Injap Sia on Mang Inasal, DoubleDragon, and his X-ray vision
MANILA - Double Dragon, the property company he took public less than three months before, was having its worst week on the stock market. By the time we finished breakfast it was down as much as 26 percent since a week before. But Edgar “Injap” Sia said he wasn't worried.
Was he worried when "DD" was climbing from an IPO price of P2.00 to almost P11? That’s what I really wanted to know, because jumps like that often lead to falls like these, possibly making investors wary about his stock and raising questions about him being a one-hit wonder. He said no.
"The more we were driven to make sure we hit our targets on time or ahead of time,” he said between bites of the egg, ham and lettuce sandwich he made from the hotel breakfast buffet.
He says he's happy as long as there is pandesal, which there was. "If you know you can’t catch up with income targets, you’d be worried. If the price is 20 to 30 years, you’d be worried."
The target is 100 City Mall “community malls” by 2020, making up 70 percent of his targeted 1 million square feet of leasable space. It sounds like a lot, considering he hasn’t opened a single one of the first five he is promising this year. But this is a man who built Mang Inasal to 303 outlets in seven years, then, in 2010, sold 70 percent to Jollibee for P3 billion. He was 33.
He says leasing out the space will be easy. His partner in Double Dragon is Jollibee Food Corp.'s Tony Tan Caktiong. Their partner in City Malls is Henry Sy's SM group.
JFC’s Jollibee, Chowking, Mang Inasal, Greenwich, Red Ribbon and Highlands coffee chains, and the SM group’s SaveMore, Ace, Watson’s and Toy Kingdom chains, not to mention BDO and Chinabank will take up 80 percent of the 5,000 to 10,000 square meter malls.
He says 100 may sound like a lot, if you didn’t know there are already 200 around the country, just mostly stand-alone, renting space to the Jollibees and SaveMores. He says City Malls and those who will compete with it -- Lucio Co’s Cosco is planning its own version -- will roll over the small operators. Just like Mang Inasal and other national fast-food chains supplanted local restaurants, like “Big Bite” and “Try Me” in Iloilo.
He says that’s because retailers and restaurants will favor operators who can keep their malls looking new, which bigger operators will be able to because they’ll have experience and efficiencies. And chains and other businesses that need space or a venue for events -- like ABS-CBN rolling out SIM cards, he says, citing my employer -- will want to deal with an operator who can deliver a string of malls, even dozens. Consumers will then flock to these malls.
“In three to five years, there will be a total change,” he says. “In fast food, we share stomach. Here we share basket. We think consumers will choose the branded one. We will float up.”
“We have perfected our model. Now it’s execution na lang,” he says, again even if he hasn’t completed a single one.
Robinsons got the lease on the first City Mall, before the SM group bought in. SM will now get first dibs on all others.
I say it must be a far cry from convincing leasing managers to rent space to Mang Inasal in the early days, to now. Everyone must want to do business with you, I say.
It’s the same, Injap says. Before he had to convince leasing managers Mang Inasal fast-food was different from other chicken restaurants. Now he has to convince analysts there’s a market for so many City Malls.
“Their life revolves around Manila,” he says of the analysts. “Office, airport, golf club, coffee shop. They don’t see the outside. There’s 200 built in the last few years. If you don’t tell them, they won’t know.”
Injap Sia is always “outside” Manila. In the last year or so before selling Mang Inasal, when it was adding up to two outlets a week, he hopped on choppers to scout for and check locations.
Now he’s looking for property to acquire for City Malls or other real estate projects. He only moved to Manila in 2011, the year after he sold Mang Inasal. He grew up in Roxas City and opened his first Mang Inasal in Iloilo City after being offered a cheap space in a Robinsons mall there. The 2010 Ernst & Young Philippines Entrepreneur of the Year says he only thought up Mang Inasal because he could get the cheap space.
He’s just been back to Iloilo, for a very special business trip. It was the groundbreaking of the City Mall there, which will be open by December. But that’s not what made it special. Jollibee’s Tony and Grace Tan Caktiong went, and met Injap’s parents for the first time.
