SMC infrastructure business to be worth $20B in 2020

San Miguel Corp., which has transformed into an energy-based conglomerate from food and beverage in less than a decade, expects to further evolve into an infrastructure-driven enterprise with its infrastructure group estimated to become a $20-billion business by 2020.

During an investors’ briefing for SMC’s P30-billion preferred shares offering late Wednesday, SMC president Ramon S. Ang said that with the group’s major infrastructure projects in the pipeline, this sector might exceed the power and oil businesses combined by 2020.

“Our infra group, I think, will deliver and at the end of year 2020, valuation-wise, will be bigger than our power and oil combined because the valuation of this kind of business is usually between 15 to 20 times cash flow,” Ang said. “So it should have market cap (capitalization) of $20 billion on our infrastructure business.”

“So you can see the company has been expanding and spending a lot of time on infrastructure, to give stockholders a very stable and bright future,” he said.

As of the first nine months of 2015, SMC’s infrastructure unit accounted for only 2 percent of the business while the fuel and oil businesses of Petron Corp. accounted for the biggest share of 54 percent.

SMC’s traditional businesses–food, beverage and packaging combined–now account for only 32 percent of total business compared to 100 percent in 2008 or prior to the conglomerate’s aggressive diversification program.

On tollroads, Ang said prospects were bright as vehicular traffic was exceeding expectations.  Elevated tollroad Skyway is hitting about 300,000 cars a day now, mirroring the daily vehicular volume in the adjoining South Luzon Expressway (SLEx), Ang said.  He added that SLEx would be extended all the way to Lucena and eventually to Pagbilao, Quezon.

For the new tollroad Tarlac-Pangasinan-La Union Expressway (TPLEx), he said daily vehicular volume was hitting 80,000 to 90,000 daily whereas the original projection for this year was only 50,000 cars a day.

The group, in partnership with Citra and the Star Tollway groups, is now also building the connector road connecting Balintawak in Quezon City to Buendia in Makati. “If we’re able to do that, you won’t be suffering anymore from traffic in Edsa,” he said.

The group is also building a new highway called C6 to Bulacan and upgrading the airport in Caticlan, gateway to the world-famous Boracay Island.