Ayala Corp [AC 691.00, up 2.4%; 195% avgVol] [link] confirmed a report that quoted AC Chairman Jaime Zobel as saying that AC “can make a difference” by building cold storage facilities and developing a network of “cold transport” and “cold chain improvement structures”. Mr. Zobel said that AC has “decided to put a little focus on the logistics side of the business”, and philSTAR reported that AC Logistics CEO Jose Rene Almendras said that its was “looking at putting up more cold storage facilities.” The comments come after Department of Agriculture Secretary Francisco Laurel revealed his desire for a massive spending framework for the country to improve its cold storage and warehouse capacity as part of a long-term plan to reduce production spoilage and dependence on imports.
MB BOTTOM-LINE: The Ayala Group has been active in the logistics market, but its actions have lacked conviction and demonstrated an unwillingness to take the lead. There is a young and regionalized private cold storage market that is waiting for a deep-pocketed conglomerate to consolidate the industry and build a true national presence, but companies like AC and Metro Pacific (MPI) feel that they haven’t yet figured out how time-consuming and expensive it will be to conduct the build-out necessary to compete in a meaningful way. If AC’s interest is only in the media that would come from building a handful of tiny cold storages as a token part of the government’s plan, then that’s fine. Time isn’t really a consideration and neither are operational quality or profits. But if the goal here is to truly become a nationwide leader in cold chain logistics, AC, MPI, and any of the other conglomerates will need to go hunting and pay the iron price to acquire quality. As mentioned previously, the three largest private cold storage providers are Jentec, Royale Cold Storage, and Glacier Megafridge. The path to the top is through one (or more) of these players.
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