July 01, 2014

FPH eyeing investments in airports

First Philippine Holdings (FPH, Not rated) is reportedly looking to bid for the provincial airports that government is planning to privatize through the Public-Private Partnership program (PPP). The Philippine Daily Inquirer today quoted the company president as saying FPH is looking at such deals to be rolled out this year by government.

While these are much smaller airports than the recent Mactan-Cebu airport expansion and modernization project, government plans to bundle these airports in a package to provide more scale and attraction to investors.

Our take: It remains to be seen how FPH will fare in the auction but any success at these auctions could help the company diversify its holdings to provide additional recurring earnings. These should make it more attractive to the market given additional assets that are not listed.

At the moment, FPH is into power generation firm through its 66.2% stake in First Gen Corp (FGEN) and 60% of unlisted Batangas Cogeneration Corp; real estate development through its 86.8% stake in Rockwell Land Corp (ROCK), construction through its wholly-owned First Balfour Inc. To help finance any potential new investments, FPH has sold preferred shares to raise up to P600m. – WealthSec