AGI sets P5B stock buyback

Andrew Tan. INQUIRER FILE PHOTO

Tycoon Andrew Tan-led conglomerate Alliance Global Group Inc. has earmarked P5 billion for a two-year share buyback program, believing that the conglomerate’s shares are “grossly undervalued” in the stock market.

This is the second publicly listed company under Tan’s group to embark on a share repurchase program after Emperador Inc., whose board likewise allotted P5 billion to buy back shares.

“We are undertaking this corporate action because we believe that our shares are grossly undervalued. Our group has been consistently profitable, with attractive growth prospects and enjoys strong brand equity and therefore views this exercise as a means to enhance shareholder value over time,” AGI president Kingson Sian said.

AGI – which is into real estate development (Megaworld Corp.), integrated resort development and operation (Travellers International Hotel Group), beverage (Emperador Inc.) and fast-food business (Golden Arches Development Corp.) – is currently valued by the stock market at around P151.6 billion, much lower than the valuation of other major conglomerates in the country.

“AGI continues to build on its strength with a business model that is time-tested and stress-tested,” Sian added.

The conglomerate posted new levels of revenues and core net profit in 2016 of P139.6 billion and P22.8 billion, respectively. Attributable net income rose by 6 percent last year to P14.8 billion.

AGI has allocated a capital spending budget of about P80 billion this year, of which 75 percent will be spent for Megaworld’s residential development and the construction of office and commercial projects. Over 10 percent will fund Travellers’ ongoing expansion program at Resorts World Manila, while the balance is intended for Emperador maintenance and McDonald’s store rollout by Golden Arches.