LT Group hikes capex by 73% to P19B
Credit to Author: ANGELICA BALLESTEROS, TMT| Date: Tue, 07 May 2019 16:21:42 +0000
LISTED LT Group Inc. has increased its capital expenditure (capex) for this year by 73 percent to P19 billion from P11 billion in 2018 to help its banking subsidiary get more funds.
At a briefing in Manila on the sidelines of the Tan-led holding company’s annual stockholders’ meeting in Manila on Tuesday, LT Group Chief Finance Officer Jose Gabriel Olives said the increase was due to the higher capital requirement for Philippine National Bank (PNB), which was looking to conduct a P12-billion stock rights offer this year.
“[Capex is] normally around P10 billion, except this year. We’ll probably have more because, as you know, we have a 60-percent interest in PNB…[and] if we subscribe to our requirement, then we will need to add P6 billion to P7 billion for that,” Olives explained.
About P2 billion will be allocated for property arm Eton Properties Philippines Inc., as it continued to expand its horizontal developments. It is now building two townships, one of which is Parklinks, its joint venture project with Ayala Land Inc.
The rest of the capex will be spread to other units.
For Asia Brewery Inc., LT Group will build in Pampanga province a facility to produce bottled water, since it had a strong reception for bottled sparkling-water products. For Tanduay Distillers Inc., the holding firm said the company was looking to acquire sugar milling and refinery assets of listed Roxas Holdings Inc.
Among all its businesses, LT Group President and Chief Operating Officer Michael Tan said his company was cautious over further tax hikes on tobacco and alcoholic beverages, which would translate to higher selling prices and likely dampen sales volume.
“The tobacco business will remain as the main source of LT Group’s earnings. PMFTC will continue to be vigilant in the fight against the illicit trade [of cigarettes] and continue to work with [the] government,” he said during the shareholders’ meeting.
Tan underscored that the group was not against tax increases, but said these should be implemented gradually, like 5 percent annually, should these continue.
LT Group will also bring to the market a new “heat-not-burn” tobacco deemed less harmful than burned tobacco.
“It can be taxed also, but we’ll see if we can get a differential treatment on that,” Tan said.
LT shares rose by 38 centavos or 2.29 percent to close at P17 each on Tuesday.
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