LT Group eyes expansion in SE Asia

By: Doris Dumlao-Abadilla
Philippine Daily Inquirer
01:09 AM June 21, 2017
http://business.inquirer.net/231731/lt-group-eyes-expansion-se-asia

While looking at overseas expansion opportunities in the industrial segment, LTG is also upbeat on expanding its domestic businesses. LTG has earmarked P10 billion for capital spending this year, up from last year’s P7 billion, mainly to fund property development and banking technology upgrades.

The capital outlays will be funded by internally generated cash and some bank borrowings, LTG president Michael Tan said in a briefing after the LTG’s stockholders’ meeting.

About half of the capital spending budget will be for property arm Eton Properties Philippines Inc. while up to P3 billion will be for Philippine National Bank’s investment in technology upgrades.

“We’d like to grow the bank a lot more, brick and mortar and also with digital strategy,” Tan said.

PNB’s migration to a unified, more modern IT system this year is seen to enable it to offer customers more products and services. But LTG expects the bank to work harder to compensate for the one-time gains booked in 2016.

For the property business, Tan said the strategy would be to continue to grow recurring income.

The beer business, Asia Brewery, is seen to benefit from the increasing income of consumers despite stiff competition. The consumers’ higher disposable income is seen to sustain demand and provide a new market for Vitamilk soymilk, which was previously sold only in the modern trade.

LTG expects the joint venture to enable the company to develop a bigger market for beer and alco-pop. However, additional marketing expenses will have to be incurred to develop and expand existing and additional brands, especially in the alcoholic beverage segment.

Tanduay is seen to benefit from the renewed demand for rum, especially in Mindanao and Visayas.

LTG is working to gain a foothold in regional markets. To date, PNB has operations in mainland China and Hong Kong, focusing on the remittance business, but the group is keen on setting up industrial ventures elsewhere in Southeast Asia.

“We’re looking for opportunities, mostly for beverages,” Tan said.

He said LTG’s existing joint venture with Calidad Pascual of Spain had a ready framework for Southeast Asian expansion.

The venture with Calidad Pascual produces yogurt products under the brand “Creamy Delight Yogurt.”