Biz Buzz: ‘Misguidance’

Earlier touted by some as someone who can be the country’s newest taipan, this businessman is facing a big credibility test at the stock market.

His flagship business has lost 15 percent of its market capitalization in the last two trading days alone as prices slid to near 52-week lows, with investors dumping its shares (as well as those of its parent firm) since announcing a sluggish second quarter performance.

It’s not so much the decline in Q2 earnings per se that hit a raw nerve among investors. Only a month ago, the company went on a roadshow organized by an international bank, and there gave assurance that profit prospects were a-OK.

Market sources said the company had specifically stated that there was an evident pickup in the second quarter and had even given clear-cut earnings per share guidance during the roadshow.

So to say that many investors and analysts were disappointed with the company’s second quarter results is an understatement. The market could be more forgiving even of ugly financial results, one market source said, if the issuer were more forthright. In a subsequent call with investors, the company admitted that cutthroat competition was partly to blame for the slump in profits.

The lesson for any publicly listed company, of course, is never to promise anything that you can’t deliver. Doris C. Dumlao

Expanding Makati Med

With Makati Medical Center now starting to fill up—with some 700,000 outpatient visits and 32,000 inpatient admissions a year—the Metro Pacific group, led by businessman Manny V. Pangilinan, aka MVP, is starting to look at expanding.

At present, Makati Med has entered into a deal to lease an eight-story building across the hospital and transferred the administrative offices there to free up more space for medical services in the main building. This will allow the 500-bed hospital to expand inpatient space by around 50 beds.

But the group believes that the Makati central business district’s premier hospital needs a more permanent solution to boost capacity.

The ideal option, MVP said, is to purchase the idle lot within the vicinity—a 7,000-square-meter property that was razed in a fire a few years ago. It remains to be seen whether this property is for sale.

But in lieu of expanding on its current premises, another (and less costly) option is for Makati Med to build a satellite hospital elsewhere in Makati.

“Perhaps [we can] motivate patients to go to the satellite location and declog the main building, and people will just go to the main building for inpatient and other special work,” said Augusto Palisoc Jr., president of the hospital group.

The hospital group—currently the smallest but the fastest growing in Metro Pacific’s portfolio—wants to expand inpatient and outpatient services. Doris C. Dumlao

Ghost month pause

If you’re wondering why no progress has been made in the negotiations for Philippine Airlines between tycoons Lucio Tan and Ramon Ang, it’s probably because of the fact that at least one of the parties involved (or perhaps both) are still very much “traditional” in their ways.

And by “traditional,” we mean someone who adheres to customs and the old ways. Simply put, superstitious.

We understand that no major talks have been held over the last two weeks on account of August being the Chinese “ghost month,” alternatively called the “Festival of the Hungry Ghosts.” It’s bad luck to strike major deals during this time, according to customs.

In any case, it buys Tan time to raise the over $1 billion in liquidity he needs to buy back Philippine Airlines from San Miguel Corp.

Of course, this early, San Miguel is already looking at options just in case Tan is unable to come up with the cash required by Ang. This is especially since it is unlikely that the status quo will be preserved if both parties don’t come to an agreement.

One option is for San Miguel to keep all the new aircraft it bought for PAL… and start its own airlines. Now that would be interesting. Daxim L. Lucas

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