MacroAsia Corporation (MAC), formerly known as
Infanta Mineral and Industrial Corporation (IMIC), was incorporated on February
16, 1970 to primarily engage in the business of geological exploration and
development. On January 26, 1994, the Securities and Exchange Commission (SEC)
approved the change in the IMIC's original purpose to that of a holding
company, and its corporate name to Cobertson Holdings Corporation. In November
1995, the SEC further approved the change in corporate name to its present
name. MAC began commercial operations as a holding company under its amended
charter in 1996.
MAC at present is engaged primarily in
aviation-related support businesses. It provides aircraft maintenance, repairs
and overhaul services, charter flight services, airport ground handling
services and in-flight catering services and operates a special economic zone
at the Ninoy Aquino International Airport (NAIA). All subsidiaries and
associated companies of MAC render services directly to the airline
customers/locators at NAIA, Manila Domestic Airport, Mactan-Cebu International
Airport and Davao International Airport.
MAC operates mainly through its four
subsidiaries and two affiliates, namely, Lufthansa Technik Philippines, Inc.,
MacroAsia Catering Services, Inc., Cebu Pacific Catering Services, Inc.,
MacroAsia Airport Services Corporation, MacroAsia Properties Development
Corporation, and MacroAsia Air Taxi Services, Inc.
Aside from airport businesses, MAC also has
mining projects after receiving from the government a Mineral Production
Sharing Agreement (MPSA) in 2006. The MPSA covers 1,114 hectares as renewal of
its rights in the nickel-rich area in Brooke's Point, Palawan. In May 2007, MAC
received its second MPSA covering 410 hectares in another nearby area in
Brooke's Point, Palawan. Both areas are used to be held and mined by IMIC.
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SNAPSHOT
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# of shares outstanding:
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1,234,312,000
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Current Price:
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2.75
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Market Value
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3,394,358,000
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Stockholders’ Equity (As of 30-Jun-12)
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3,212,941,000
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Price to Book Value Ratio
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1.06
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Price to Book Value (Appraised) Ratio
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-
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P/E Ratio
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194.24
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ROE
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0.54%
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ROA
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0.47%
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Free Float
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25%
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FINANCIAL RESULTS In Thousand
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2012F
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2011
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2010
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Revenues
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1,728,188
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1,361,874
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1,171,611
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Cost of Services
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1,208,188
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1,014,280
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882,902
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Gross Profit %
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30%
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26%
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25%
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G & A Expenses
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346,478
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346,304
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361,830
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Net Income/(Loss)
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34,950
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299,456
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401,126
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EPS
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0.028
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0.2416
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0.32
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Book Value
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3,212,941
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3,227,900
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3,034,740
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Stock Price
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2.75
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3.00
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3.00
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Book Value Per Share
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2.60
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2.60
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2.43
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P/E Ratio
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97.12
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12.42
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9.33
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Price to Book Value Ratio
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1.06
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1.15
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1.23
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Outstanding Shares
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1,234,312
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1,239,530
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1,247,020
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Total Assets
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3,683,489
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3,854,842
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3,423,095
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Stockholders’ Equity
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3,212,941
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3,227,903
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3,034,741
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ROA
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0.95%
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7.77%
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11.72%
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ROE
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1.09%
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9.28%
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13.22%
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·
Revenues
are increasing for the In‐flight
and other catering and ground handling and aviation
·
Direct
cost increased by 26% while revenues increased by 33%. Cost efficient is in the
works.The management has effectively reduced the cost of services provided.
Moreover, the 14% increased in G&A expenses is minimal at 14% increase
·
Majority
of the profit of MAC is coming from its affiliates, Lufthansa Technik
Philippines, Inc. In fact, among the companies, LTP is the bread and butter of
MAC as far as income contribution is concern. Thus, it is no surprised that
when LTP incurred a net loss for 1H12, it spilled over unto MAC. The current
loss is temporary because of the increased costs associated with starting up
the A380 hangar for operations. Once this is over, revenues will go up and consequently
its net income.
·
The
dividend yield per year is 2.75% at its current price of 2.75.
·
MAC’s
price has been descending since its peak in 2007 which is almost 6 pesos. At its
current price of 2.75, it is already down by more than 50% and we still don’t know
how low the price will go.
