Henry Sy firm allots P2 billion for capex in 2011

MANILA, Philippines – Megawide Construction Corp., the major contractor of the residential development arm of retail tycoon Henry Sy, has set a capital expenditure program of P2.02 billion in 2011, or more than double this year’s budget of P800 million as it hopes to capitalize on the increasing demand for construction from both private and public sectors.

Edgar Saavedra, president of Megawide, said the company is building a P1-billion world-class pre-cast concrete manufacturing plant in Taytay, Rizal as well as investing in new equipment such as the Automatic Climbing System (ACS), which can cut production time by 20 percent and boost capacity by 35 percent.

Saavedra said Megawide is also acquiring Liebherr Cranes from Germany and earth moving equipment from Caterpillar.

He said investing in the number one brand from Germany, though initially more costly, is the most prudent thing to do as these equipment have longer life span, which translates to better profit margins.

“Construction can be carried out within a much shorter time frame, while maintaining quality and dimensional accuracy. The equipment can be raised without the use of a crane, making work flow faster and safer as it dispels any wind problem which may arise from a traditional crane equipment”, Saavedra, said.

Leading construction firms in the world have used this system to build the tallest buildings which includes The Burj Khalifa in Dubai, Petronas Tower in Malaysia, Shanghai World Finance Center, and The Trump International Hotel in USA, among others.

Megawide chief investment strategy officer Oliver Tan said funding for its capital expenditures will come from internally generated cash as well as from proceeds from an initial public offering of shares slated in February or March 2011.

Megawide, which boasts of using the most-advanced, state-of-the-art-facility from Europe, is hoping to raise P2.29 billion from the maiden offering of its shares to the public. In its registration statement filed with securities regulators, the company said it was offering 292 million new common shares, representing 34 percent of its outstanding capital, at P7.84 each share.

Saavedra said the company is poised for further growth with a string of new projects from its loyal clients, which include SM Development Corp.

Aside from the SM Group, its solid clientele base includes Belle Corp., Antel Group, Suyen Corp. (owner of Bench), Prince Jun Development Group, Bellevue Hotel Group, Keppelland Realty, Malate Bayview Development Group, Goldland Properties and Dynamic Realty.

Megawide is eyeing a record P4 billion in revenues this year or double the amount posted in 2009. Construction contracts are currently valued at over P20.66 billion, covering 26 condominium and office buildings.

From only P241 million in 2007, Megawide’s revenues surged to P1 billion the following year and doubled in 2009.