Double Dragon is “Double Dragon” because Tony Tan Caktiong and Injap Sia were both born during the year of the dragon, just 24 years apart.
But Edgar Sr., the grocery store owner who seeded his son with P2.4 million for that first store, is a dragon as well, the same age as Tan Caktiong.
And Edgar III is a dragon too, though Injap says, improbably, that he and his wife didn’t realize it immediately because they were too busy with their other baby, Mang Inasal. (Their second son isn’t a dragon, but if names count for anything, John Henry’s stars are aligned: he is named after John Gokongwei and Henry Sy, long before Injap met the taipans.)
All the dragon talk gives me a good opening to ask if he thinks he’s been lucky.
“That I can’t explain,” he says. “I tell people it’s from up there,” he says pointing up. “We are being used as instruments. He gives us ideas, support, wisdom, the right partners to execute the idea.”
Is he religious?
“No, not really,” he says. “Practical lang. Kasi where else? Success is a series of correct decisions, correct choices. If you’re guided, you choose right eight out of 10.”
“Swerte is from up there. It’s blessings. It’s guidance. Why me, why not them? I cannot explain.”
Tan Caktiong has an explanation.
“It’s just Injap’s personality, he just moves things so fast,” Tan Caktiong said, according to Inquirer’s Biz Buzz. “But if there’s a major acquisition, he calls me up.”
In the two and a half months since their company listed, Injap has signed deals for 11 properties, including a 90-day exclusivity agreement for Globe Asiatique's Sky Suites in Quezon City. The biggest one for a property on EDSA and Macapagal Avenue near SM’s Mall of Asia that can house 300,000 square meters of leasable space, a third of his quota.
"When you assess a deal, you have to have an X-ray assessment you can do it," Injap says. "I know if it’s OK, if nothing’s wrong, if there’s opportunity. The MRI, the CT-scan, sila na 'yon."
"Sila" are his lawyer brother Ferdinand, who was his right hand in Mang Inasal and now Injap Investments, and his accountant sister Mariz, now their CFO. He says they get most of the e-mails he sends during his “quiet time” in the morning, before his wife and kids get up.
"I'm the facilitator, the spotter, oversight of execution. I bug them, I put things together. Kung lumampas sa akin, there’s opportunity. My siblings process. Tito Tony is the filter, he looks at risk.” He says he spends “one and a half hours per deal talking with Tito Tony. Dala ko na ang mga X-rays."
It's always "Tito Tony." Always "Tito Carlos," when he talks about Carlos Chan, the Oishi magnate who is his partner in J. Co donuts and Hotel 101 business hotels. "Tito Tony Go" is the owner of Maxicare, where Injap sits as a director and met board advisor John Gokongwei.
Even I have been "Mr. Coco" since we met two years ago, in person and in texts and e-mails. Like in the e-mail he sent two minutes before our breakfast, politely reminding me of our breakfast, which wasn’t even his first meeting of the day.
Today he’s having some trouble showing me some texts and e-mails on his one day old Samsung Note, having just switched from an iPhone at Tony Go’s prodding. He says he’s no techie, even needing his sister’s help to get on Skype for a very important meeting earlier this year.
(He’s not just polite, he’s shy and publicity-averse too. Rejecting my many pleas for a TV interview, agreeing very reluctantly for me to name his family members or share his pictures, some of which you see here.)
It's Tony Tan Caktiong he is tied to the hip now. The two dragons must have an unnerving understanding for -- and mutual respect of -- each other, having built similar businesses and now building a new one together.
As we were having breakfast on a Friday, Injap was thinking of the "cramming" he'd have to do over the weekend. For three days the following week, he said the Sias and Tans are going to be holed up in Jollibee Center to discuss six Harvard Business School cases with HBS professor Boris Groysberg.
