In a statement, PhilRatings said its grade on JG Summit, one of the country’s most diversified conglomerates, was a reflection on the firm’s “strong liquidity, sound capitalization, very good management, and the solid market position of its core businesses.”
“It also takes into consideration the positive outlook for the domestic economy, in general, and the industries included in JGSHI’s investment portfolio, in particular,” PhilRatings said.
PhilRatings grades are based on available information and projections at the time that the rating review is ongoing.
PhilRatings cited that the JG Summit’s principal source of cash continued to be operating activities, amounting to P8.1 billion in the first half of 2012.
At the end of June this year, the group’s current debt of P42.1 billion was amply covered by total cash/cash equivalents (P29.7 billion), financial assets available-for-sale investments (P60.3 billion), and financial assets at fair value through profit or loss (P13.5 billion).
“Internally generated cash will be used to fund expansion activities, as the JG Summit Group pursues its expansion strategy,” PhilRatings said.
The research firm said JG Summit “has demonstrated its ability to provide direction for sustainable growth, while management has shown expertise to manage large-scale operations,” citing the success of subsidiaries like Cebu Pacific, Universal Robina Corp. (URC), and Robinsons Land.
PhilRatings said the three firms enjoyed strong positions in their respective industries.
In particular, URC’s brands have become “household names in the Philippines,” PhilRatings said. Robinsons Land, for its part, remained one of the country’s leading real estate developers in terms of revenues, number of projects, and project size.
The third jewel in the JG Summit crown, PhilRatings said, was Cebu Pacific, the leading low-cost carrier in the Philippines.
The airline remained as the preferred domestic carrier, with a market share of 46.5 percent for the first quarter 2012. “It pioneered the ‘low fare, great value’ strategy in the local aviation industry, targeting passengers who are willing to forego extras for fares that are typically lower than those offered by traditional full-service airlines,” PhilRatings pointed out.