·
The
average P/E and PBV for the past five years are 15 and 2 respectively. I think
that is quite high considering that 2007 is the peak of the last bull cycle. A more
conservative estimate should be P/E of 10 and PBV of 1.5.
·
A 600,000 net income is achievable
at least in 2013 I think because of the expanded hangar operations of LTP and
improving revenues. With that in mind, a P/E of 10 would result in a target
price of 4.87 which is very conservative because the computation merely rely on
the current businesses. Mining and PPP projects are excluded.
·
Passenger loads and flight
frequencies of airlines are the two most important factors that affect the
revenue levels of the Group’s operating units. With the improving economic outlook of the
Philippines, air travel is seen to rise in the foreseeable future.
·
A very liquid company with more
than 1 billion peso in cash at its disposal, it can partly fund the Mining and
PPP airport projects which can provide an upside for MAC.
·
MAC has a buyback program of 50
million because the management believes that the company is trading below its
inherent value. As of June 30, 2012 it spent P42M already and is still
counting. An insider also bought 50K shares last month.
Mining Treasure
Bulawan
Mining Corporation (BUMICO) assigned its rights, interests and obligations to
MacroAsia under its Operating Agreement with PHILEX, involving 62 mining claims
in Negros Occidental, of which 6 are
covered by a Mining Lease Contract and were subjected to mining operations by
PHILEX from 1996-2002.
PNB
Management and Development Corporation
(MADECOR), assigned its rights, interests and obligations to MacroAsia under its Operating
Agreement with PHILEX, involving 61 mining claims in Negros Occidental.
The
assignment is limited to the Assignors’ rights, interests and obligations under
their respective operating agreements with PHILEX.
The Company’s
mining project, which is basically a reactivation of the Infanta Nickel Mine
that was operational in the 1970’s, is expected to generate revenues as soon as
all the mining permits for operations are secured. The mining project has
already been endorsed for operations by the local government units and the
Palawan Council for Sustainable Development (PCSD), and has been granted the Environmental
Compliance Certificate (ECC) for operations on September 09, 2010. The Company
is in the final stage of securing its Certificate of Precondition (CP) from the
National Commission on Indigenous People (NCIP). This document signifies the formal
granting of Free and Prior Informed Consent by the indigenous peoples within the
host barangays as attested by the NCIP.
In
this Memorandum of Agreement, Jinchuan and MacroAsia recognize their common
interest in nickel mining in Palawan and agree to cooperate with each other by
jointly developing and operating if possible, their nickel laterite properties upon
respective completion of all statutory requirements for mining operations. The two companies also agreed to undertake a
joint venture to construct a processing facility, subject to a
mutually-acceptable feasibility study, with an end in view of adding value to
their respective commercial operations.
Over the life of the project, the estimated value of the investments
being targeted is about US$1 Billion.
Considering
the existence of an ore stockpile and roads within the mining tenement, it is
possible to start ore shipment less than a year after all permits are completed.
The
diversification shall move MAC away from its core aviation related business.
Mining is a different business and it requires a different approach to the core
business of the group. We all know that mining eats up a lot of resources and
this may drain the cash of MAC. MAC has more than a billion of cash at its
disposal.
I
believe that this is a game changer for MAC if the operation is successful. MAC
can take a cue from MARC, a listed nickel mining company.
Expanding presence abroad
MacroAsia,
whose management is led by chairman Washington Sycip, derives the bulk of
revenues from aircraft maintenance and repair as well as inflight services like
catering. It is also expanding its presence abroad and recently signed a joint
venture in Qatar to go into industrial catering, with an initial P12 million
investment, Chua said. He said MacroAsia will gain 44-percent equity in the
partnership but will maintain management and board control. Lucio Tan Jr.,
MacroAsia director, said the company is also in talks to form similar joint
venture deals with companies in Europe and Asia but he declined to elaborate.
I think it is one
way for MAC to increase its revenues in the future further.
MacroAsia looks at PPP airport
projects
MacroAsia
Corp., a listed aviation services firm, will be used as Tan’s vehicle to
participate in these airport and related cargo terminal projects, company
president and chief executive officer Joseph Chua said.
Wow! After waiting for almost a month for the JV signing
since its disclosure, until now it is not signed. The disclosure said the signing
will be in a few days but it is almost a month already. I have learned that “within
the next few days” means it can take a month or so. Unbelievable! The respect I
have with the management has diminished. I think the “within the next few days”
statement put a dent on the credibility of the management.
