Megawide eyes affordable homes after acquiring PH1

MEGAWIDE Construction Corp. is planning to focus on below-middle-income consumers as the market for its new acquisition PH1 World Developers, Inc.

At the company’s virtual annual stockholders’ meeting on Wednesday, Megawide Chairman Edgar B. Saavedra said the specific segment that the company wants to target is affordable housing, which he described as below middle-income or the middle-income level.

He said the choice of focusing on the segment was because of its resilient performance during the pandemic.

“But the majority of the products that we’re focusing on are on the below-middle-income level, which the management deemed as more essential,” said Mr. Saavedra, who is also the company’s president and chief executive officer.

He said during the pandemic, residential projects proved to be more resilient than those in commercial and other segments, “especially if you look at the affordable segment market.”

Meanwhile, Mr. Saavedra said Megawide’s entry into the real estate business is a usual progression for construction companies.

“It’s very common for, or it’s a natural progression for a construction company to go into real estate,” he said, citing its familiarity with the business.

“Obviously, we have the core competency as we have been doing the business for the last 26 to 27 years. We are very familiar with the market and then we are very familiar when it comes to the design and build of the development of the business,” he added.

He also noted that the real estate business could provide the company with more profit than having only a construction business.

“If we look at the margin, for construction, the bottom line net after-tax will normally be a single digit, unlike in real estate, you can get a double digit,” he said, adding that “it’s easy to say it will be four times better if you do the real estate.”

Last week, Megawide’s board of directors approved the acquisition of PH1 from the company’s affiliate, Citicore Holdings Investments, Inc.

The transaction involves the acquisition of 100% capital stock or 579.46 million shares of PH1 for P5.2 billion or P8.97 per share in line with the fairness opinion report of FTI Consulting Philippines, Inc.

On Wednesday, shares in the company declined by four centavos or 1.2% to P3.30 apiece. — Justine Irish D. Tabile