San Miguel eyes energy projects in Indonesia, Australia

San Miguel Corp., the Philippines’ largest listed company by sales, is considering energy investments in Indonesia and Australia to expand in markets overseas following a series of acquisitions at home.

“That’s what we’re aiming for,” President Ramon Ang told reporters. “Be it coal or natural gas, as long as it’s energy related.”

The company that’s been a brewer for more than a century, has been expanding into industries such as oil, mining, power and infrastructure to boost return on equity to three times the 7 percent level it used to earn from food and drinks alone. It has spent at least $4.5 billion on acquisitions in the past three years and had $2.9 billion in cash at the end of December, according to data compiled by Bloomberg.

San Miguel will likely reach an agreement on an overseas acquisition in August, Ang said on July 6. Last month, he said it is targeting a company in Asia that’s “very profitable” and has “big potential.” He declined to talk about it yesterday.

The company’s profit in the first half rose “double digit” from a year earlier, boosted by energy investments led by Petron Corp., Ang said. Profit at Petron, the nation’s biggest oil company, also increased double-digit, he said, without elaborating.

San Miguel’s net income in the three months ended March more than doubled to 7.14 billion pesos ($170 million) from 2.9 billion pesos a year earlier.

Petron will “for sure” sell shares this year to meet the stock exchange’s minimum public ownership requirement and raise funds for expansion, Ang said. The company, which accounts for about a third of the domestic oil market, will probably contribute about 230 billion pesos to San Miguel’s sales this year, making it the single-biggest source of revenue, Ang said on Feb. 3.

San Miguel shares have fallen 22 percent this year compared with the 6.4 percent advance in the benchmark Philippine Stock Exchange Index. The stock was unchanged at 127.90 pesos as of 11:09 a.m. in Manila trading. Petron, which has declined 15 percent this year, rose 0.3 percent to 16 pesos.

San Miguel plunged the most in more than 21 years on May 5 after raising about $1 billion selling shares and convertible bonds at a discount.

In addition to its controlling stake in Petron, San Miguel owns power plants that provide more than a fifth of the country’s electricity requirements and a 10 percent interest in Australia-based miner Indophil Resources NL. Indophil holds a third of Tampakan, the largest untapped gold and copper deposit in Southeast Asia.

San Miguel, which has said it expects new businesses to make up 70 percent of revenue in five years, also owns a stake in Manila Electric Co., the nation’s largest power retailer, and has investments in companies with rights to build airports, toll roads and rapid rail transit. Source: Manila Bulletin