Solid Group allots P400 million for real estate development projects

MANILA, Philippines - Solid Group Inc. (SGI), a listed holding firm owned by the Lim family, is allotting P400 million this year for its real estate development projects and the modernization of its broadband infrastructure.

In a filing with the Securities and Exchange Commission (SEC), SGI said this year’s capital budget will be funded by internally-generated cash.

SGI, through Zen Towers Corp. is engaged in the development and sale of real estate properties. Its initial project is the Zen Tri-Tower condominium located in Ermita, Manila.

The company offers broadband cable services through the Destiny hybrid fiber Coaxial cable infrastructure which competes with cable companies Sky Cable and Home Cable in Metro Manila, and to some extent with other market players in the telecommunication industry such as PLDT, Bayantel, Globe and Eastern.

The MyDestiny Internet service provides Internet users a higher service level through its broadband technology versus the prevailing dial-up system of the majority of ISP’s operating in Metro Manila.

Revenues from the group’s broadband business segment is seen to grow by 10 percent to 15 percent annually from Internet subscriptions and data services, and from transport fees.

SGI said the planned introduction of fiber-to-the-home service and expansion of wireless broadband applications will contribute to the growth of this business segment.

SGI expects its consolidated operations to continue to be profitable in the future as robust growth is forecasted in its trading business segment as new products and models are introduced and as brand equity continues to grow.

“This strategic direction is consistent with the company’s conscious effort to continue leveraging on its historical core competence in consumer electronics and similar products. The promising results shown by this business segment in just one short year is early confirmation that the company has retained its long-established business strengths in sourcing, production, marketing, and distribution,” SGI said.

SGI said property development project studies are being undertaken so that its property would eventually be converted into higher-value assets to benefit the company’s shareholders.

Although its low debt load provides the company with substantial debt capacity to borrow funds to finance future projects/investments, management has set a limit on financial borrowings to a maximum gearing of 50 percent of equity.

SGI reported a net income of P350.84 million last year, a reversal of the P25.54 million net loss incurred in 2007, mainly due to improved profitability of all business segments. Revenues rose 24 percent to P1.76 billion from P1.42 billion.

Service revenue amounted to P605 million, down six percent from P641 million while sale of goods reached P911 million or an increase of 92 percent from P474 million in 2007, largely driven by mobile phone sales.

Revenue growth of the broadband segment improved by 24 percent driven by the increase in Internet subscribers by 27 percent and transport revenues of 37 percent of Solid Broadband Corp.

SGI has spun off its mobile phone, LCD television and digital devices businesses into a new company initially capitalized at P100 million.

The new firm shall engage in the manufacture, sale and importation of various types of digital communication devices, information technology, broadband and audio-video equipment, gadgets and accessories as well as undertake product research and development. 

SGI earlier said it expected sales from its mobile phone business to grow three-fold this year to P1.5 billion due to the strong take-up of its dual active SIM, which carries the brand My Phone.

My Phone is the first Filipino brand of mobile phones made in China and is specifically custom-made in China to suit Filipino preferences.

Solid Group launched its line of LCD televisions under the brand My Screen. They are bundled either with the Destiny cable TV service or Solid broadband Internet, or both.