Biz Buzz: Stock market darling

THE Lao family’s D&L Industries gained in recent weeks while many other companies declined, and we might know why.

Apparently, foreign broker Macquarie Securities initiated coverage of the company in late April, assigning it some fairly bullish prospects and, naturally, a nice share price target, based on a report Biz Buzz managed to obtain.

Macquarie, specifically, gave D&L an “outperform” rating, citing themes that D&L has long capitalized on, like the strong domestic consumer economy. It also cited the company’s promising export potential.

Interestingly, Macquarie views D&L’s food business as “monopolistic” in the sense that the company has managed to corner a good deal of prime clients—like major fast-food companies and restaurant chains—by creating food ingredients and formulations they can’t get anywhere else.

“As a result, these clients become more dependent on DNL, especially for successful products,” Macquarie said.

This matters because food ingredients account for about half of the company’s revenue and a third of profit.

Oh, you were wondering about the price targets?

Macquarie said this was at P23 a share, assuming a 2015 profit of P2.46 billion. That’s for the standard 12-month period. It gave a “bull case” scenario, which assumes that certain partnerships materialize, apart from other consumer growth projections, placing the target higher at P27 a share.

Macquarie is the fifth foreign broker to cover D&L after CLSA, Maybank, JP Morgan and Bank of America Merril Lynch.

That shouldn’t be surprising. D&L was actually recently named the best managed mid-cap company in the Philippines by FinanceAsia, while its young CFO Alvin Lao was named the second best finance officer in the country after Ayala Land’s Jaime Ysmael. Miguel R. Camus

Double Dragon going big

DOUBLE Dragon Properties Corp. is getting ready to join the big boys listed on the Philippine Stock Exchange.

The upstart real estate company, which has adopted an aggressive expansion strategy, has filed an application with the PSE to move from the board composed of small and medium scale enterprises to the main board.

The property development company led by Jollibee Foods Corp. chair Tony Tancaktiong and Mang Inasal founder Edgar Sia II felt that it was ripe for graduation to the main board, having met the requirements including a track record of posting a significant income, since its listing in April 2014.

Last year’s results are hard to ignore as the property company, which is developing a chain of CityMalls across the country, reported an almost 400-percent increase in net income to P560.8 million from P122.1 million the previous year.

PSE is evaluating the proposal and it seems Double Dragon’s move up will just be a matter of time, and those who have bet big on its prospects can hardly wait. Tina Arceo-Dumlao

Geo-Estate looks south

WHAT is real estate man Francisco Licuanan III up to nowadays?

Well, apparently, the former CEO of Ayala Land Inc. is busy running property firm Geo-Estate Development Corp … and giving his former Ayala employers competition.

Well, maybe not full-on competition, but some competition.

As chair and CEO of Geo-Estate, he is busy with a project called Sonria, which will be the first high-end residential condominium in Barangay Ayala Alabang.

With Stonebridge Corp., Geo-Estate is also building the 21-floor, 88-unit residence on the corner of Securities and Industry Streets in Madrigal Business Park.

Licuanan says Sonria is both for end-users and investors. It is being marketed to people who want to live in Alabang and for those who want to earn income from rental and price appreciation.

The project offers one-, two- and three-bedroom units, oriented primarily to empty nesters in Ayala Alabang and young, independent couples.

Geo-Estate is also counting on the project providing its investors with good returns when leased out.

According to Licuanan, there is a big demand for housing for executives of foreign companies whose factories are located in industrial estates south of Metro Manila.

Then there’s the inevitable transition of Ayala Alabang from a primarily low-rise residential area to a higher density mixed-use district.

Licuanan explains that residential areas often start with house and lots. When real estate values start picking up, people start to look for townhouses and, eventually, condominiums.

Geo-Estate’s marketing pitch also hinges on the expectations that prices of Sonria units will appreciate along with the rest of Southern Metro Manila.

In a recent study, research firm Cuervo Far East projected that properties in the Southern Manila West Growth Area—or portions of Las Piñas and Muntinlupa cities west of the South Luzon Expressway (SLEX)—will appreciate by 10 to 15 percent annually until 2019, as new road networks and residential developments are built.

Historically, property values in the area, which include Ayala Alabang, have increased by an average of 20 percent yearly since 2009.

In CFE’s estimate, land values for select residential developments in the area may rise to P100,000 per square meter by 2019, from P30,000 to P80,000 in 2014.

So will the project sell? We’ll know soon enough. Daxim L. Lucas

Sooner or later?

THERE’S been much ado lately about Energy Secretary Carlos Jericho L. Petilla’s resignation.

After days of silence on the matter, prompting speculation from various sectors and even government officials, Petilla finally confirmed on the occasion of his birthday last April 29 that he had resigned.

He named his officer in charge (OIC) and said that it was his last day in office.

However, there is the matter of meeting with President Aquino to see if there would be a new Energy secretary, or would an OIC suffice until such an appointment has been made—or even well until this administration bows out and the next one appoints an energy chief.

That meeting is expected to take place today, May 4.

And so, Petilla said, he has started tying loose ends.

If there are three things he is pushing the Department of Energy (DOE) to complete beyond his term, he said, those would be power demand aggregation/bidding, making open access mandatory, and instituting a regular review of the Feed-in-Tariff incentive scheme.

If he does not leave now and runs for public office, he will have to leave in October, anyway. And if he does not run, he will still have to leave in June 2016.

And so, it seems to be just a matter of time.

DOE stakeholders (especially those with pending proposals and/or issues) are only asking, will it be now or later? Riza T. Olchondra

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