January 06, 2014

DMCI to spend P20b in capex this year

Quoting the company’s managing director, BusinessWorld today reported that DMCI Holdings (DMC, Not rated) will spend at least P20b for its capex this year. More importantly, the amount will be used for power plant expansion (P15b) and for real estate land bank acquisition (P5b).

DMCI’s power and mining unit Semirara Mining Corp (SCC, Not rated) has approved a plan to expand its power plant portfolio by two 350MW plants, with the construction of the first plant in 3Q14 and the second one by 2Q15. It hopes to bring to commercial operations the first of the two units by 2015.SCC owns and operates a 600MW facility through its wholly-owned unit SEM-Calaca Power Corp.

 Our Take: We believe that DMC’s refocusing on its power and real estate operations will be taken positively by the market given the bright prospects for both industries amid strong demand. Previously, the company has put more focus on its mining investments and less on its core (construction, power and real estate) activities thus raising market concerns given the uncertainties in regulations. Government is finalizing the proposed revisions to the country’s mining laws which will involve raising government’s share in revenues generated by mining companies. – WealthSec