Storm in the power sector
In the corridors of power, whispers are getting louder about the sudden preventive suspension of Energy Regulatory Commission (ERC) chairperson Monalisa Dimalanta. The news has left many stakeholders concerned, especially those closely monitoring the energy sector.
Known for her professionalism and balanced approach to encouraging investment while protecting consumers, Dimalanta has been at the helm of significant reforms in the past two years.
However, her sudden suspension has put a damper on her momentum. Her temporary absence might throw a wrench into the implementation and approval of much-needed projects, leaving industry insiders anxious.
Despite the suspension, Vince Perez, former Energy secretary and now the chairman of Renewable Energy company Alternergy Corp., said he keeps faith in Dimalanta’s integrity and believes that the situation will soon be resolved favorably.
“Chair Mona has exemplified and embodied strong professionalism since taking the helm at the ERC and ensures that there is a strong balance between encouraging investment in the country’s power sector and protecting the interest of the consumers,” Perez said.
“My hope is that there would be an urgent resolution to this,” he added.
As the energy sector holds its breath, many are hoping for a swift resolution that allows this chairperson to continue her work in ensuring the stability and progress of the industry. Until then, the sector is left in a state of uncertainty, waiting for the storm to pass.
Meteoric rise, fall
Political kingpin turned richest Filipino, based on business bible Forbes, Manny Villar may have some huge catching up to do as his business exposures, heavy in real estate and retail, appears to be on a sharp decline amid mounting debts.
Flagship Vista Land and Lifescapes Inc. (VLL), according to stock trading firm AP Securities, faces risk in the company’s ability to sell a “swelling inventory amidst an aggressive expansion and build-up.”
Raising funds for the P30-billion capital expenditure earmarked for this year is also becoming a problem.
VLL has reportedly canceled a $2-billion dollar-denominated bond sale amid lackluster investor demand despite the high yield offered at 9 percent.
The proceeds of the offer were intended to be used for refinancing, working capital, investment and other general corporate purposes.
Based on the company’s last annual report, VLL has P32.7 billion worth of debts, which mature this year.
“It is not immediately clear how the company will refinance this maturing debt following the cancellation of the bond offer,” the AP Securities report indicated.
Then there’s a growing concern over cash flow.
AP Securities said the lack of interest at the offered rate was likely due to concerns over the company’s financial liquidity.
Looking at the accounts receivable turnover ratios of VLL in comparison to that of the two largest residential developers in the country which is Ayala Land Inc. (ALI) and Megaworld (MEG), a noticeable difference in terms of their receivable turnover ratios was evident.
While MEG’s and ALI’s ratios experienced significant recovery for until 2023, VLL has failed to do so.
Looking at their days inventory outstanding, AP Securities saw ALI’s days inventory decline from its first quarter peak of 882 days and MEG from second quarter 2021’s 2,710.
In the case of VLL, however, they not only have the highest days inventory among the three, but the only one that has significantly climbed quarter-on-quarter, barring the small decline from the second quarter of last year at 3,915 to the third quarter of that year of 3,716.
AP Securities said the elevated inventory poses a concern for VLL’s ability to internally generate funds that it needs for debt refinancing and future projects.
AllHome Corp. (HOME), the listed home products retailer of the Villar Group, is not faring better as it reported P5.6 billion in revenues in the first semester, down 6.9 percent from a year ago.
At the same time, its net income dropped by 36.1 percent to P282.4 million, from P442.1 million in the previous year.
AllHome blames a slower than expected completion of most construction activities of the AllHome market base, a factor in the lower turnover of units for the half, affecting AllHome’s offering of finishing materials, tiles and sanitary wares.