Biz buzz: Roundabout Apec route

President Duterte will almost certainly attend the Asia Pacific Economic Cooperation summit in Peru later this month, and preparations are already being made by the Palace to assemble the government, business and media delegations for the literally long trip.

But this trip may become even longer in terms of travel time for the travel weary members of his official entourage.

That’s because Mr. Duterte apparently does not want to transit through the US West Coast if he’ll fly to the Peruvian capital of Lima. Usually one transits through Los Angeles when flying to Latin America from Asia, as the Pacific Ocean is just too wide for commercial jets, but the President apparently dislikes the US that much, that he wants to reach Peru through a different route.

How about flying the other way around the world via Europe? Nope. He doesn’t like the European Union, too, remember?

Biz Buzz learned that this left government planner with one option: fly to New Zealand (and meet Filipinos there while he’s at it) and then cross the South Pacific of Latin America. That will work.

The downside for the President’s official entourage though is the flying time this roundabout route will require: almost 24 hours in the air, excluding the stopover. And you land in Peru where the time zone is the exact opposite of the Philippines. Let’s hope the topsy turvy body clock doesn’t affect the President’s now famous temper. —Daxim L. Lucas

Shell’s game

After two decades of being pushed back, Pilipinas Shell Petroleum Corp. finally made it to its goal to list on the Philippine Stock Exchange through an initial public offering.

The company’s IPO was, of course, a requirement imposed on it by the 1998 Oil Deregulation Law, but was continually deferred due to “unfavorable market conditions”—an explanation that energy beat reporters got tired hearing from Shell executives that, after about a decade, they simply stopped asking for updates.

But not everyone was convinced when Shell finally announced the pricing for its P19-billion public offering. Many market watchers noted that the stock’s price-to-earnings ratio of about 15 times earnings was higher than the market’s average of 13 times, and higher than the same metric for rival Petron Corp. whose operations are twice as big as that of Shell’s local unit.

Some market watchers were, in fact, speculating that Shell priced its stocks at a premium just to have that singular bragging right of having a larger market capitalization on the PSE than its San Miguel-controlled rival.

At the IPO price of P67  per share, Shell’s market capitalization stands at some P108 billion, beating Petron’s P96 billion.

And how does one justify such a premium given that the larger rival’s shares are trading at cheaper levels? Simple: change the metrics of the game.

According to Pilipinas Shell’s new CEO Cesar Romero, the company doesn’t use topline numbers when measuring itself against its bigger competitor—for obvious reasons—but instead uses measures of efficiency.

(Incidentally, the young Romero was mentored by former Pilipinas Shell CEO and pioneer Cesar Buenaventura, who was present at Thursday’s IPO ceremony to witness the culmination of his efforts at the helm of the petroleum firm.)

Romero said Shell’s gas stations, for example, had “double” the average throughput of gas stations of various local players.

“One thing we’re very proud of is our very efficient network,” he said. “The volume per station of Shell is actually double that of the industry. Thus, we’re able to achieve almost the same sales volume as competitors.”

And even Shell’s refinery—smaller than Petron’s new $2-billion Bataan behemoth—was praised for being “fit-for-purpose and right-sized” for the company’s needs.

“Pilipinas Shell is a marketing-led business with a highly integrated and optimized supply chain, which includes a refinery,” Romero said. “Our refinery is a contributor to the overall profitability but that’s not the driver. The driver is the marketing business.”

In other words, if you can’t match your bigger opponent’s size, play by different rules. Makes sense. It should be interesting to see how Petron responds to Shell’s game. —Daxim L. Lucas

Forward thinking SMC

Some were surprised that conglomerate San Miguel Corp. shifted its massive airport proposal from Manila Bay in Manila further north to an area near the same body of water in Bulacan province.

But from what we’re hearing, the conglomerate was committed to this location, and its recent unsolicited proposal to the government included add-on transport linkages that would help any air gateway succeed.

Perhaps learning from the lessons of Clark International Airport in Pampanga—which still lacks crucial railway access —San Miguel’s Bulacan proposal has somewhat of an advantage.

After all, San Miguel Corp. is also behind the Metro Rail Transit Line 7, which will link Quezon City to San Jose del Monte, Bulacan via 30-minute train ride when it opens by 2020.

SMC president Ramon S. Ang told Biz Buzz that such a connection between SMC’s airport and MRT-7 was being planned.

We heard from our government sources that SMC’s airport would rise on over 2,000 hectares of land in Bulakan, Bulacan (no, that wasn’t a typo). That meant some roads would have to be added to link it to San Jose del Monte.

Perhaps surprising for some was the fact Bulacan is not very far from Metro Manila. Considering infrastructure projects being built, our sources said the proposed airport would be about 20 minutes away from Balintawak, Quezon City by car, and about 40 minutes to Buendia, Makati.

Of course, there’s also a rival private-sector concept for a new air gateway at Sangley in Cavite province, made by the Sy and Tieng business groups. We understand there are many infrastructure projects for the government to consider, given its new motto to “build build build.”

We hope a new air gateway remains top of mind as well. —Miguel R. Camus