MANILA -- Metro Pacific Investment Corp will "recast" its investment program, looking to "less risky" ventures as its water unit, Maynilad, faces government scrutiny, its chairman, Manuel Pangilinan said Wednesday.
"Discretionary spending" on top of its infrastructure commitments will divert to warehousing, real estate and tourism. Maynilad will also be unable to pay dividends, Pangilinan said. The company is "committed" to current projects, he said.
"In these circumstances, questions have been raised regarding investment in Philippine - regulated infrastructure and the sources of capital to support this," he said.
"There are no quick or easy answers to these questions but the current model of a listed infrastructure business with a wide pool of dedicated Philippine and foreign shareholders putting their faith in these long-term contracts needs serious review," he said.
Maynilad dropped its P3.4 billion compensation claim after President Rodrigo Duterte branded its contract to supply water to the capital as "onerous," along with rival Manila Water, which dropped a P7.4-billion claim.
"The fall in our share price, along with the prices of other listed companies with government concessions, shows that despite our growth, investors now attach sharply higher risk premiums for government adherence to contract," Metro Pacific Chief Executive Jose Ma. Lim told shareholders.
"As a practical matter, Maynilad is currently unable to pay dividends thereby forcing MPIC to recast its investment program in light of lower inbound cash flow, higher regulatory risk and the resulting and self-evident lack of investor enthusiasm for this asset class," he said.
Core net income grew to P15.6 billion last year from P15.1 billion in 2018. From a high of P5.23 per share in September, MPIC's stock fell by half to as low as P2.69 in December as Duterte threatened to cancel Maynilad's contract.
Core net income for Maynilad was at P7.7 billion in 2019, unchanged from the previous year even as revenues rose 9 percent to P24 billion.
Company president and CEO Jose Ma. Lim said the fall in the firm's share price showed that "investors now attach sharply higher risk premiums for Government adherence to contract.”
MPIC's tollways unit is currently building the NLEX Harbour Link, NLEX Citi Link, CAVITEX-C-5 South Link and the NLEX-SLEX Connector. It is also building the Cavite-Laguna Expressway and the Cebu Cordova Link Expressway.
Its railways unit is building the LRT-1 Cavite Extension covering the five stations from Pasay City to Paranaque City.
“We will endeavor to at least match our 2019 Core Income in the year ahead, despite the challenges”, said Pangilinan.