JG Summit Holdings keeps top rating with PhilRatings

MANILA, Philippines—Taipan John Gokongwei’s JG Summit Holdings has held on to its top-notch standing with local credit rating agency Philippine Rating Services Corp. (PhilRatings).

In a statement, PhilRatings said its grade on JG Summit, one of the country’s most diversified conglomerates, was a reflection on the firm’s “strong liquidity, sound capitalization, very good management, and the solid market position of its core businesses.”

“It also takes into consideration the positive outlook for the domestic economy, in general, and the industries included in JGSHI’s investment portfolio, in particular,” PhilRatings said.

PhilRatings grades are based on available information and projections at the time that the rating review is ongoing.

PhilRatings cited that the JG Summit’s principal source of cash continued to be operating activities, amounting to P8.1 billion in the first half of 2012.

At the end of June this year, the group’s current debt of P42.1 billion was amply covered by total cash/cash equivalents (P29.7 billion), financial assets available-for-sale investments (P60.3 billion), and financial assets at fair value through profit or loss (P13.5 billion).

“Internally generated cash will be used to fund expansion activities, as the JG Summit Group pursues its expansion strategy,” PhilRatings said.

The research firm said JG Summit “has demonstrated its ability to provide direction for sustainable growth, while management has shown expertise to manage large-scale operations,” citing the success of subsidiaries like Cebu Pacific, Universal Robina Corp. (URC), and Robinsons Land.

PhilRatings said the three firms enjoyed strong positions in their respective industries.

In particular, URC’s brands have become “household names in the Philippines,” PhilRatings said. Robinsons Land, for its part, remained one of the country’s leading real estate developers in terms of revenues, number of projects, and project size.

The third jewel in the JG Summit crown, PhilRatings said, was Cebu Pacific, the leading low-cost carrier in the Philippines.

The airline remained as the preferred domestic carrier, with a market share of 46.5 percent for the first quarter 2012. “It pioneered the ‘low fare, great value’ strategy in the local aviation industry, targeting passengers who are willing to forego extras for fares that are typically lower than those offered by traditional full-service airlines,” PhilRatings pointed out.

JG Summit again in Forbes’ Fab 50

JG SUMMIT Holdings, Inc is again the sole Filipino company to have made it to Forbes’ Asia’s Fab 50, an annual listing of the region’s best listed firms.

The conglomerate was one of 50 -- selected among Asia’s 1,295 biggest companies -- that were deemed by Forbes to have demonstrated resilience amid global economic turmoil.

"A slowing economy weeds out the merely good companies from the truly great ones," Forbes said.

"So this year’s list of the 50 best publicly traded companies in Asia-Pacific is a roll call of outfits that have managed to thrive amid decelerating growth in Asia and all but nonexistent growth in their US and European markets."

The Gokongwei-led firm made it to Asia’s Fab 50 list for the first time last year.

China had the most firms on the list with 23, followed by India (11) and South Korea (four). Australia, Hong Kong, Taiwan, and Thailand had two companies each, while Japan, Philippines, Malaysia, and Singapore had one apiece.

Companies in the Fab 50 list must have at notched least $3 billion in annual revenue or market capitalization to be considered for selection, Forbes said. Other criteria used include revenue, earnings, return on capital, share-price movements and outlook.

Forbes pegged JG Summit’s market capitalization at $5.4 billion as of end-August.

Firms with excessive debt and those that are at least 50% government-owned, or are local affiliates majority-owned by multinationals, are disqualified.

JG Summit, established in 1990, last month reported net income of P7.47 billion for the first semester, a 49.4% increase from P5 billion a year earlier, due largely to foreign exchange gains.

Companies under the conglomerate include food and beverage firm Universal Robina Corp., Cebu Air, Inc. -- the operator of airline Cebu Pacific, and real estate developer Robinsons Land Corp. -- Franz Jonathan G. de la Fuente