GT Capital sees sustained growth

Posted at 10/27/12 8:03 AM

MANILA, Philippines - GT Capital Holdings Inc., the investment vehicle of banking tycoon George Ty, continues on a fast-paced upward trajectory on the back of the country’s strong economic growth, robust domestic consumer spending, record low interest rates and steady flow of remittances from overseas Filipino workers.

“We did very well in the first half. We’re confident that the strong pace will be maintained in the second half. July auto sales were the highest ever in the history of Toyota, property sales are also high relative to what was reported last year. For as long as interest rates remain low and the affordability is there, the property market will continue to be a growth sector,” said GT Capital president Carmelo Bautista on the sidelines of the company’s special stockholders meeting yesterday.

GT Capital grew its first half net profit 136 percent to P4.02 billion, largely due to one-time gains booked by property unit Federal Land Inc.

Total revenues also grew more than two-fold to P10 billion from P3.5 billion as a result of the consolidation of Global Business Power Corp., as well as higher net income contribution of associates.

Bautista also downplayed concerns about a housing bubble, saying demand still outstrips supply. “ In terms of supply, we’re still two or three years behind,” he said.

He said the conglomerate remains focused on strengthening its core businesses to sustain growth. It has diverse investments in established companies that are dominant in their respective markets that include Metrobank, Federal Land, Toyota Motor Philippines, Global Business Power Corp., and Philippine AXA Life Insurance (a joint venture with the AXA Group, one of the world’s largest life insurers).

“GT is more of a proxy to the Philippine economic growth. The economy is growing pretty well wherein sectors that are consumer based are growing and we’re dominant in those sectors so there is no incentive for us to look outside,” Bautista said.

TMP remains the leading automotive company in the country, accounting for 35 to 40 percent share of the market. On a year-to-date basis, it holds a 44.3-percent market share in the passenger car segment led by the Vios model with a total of 1,363 units sold; and 40 percent share in the commercial vehicle segment led by the Innova with around 1,188 units sold.

To keep its dominant position in the automotive industry, TMP is set to launch new products, among which is the 86,a sports car with a two-door coupe body style and front-engine, rear wheel drive layout.

Bautista said the conglomerate’s capital expenditure program for next year will be slightly higher than the P15 billion budgeted this year due to the construction of two power plants and the completion of existing real estate projects.

He said the holding firm is exploring fund-raising options to finance the purchase of an additional 30 percent stake in TMP valued at P9 billion. The transaction, when completed, will raise GT Capital’s total shareholdings in TMP to 51 percent.

“We’re looking at a number of options. We have proposals for long-term fixed rate bonds,” Bautista said.