Megawide 2011 profit seen hitting P800M

Listed Megawide Construction Corp. sees its 2011 profit growing by more than double as the company moves to diversify its portfolio of projects to include developments by other local real-estate giants.

The company, which is 20-percent owned by retail group SM, said it also planned to venture into the infrastructure sector under the Aquino administration’s public private partnership (PPP) initiative.

“If you look at the plans of the country’s top five listed real-estate developers, they have close to P200 billion worth of projects in their pipeline for this year and the next,” Megawide chief investment strategist Oliver Tan said late Tuesday.

With the abundance of projects available, Tan said the company’s profit by the end of this year could easily reach P800 million, from P335 million in 2010.

He said most of these projects were in the residential sector, which remained strong due to the continued inflow of remittances from overseas Filipino workers (OFW).

Most of Megawide’s current projects are residential high-rise developments by SM Development Corp.—now the country’s largest real-estate firm.

In the first quarter, Megawide profit jumped by 200 percent year on year to P104.1 million on higher revenue booked from building contracts in progress. Tan said this trend had so far been sustained in the second quarter.

Tan said the company planned to diversify by taking as many projects as it can from other developers. “We want to entertain new clients to diversify our client base to mitigate our concentration risk,” he said.

He added that the company was currently looking at the possibility of bidding for several infrastructure projects to be put on the auction block by the Department of Transportation and Communications (DoTC).

The DoTC is the government’s main implementing agency for PPP projects—the centerpiece of the current administration’s economic platform.

The projects lined up by the DoTC include the common station to be shared by the Light Rail Transit (LRT) line 1 and Metro Rail Transit train lines to be located at North Avenue in Quezon City.

Also expected to be put up for bidding this year is the contract to build the LRT line 1 South Extension to Cavite province.