Eton Properties expects sharply lower profit this year

MANILA STANDARD - Eton Properties Philippines Inc., the real estate unit of the Lucio Tan Group of Companies, expects net income to decline 60 percent this year to P300 million from P733 million in 2011 due to construction delays.

Eton said in a statement profit in the first six months of the year reached P31 million, down sharply from P418 million year-on-year while revenues slid 60 percent to P995 million from P2.5 billion a year ago.
The company partly attributed the lower profit to the non-recognition of sales of projects that had not started construction. The company uses the percentage-of-completion method in recognizing residential project revenues.

Construction of Eton’s ongoing residential and commercial projects continued full-blast in the first half, but development of Aurora Heights Residences, First Homes Makati and West Wing Villas was moved back to give way to design improvements and enhancements.

“We moved back construction timetables of some projects for much-needed design improvements. These range from road widths to building façade. The enhancements would definitely add value to these projects in terms of quality and functionality,” Michael Tan, officer-in-charge of Eton Properties, said.

Tan said he expects the recognition of income from these projects once construction begins.
Construction on the fully-sold West Wing Villas is expected to start in September this year while that of high-rises First Homes Makati and Aurora Heights Residences is expected in the first quarter of 2013.
First Homes Makati is a 34-story condominium project along Pasong Tamo, Makati, just steps away from Ayala Avenue.

The company recently launched Hanna Manor, the 11^th cluster of The Manors at North Belton Communities in Quezon City, an enclave featuring 14 clusters of five-story mid-rise buildings.
Eton also plans to launch within the year a Quezon City project featuring mid-rise and high-rise structures, a residential condominium for the upper class market in Makati and the second tower of First Homes Makati.
Eton Properties has launched 45 projects since the company started operations five years ago. Its portfolio of launched and completed projects includes residential, commercial, office projects and township developments.

Trading of Eton Properties’ shares is currently suspended because of the non-submission of reportorial requirements to the Philippine Stock Exchange.

For more details on Eton projects, you may e-mail reby_ramirez@yahoo.com or contact her at 0922.883.9308 / 0916.4044.555 / 0919.699.3572 / 4044-534.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.

Bank merger clears another hurdle

BUSINESSWORLD - THE MONETARY BOARD has green-lighted the merger of Philippine National Bank (PNB) and Allied Banking Corp. (Allied Bank), with the Securities and Exchange Commission (SEC) left as the sole regulatory hurdle to the union.

In a disclosure to the stock exchange, PNB said: "we received ... advice from the BSP (Bangko Sentral ng Pilipinas) under Monetary Board Resolution No. 1270 dated Aug. 2, 2012, approving the plan of merger and articles of merger of PNB and Allied Bank, with PNB as the surviving entity."

Allied Bank President Anthony Q. Chua, in an e-mail, yesterday said: "[Pending SEC approval,] the two banks continue to meet and plan the integration process. This will continue until the merger is fully completed."

PNB and Allied Bank are still responding to SEC queries regarding the merger, he said.

Philippine Deposit Insurance Corp. was the first of three regulators to approve the merger, issuing its approval on July 26.

The plan, approved by the banks’ shareholders in 2008, is expected to be implemented this year. New share swap terms were approved in March.

PNB will exchange 130 PNB common shares for each Allied Bank common share and 22.763 PNB common shares for every Allied Bank preferred share. The PNB shares will be issued at P70 apiece, up from the P55 approved in 2008. PNB will issue a total of 423.96 million common shares.

Also in March, Allied Bank sold a 28% indirect stake in San Francisco-based Oceanic Bank to California-based FNB Bancorp, clearing another merger hurdle.

Full integration of the Tan-led banks is targeted for completion 18 months after SEC approval, Mr. Chua said. After the merger, PNB will have 650 branches and assets of over P500 billion, making it the country’s fifth largest bank.

PNB earned P1.169 billion in the first quarter, up 1,000% from a year earlier. Allied Bank, meanwhile, netted P629.105 million in the same period, up 153%.

