Home Economy Philippine builders may benefit from state’s renewed infra dev’t plan

Philippine builders may benefit from state’s renewed infra dev’t plan

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A construction site is seen in Cubao, Quezon City. — PHILIPPINE STAR/ MICHAEL VARCAS

By Ashley Erika O. Jose, Reporter

LISTED construction companies are expected to post better results this year amid a growing state focus on infrastructure development and with the Philippine central bank widely expected to start cutting interest rates, analysts said.

“There will be faster growth this year as government public-private partnership projects pick up and easing inflation lowers construction and funding costs,” Cristina S. Ulang, research head at First Metro Investment Corp., said in a Viber message on Tuesday.

Infrastructure spending increased by 66% to P122.1 billion in August from a year earlier as the government fast-tracked projects, the Budget department said in October.

“If the government maintains or increases its focus on infrastructure development, as indicated by ongoing projects and future plans, listed construction companies may experience positive growth,” Globalinks Securities and Stocks, Inc. head of sales trading Toby Allan C. Arce said in a Viber message.

“Continued government support often translates to a steady flow of projects, contributing to the construction sector’s overall performance. Conversely, economic challenges or uncertainties may impact the willingness of both public and private sectors to invest in construction projects,” he added. 

Construction industry growth could improve this year amid faster economic growth, easing inflation and possible Fed rate cuts, Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., separately said via Viber.

Inflation likely eased to 4% in December, according to a median estimate of 13 analysts in a BusinessWorld poll last week, amid lower prices of fruits and vegetables, electricity and fuel.

The Monetary Board in December kept its benchmark rate at a 16-year high of 6.5% for a second straight meeting. From May 2022 to October this year, it raised borrowing costs by 450 basis points to tame inflation. 

“The government’s budget on infrastructure continues to be significant, while a potential drop in interest rates that would result from a sustained decline in inflation could encourage the private sector to boost capital expenditures,” April Lynn Lee-Tan, chief equity strategist at COL Financial Group, Inc. said in a Viber message. 

Listed construction companies had mixed earnings results in the third quarter. Megawide Construction Corp.’s net loss narrowed to P29.85 million from P319.58 million a year ago on higher revenue.

Megawide’s attributable net income in the nine months to September hit P333.31 million, a turnaround from the P445.25-million net loss a year earlier. 

EEI Corp. reported an attributable net income of P406 million for the third quarter, higher than P33.08 a year earlier, while revenue rose by 5.3% to P4.35 billion. But it posted an attributable net loss of P294.97 million in nine months from a P149.68-million profit a year ago.

During the quarter, Phinma Corp.’s attributable net income rose by 40.5% year on year to P582.77 million on higher revenue. Its attributable net income fell by 3.7% to P791.53 million in nine months.

The growth of construction companies would also be driven by renewable energy projects, Mr. Arce said. “If the government’s commitment to increasing the share of renewable energy in the power generation mix continues, construction companies involved in renewable energy projects may see increased opportunities.”

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