BIZ BUZZ: Tall building, tall problems
This boutique property company has developed a reputation over the years for bringing to the market distinct vertical developments that have attracted their fair share of the well-heeled market.
But one particularly eye-catching project has apparently come at a steep price being paid by disgruntled suppliers, with a number believing that they have been left with no choice but to run to the courts because of the stubborn refusal of the property company to pay over P40 million that it owes for work already done and in use.
One of these suppliers told Biz Buzz that the developer is still stalling even after another demand letter was sent last year, mouthing one excuse after another to justify the payment delay that has stretched to over—get this—six years!
The hapless suppliers can only wait for so long, thus are getting the paperwork together to file the cases in court. And, according to them, there are more who are poised to press their claims, too.
With the expected flurry of cases coming to the courts, it will be only a matter of time before more facets of the not-so-nice side of this property company will be … uhm … shall we say … “discovered.” —Tina Arceo-Dumlao
Worst over for PLDT?
At the peak of investor anxiety over its P48-billion budget overrun, shares of PLDT fell by as much as 17.5 percent. Some market observers speculated not just about a management revamp, but a potential change in ownership.
A big foreign brokerage house even wrote: “We expect radical changes to senior management … and there could also potentially be changes in ownership, to restore confidence to investors.” Some analysts did not agree that divestment would be in the cards right now, particularly since PLDT is maintaining its dividend payout, which shows First Pacific still holds it dearly as a crown jewel.
As to the speculated change in management, even the name of tycoon Lance Gokongwei surfaced as CEO candidate at some point, especially since the Gokongwei Group has one foot in the door (in terms of equity position), so to speak.
But now, the “worst-case scenario” may have already been “fully priced in,” a joint research by First Metro Securities Brokerage Corp. and DBS said.
Since the eruption of the budget brouhaha, PLDT’s shares have trimmed losses but they are still down by about 7.6 percent.
“We still see TEL (the stock market trading symbol of PLDT) as best positioned in the current competitive and regulatory environment among telcos under our coverage. We expect the capex (capital expenditure) overrun will have limited impact on TEL’s core telco business and that its balance sheet can absorb worst-case conditions relating to the overspend,” said the research note dated Jan. 3.
Apart from the recent sell-off presenting an opportunity to increase exposure at a cheap valuation, the First MetroSec-DBS report said the projected dividend yield of 6.7 percent for 2023 and 6.2 percent for 2024 was “attractive” and “offers a cushion to investors.”
This was even as higher assumption of capex and depreciation and amortization prompted FirstMetro Sec and DBS to reduce net profit estimate for PLDT by 17.5 percent and 18.6 percent for this year and next year, respectively, to P24 billion and P25 billion.
Nonetheless, these forecasts are still below expectations on more conservative revenue assumptions.
Key risks cited by the research included: competition being tighter than so far assumed, swift technological obsolescence (that could render the maintenance of older generation networks unprofitable), a prolonged high interest rate regime and continued depreciation of the peso (that could lead to higher capex spending in peso terms). —Doris Dumlao-Abadilla
