MANILA, Philippines - Megawide Construction Corp., one of the most active local companies in infrastructure and construction, is venturing into $100 million worth of power generation projects in line with plans to diversify its income source.
The company’s portfolio of Public-Private Partnership (PPP) projects and power generation business will allow it to double its net income and revenues by 2017, company officials said yesterday.
“Part of our diversification plan is to increase the recurring income [portfolio] because of the cyclical nature of the construction business,” said Megawide chief marketing officer Louie Ferrer.
In line with the vision of increasing its revenue stream, Megawide is investing roughly $100 million to develop several power generation assets with a total capacity of 100 megawatts (MW), said Megawide chief financial officer Oliver Tan.
Megawide entered into an agreement yesterday with PhilCarbon Inc., forming Megawatt Clean Energy Inc. that will develop a portfolio of renewable energy projects ranging from biomass, wind, hydropower, solar and geothermal.
Local renewable energy developer Philcarbon is the firm behind the P3.4-billion, 33.4-MW Bulalacao wind project in Oriental Mindoro.
The joint venture firm’s first project is a 3.5-MW biomass facility in Aurora province whose construction will start late this year, Ferrer said.
Megawide will roll out other power generation projects in the next two years that will require $100 million in investment, Tan said.
“We’re still retaining our current market share in the construction business but we know that business is cyclical,” Tan said.
Megawide, which started as a contractor for residential towers particularly those of SM Development Corp., corners 15-17 percent of the high-rise construction business in the Philippines.
Aside from power generation, Megawide is also boosting its earnings through PPPs. So far, Megawide has bagged four PPP projects: the P5.7-billion new Philippine Orthopedic Center, the P17.5-billion Mactan-Cebu International Airport, PPP School Infrastructure Project Phase One (PSIP-1) and PSIP-2.
Tan said the new projects will allow the company to double its earnings and revenues by 2017. Last year, profits of Megawide surged more than a third to P1.4 billion from P1.01 billion while gross revenues climbed 32 percent to P10.88 billion from P8.2 billion.
“Infrastructure is needed in the country to facilitate the delivery of basic services to the population,” said Megawide president Edgar Saavedra, adding that the company has the technology to deliver infrastructure projects.