PNB shares closed at P72.95 apiece yesterday, up 20 centavos.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.

Michael G. Tan thrust into limelight

Unlike other Filipino-Chinese taipans, it took a lot longer for Lucio Tan—the country’s second-richest man, according to Forbes magazine—to make clear to the public the succession plans for his vast empire.

But such is no longer the case after the tobacco and beer magnate announced Tuesday that his diverse business empire composed of at least 17 large and small firms would be consolidated under publicly listed Tanduay Holdings Inc.

Soon to be renamed LT Group Inc., the holding company is headed by the taipan’s son, Michael, whose profile has risen since he took over the helm of his father’s flagship beverage firm, Asia Brewery Inc.

Interviewed by the Inquirer Tuesday, the foreign-schooled Michael conceded that his father’s decision to consolidate his business empire under one roof comes late compared to other taipans.

But the timing is good.

“It’s all about timing,” he said. “The stock market is up and it’s a good time to do this.”

He added jokingly that the name “LT Group” comes after similar moves by other taipans to consolidate their empires under holding firms named after their patriarchs.

“We’ve seen ‘JG Summit’ (owned by John Gokongwei Jr.) and we’ve seen ‘GT Capital’ (owned by George Ty), so why reinvent the wheel? It’s a trend and it works,” he said.

Indeed, stock market investors reacted positively to the decision to inject at least P200 billion worth of assets into the lightly traded holding firm.

At the Philippine Stock Exchange on Wednesday, the stock was heavily traded and its stock price shot up 50 percent—the most any stock can rise in a single session.

Now 46 years old, Michael Tan took his early education at the Jesuit-run Xavier School, which caters mainly to affluent Chinese-Filipino students.

“I studied there until second year high school, then my father sent me to Singapore, where I continued high school for three more years,” he said.

He was then sent to study at the prestigious Peking University where he soaked up Chinese culture, before he went to the University of British Columbia in Vancouver, Canada, from which he graduated with a civil engineering degree.

On returning to the Philippines, he was gradually eased into the day-to-day operations of his father’s empire, starting with the brewery business and eventually in the real estate firm, Eton Properties.

At present, Michael remains the chief operating officer of Asia Brewery—the country’s second-largest beer maker—and the officer-in-charge at Eton. He also holds directorships representing his father’s concerns in Allied Banking Corp., the Philippine National Bank, Philippine Airlines and Philip Morris Fortune Tobacco Co., among others.

It remains unclear when the 78-year-old Lucio Tan will retire, but it has become increasingly clear that Michael, given the roles he has been playing in running the business, is his heir apparent.

Asked to describe his management style, Michael says he—like his father— has an eye for detail. But he is quick to point out that he is less of the micromanager that his father is known to be—something business associates confirm.

“It is also important to me to establish accountability,” he said, adding that while he gives greater latitude to people working under him, he is strict when it comes to defining which company official is responsible for what.

“I don’t like officials pointing fingers at each other,” he said.

Going forward, Michael said LT Group Inc. will remain focused on the businesses of aviation (through its 51 percent stake in Philippine Airlines); tobacco (through PMFTC); beverages (through Asia Brewery); real estate (through Eton Properties); and banking (through the soon to be merged PNB and Allied Bank).

“These are really the five pillars of our business, and we intend to remain focused on them,” he said. “I want to look at the synergies that can happen between them and leverage the experience we have in these industries.”

First up on his plate as the head of the consolidated holding firm is to restore its stock market free float to the minimum of 10 percent, as it is expected to drop to 6 percent once the major operating firms are folded in.

“We will have to do a follow-on offering of primary shares,” he said, adding that the move will be part of a series of moves that will result in the LT Group firms being more liquid on the bourse.

Characteristically, he is reluctant to reply when asked whether the corporate changes signal his looming ascension as his father’s chosen one.

“What we are seeing here is only the start of a process,” he said.

For latest update on real estate development and its RA 9646, the Real Estate Service Act of 2009, visit www.ra9646.com.