Megawide Construction Corp. said Thursday its acquisition of PH1 World Developers Inc. will provide it a steady revenue stream as well as help accelerate growth and enhance the listed construction firm’s order book through property development.
Megawide shareholders have approved the acquisition of all the shares of PH1 from Citicore Holdings Investment Inc. for a total P5.2 billion.
Edgar Saavedra, Megawide chairman and chief executive officer, described the PH1 acquisition as “a natural progression of our construction and engineering unit into higher value-generating businesses and gives more momentum to our forward integration initiatives within the Group.”
Megawide, which started as a construction company two decades ago, has diversified into infrastructure development via Public Private Partnership projects such as the Mactan-Cebu International Airport and Paranaque Integrated Terminal Exchange to unlock revenue streams that generated greater value for the company.
“Construction is an enabler for us to venture into more value-accretive platforms, such as airport and landport operations, and now property development, together with the related income sources and value that they deliver,” said Saavedra.
Megawide expects the PH1 deal to accelerate its growth momentum, with consolidated net margins expected to improve from single digits to high teens in view of the better margins and price appreciation upside associated with property development.
The company said the transaction should also enhance the order book quality, as this reduces counterparty risks from external clients, and turn in more efficient operations as project management is streamlined—boosting overall employee productivity in general.
Megawide also expects to generate more stable revenues, with long-term project visibility and availability from PH1’s healthy pipeline of projects that include My Enso Lofts in Timog, Quezon City; and Modan Lofts in Pasig and Taytay, Rizal.
Saavedra said Megawide’s years of experience in the construction industry has allowed it identify gaps and end-user needs in the real estate market.
“These gaps are what aim to fill through the synergy of Megawide and PH1. We will work to create an innovative and competitive product that will be appreciated by our target market,” he added.
