Alliance Global’s FY25 projected capex down 21%

Alliance Global [AGI 9.11 ?0.1%] [link], the holdco owned by Andrew Tan and run by his son, Kevin Tan, said that it has allocated P59 billion for capital expenditures for FY25 across its many publicly-traded and private subsidiaries. The capex allocations are as follows: Megaworld [MEG 1.78 ?1.1%] will get P50 billion to build townships and commercial towers, Travellers International will get P5 billion to build a hotel in the Newport World Resorts complex, and Emperador [EMI 15.80 ?1.9%] will get P4 billion to expand its whiskey production capacity. In April, AGI said that its FY25 capex would be P63 billion. AGI’s planned capex for FY24 was P75 billion, of which AGI actually spent approximately P68 billion. 

  MB BOTTOM-LINE:  Interesting to see the P5 billion that had been slated for Golden Arches Development Corp. in April has been cut from the schedule. No idea what that’s about. Maybe it was all just big talk until the new 20-year master franchise was secured? I don’t have any info. Anyway, I have received a few questions on why companies announce capex, and I think it’s a useful thing to talk about. So why do companies do it? The main reason (IMO) is to manage investor and shareholder expectations. Outlining what the company plans to spend, and on what, signals the company’s intent. Is it looking to grow? In what direction? If you’re interested in dividends, the amount the company spends on capex may be of interest to you, as any money spent is money that cannot be returned to you at the end of the year through dividends. This capex plan from AGI seems somewhat underwhelming, but then again, I’m not a huge fan of the group. EMI is a good business, but MEG is a black hole of hopes and dreams. 
 

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