of attacks by the Duterte administration since last year.

President Duterte said the water contracts of both Maynilad and east zone concessionaire Manila Water contained onerous provisions.

“The fall in our share price, along with the prices of other listed companies with government concessions, shows that despite our growth investors now attach sharply higher risk premiums for government adherence to contract,” he said.

“As a practical matter, Maynilad is currently unable to pay dividends, thereby forcing MPIC to recast its investment program in light of lower inbound cash flow, higher regulatory risk, and the resulting and self-evident lack of investor enthusiasm for this asset class. Ironically, even though there is huge demand for the services we provide, our discretionary investment spending beyond committed infrastructure projects will divert to less risky businesses like warehousing, real estate, and tourism,” he said.

For the tollways business, Metro Pacific Tollways Corp. recorded a core net income of P5.3 billion last year, up 18 percent on higher traffic on domestic roads and tariff adjustments in the different tollways.

Maynilad’s core net income for 2019 remained flat at P7.7 billion, while revenue rose nine percent to P24 billion.

Metro Pacific Hospital Holdings Inc. reported a 14 percent growth in core net income to P2.7 billion on a 12 percent rise in aggregate revenues.

Pangilinan said despite consistent growth in earnings and book value per share - the latter at P6.05 at end-December last year,  the company is not seeing strong share price performance.

Pangilinan said this may be attributed to the ongoing political developments and regulatory risks faced by the company.

“While we might attribute some of this to market factors and some to conglomerate discount, the discount -- so we are advised -- reflects concern on political developments,” he said.