So far, Injap’s only read the ones on JPMorgan and Jack Welch and GE. He still needed to plough through Google, Morgan Stanley, Carlos Ghosn’s Nissan and Chinese private equity firm XAF Partners.
Mang Inasal rode the "sweet spot" of quickening economic growth and falling inflation and interest rates, not to mention the BPO and remittance boom that ramped up consumer spending. Property, a notoriously cyclical industry, rode the same tiger, barely affected by the Great Recession.
I ask if he and Tan Caktiong, and their investors, aren’t late to the game. And they're buying property at today's valuations, while other developers have "landbanked" for years.
“We buy properties at seven to P10,000 per square meter," he said. "If you buy at the Fort at half a million, you will be stretched, very difficult. Last week we bought at Consolacion (Cebu City) at P10,000. Right in front of the public market.”
Of course, no one said he was buying at the Fort, one of the country’s priciest districts. But to have to buy dozens of properties over the next few years at current prices and quickly turn them into profitable malls will be a challenge. Money remains cheap, though, whether from a share sale or a possible bond sale later this year.
“That’s why we have to list,” he said. “Even if we have to sell at the bottom, low.”
“The economy could be cyclical by nature. When you build a business, it’s important cyclicality is part of your consideration," he says. "From Day 1. If there’s a downtrend, we’re still OK. Go into ventures that can be weather-proof.”
Hence, malls and hotels over condos, I surmise. Consumer spending in malls will probably slow less than condo sales. And tourism can flourish even if BPOs and the rest of the local economy cools off.
The hotels, his venture with Carlos Chan, are actually condotels. I asked if condotels aren’t a hard sell because most of the ones that sprouted up in the 1990s turned out to be bad investments and bad hotels.
He says his investors will be happier because all revenue will be split equally, unlike in some condotels where it’s based on whether your unit is rented out, which, he says, some owners suspect is based on giving gifts to the staff.
And he says his condotels will be better hotels because the owners will just own the units, but he’ll finish and furnish them, making it easy to maintain consistent standards.
“The power of business is repeat,” he says. “Very few people want surprises.”
He says some investors want to buy several units, which would speed up the sales phase, but he’s limiting them to one per building because that will mean more owners “marketing” his condotels. The aim is 5,000 rooms in 15 to 20 buildings also by 2020.
“Sometimes long-term thinking makes today harder,” he says. “This will make the 5,000 easy.”
Kids and businesses
In 1997, he dropped out of University of San Agustin in Iloilo, one year shy of an architecture degree. In 2012, he went back to give the commencement speech, advising the graduates to separate their “contentment goal” from their “big dream”. He says he reached contentment in 2009, even before he pocketed the P3 billion from Jollibee.
“Now money is just numbers” and rather that working for himself, he’s out to build “sustainable” businesses that will have a “positive impact” on others.
He says he doesn't know what he'll do for a third act. Not that he knew what to do for a first act: he opened a hotel, a laundromat and a photo developing business (!) before he tried chicken barbecue.
“I treat businesses like children,” he says. “Mang Inasal became an adult already. Double Dragon is in high school or college. In a year or two, he will graduate, then have a good career by 2020. Like a baby, with every move, every cry, you have to take care. When he’s a teenager, you step back a bit. When he graduates, I can search for other things.”
All the talk about business as kids is understandable. He’s a new father. With a three-week old daughter. She wasn’t planned, he said. When his wife told him, he said he joked her: “Ayoko na mag-Disneyland!”
He got the theme park off his bucket list three years ago, when he took his wife and two boys, and his parents. He says people can go there thrice: as kids, as parents and as grandparents. He missed out as a kid -- and his parents missed out as parents -- because they didn’t have the time and money. But in 2011, the year after he sold Mang Inasal, they all went, and he took his family on vacations in 2012 and 2013.
Where’s this year’s vacation, I ask?
"This year wala because it's build-up time," he said. "Malapit na kami mag quota. We need 1 million of leasable."
Coco Alcuaz is business news head at ABS-CBN News Channel (ANC). You can find him on Twitter at @cocoalcuaz.