By Ian Sayson and Cecilia Yap
Grounded planes are helping a Philippine stock fly.
Behind the five-fold increase in MacroAsia Corp. shares this year is a venture’s expanded jet service and maintenance business. The company is the top performer this year among the 274 equities listed on the Philippine Stock Exchange, with its market value approaching $300 million. More gains may lie ahead.
Part of billionaire Lucio Tan’s empire that includes Philippine Airlines Inc., Manila-based MacroAsia expects its other businesses — airline catering and baggage handling — will also benefit as the government attracts international travelers by improving the nation’s roads and airports.
Profits will increase at least 20 percent a year, it says, after more than doubling in 2017.
“MacroAsia could be a potential three-bagger even at the current level,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc., referring to a three-fold increase. “Imagine how high the stock would go once government delivers on infrastructure and tourist traffic takes off.”
The Philippines has set a $170 billion, five-year infrastructure program, funded in part by tax changes that will raise new revenue while cutting personal taxes. Congress has yet to approve the first part of the plan and any delay in actual construction is an added risk.
Click here to read why Credit Suisse expects the infrastructure theme to disappoint
MacroAsia, which started as a miner in 1970 and then became a holding company, doesn’t have any analyst coverage, according to data compiled by Bloomberg. Tan took control in 1997, when his Philippine Airlines bought a 70 percent stake. The stock rose as much 3.3 percent Thursday in Manila.
“MacroAsia is a bet on Philippine tourism,” President Joseph Chua said in an interview on Monday. The company is planning to join Philippine Airlines’ effort to build a new terminal at Manila’s international airport. It “will grow the pie for everyone,” said Chua, a son-in-law of the billionaire.
Chua said another expansion is also in the works at Lufthansa Technik Philippines Inc., which last year added the ability to repair grounded Boeing Co.’s B777 jets in addition to working on Airbus SE’s A380. MacroAsia owns 49 percent of the venture that was set up in 2000; Lufthansa Technik AG controls the rest.
MacroAsia’s share in the business will account for 65 percent of profit this year, Chief Financial Officer Amador Sendin said, adding net income in 2017 will probably increase almost three-fold to 1.12 billion pesos ($22 million). A weaker peso, near an 11-year low against the dollar, will help boost profit as more than three fourths of the company’s revenue is in the US currency, Sendin said.
The company controls about two-thirds of the Manila airport’s foreign airline-catering market and plans to target customers outside the aviation industry. It also plans to provide ground-handling services in 30 locations by year-end, up from seven in 2016.
MacroAsia signaled bullishness in June, saying it will spend as much as 210 million pesos to repurchase shares. The stock has climbed 142 percent since then, to recently trade at 12.40 pesos.
Tags: BDO Unibank Inc., infrastructure program, Lucio Tan, Lucio Tan’s MacroAsia is this year’s top PSE performer; stock gains 400%, Lufthansa Technik Philippines Inc., MacroAsia, MacroAsia Corp., Philippine Airlines, Philippine Stock Exchange, President Joseph Chua
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