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Thursday, January 16, 2014

Philippines Inc.-The fiercest corporate rivalries

Corporate rivalries are common in every country.Let’s look at some of the biggest and bitterest corporate rivalries in Philippines Inc.
  • The Corporate Dogfight between Ayala and SM Groups.
  • The Battle Royale For RP Fast Foods' Supremacy.
  • The Airwar between PAL and Cebu Pacific
The Ayala Corporation vs. SM Investments Rivalry
The two biggest dogs in Philippine business are Ayala and SM groups. This business rivalry pits the "Kastilaloys" versus the "Tsinoys". The war is being waged in many fronts: banking(BPI versus BDO), property (Ayala Land vs. SM Prime Holdings) and malls ( Ayala Malls vs.SM Super Malls).
The Current Scorecard (as of 1/16/2014):
Ayala Corporation
P/E Ratio: 31.37
Market Capitalization P317,994,202,293.50
Free Float Level: 38.14
Share Price:P538
SM Investments Corporation
P/E Ratio: 17.80
Market Capitalization: P557,390,587,600.00
Free Float Level:43.81
Share Price:P709.50
Ayala Corporation (Spanish: Ayala y Compañía) is a holding company for the diversified interests of the Ayala Group. Founded in the Philippines by the Spanish and German Ayala, Roxas, and Zobel families during colonial rule, it is the country's oldest and largest conglomerate. The company has a portfolio of diverse business interests, including investments in retail, real estate, banking, telecommunications, water infrastructure, renewable energy, electronics, information technology, and management and business process outsourcing. From Wikipedia
SM Investments Corporation, SM Investments, or SMIC, is a holding company with interests in shopping mall development and management, retail, real estate development, banking, and tourism.[1] The SM Group was founded by Henry Sy, Sr. It has become one of the largest conglomerates in the Philippines.[2] SM is the Philippines' most dominant player in retail with 208 stores nationwide.  From Wikipedia
Ayala/SM Rivalries
BPI and BDO are two of the largest banks in the Philippines.
BPI is the most profitable bank. 
BDO is the fastest growing bank.
Ayala Malls is a real-estate subsidiary of Ayala Land, an affiliate of Ayala Corporation. Founded in 1988, Ayala Malls own a chain of large shopping malls, all located in the Philippines. Ayala Malls is the third largest shopping mall retailers in the Philippines, after SM Supermalls and Robinsons Malls.
SM Supermalls, owned by SM Prime Holdings, Inc., is a chain of shopping malls in the Philippines, with 43 malls across the Philippines as well as branches in China.
The Battle Royale For RP Fast Foods' Supremacy
"I was attracted to fast-food restaurants because they were so easy to understand. A restaurant chain that succeeded in one region had an excellent chance of duplicating its success in another." Peter Lynch, well-known investment guru
The Jollibee Group is the acknowledged leader in the fast foods business in the Philippines.The Max's restaurant group could pose a very serious challenge to Jollibee's market supremacy with Max's P3.9 billion pesos acquisition of the Pancake House Group.
MANILA—The Max’s restaurant group has launched a tender offer to minority shareholders of casual dining chain Pancake House who may want to exit on the same terms as the controlling Lorenzo family.
The buyout deal by the Max’s group values 100 percent of Pancake House at P3.9 billion. This consolidation also creates one of the country’s largest restaurant chains.
Founded in 1974, Pancake House has 105 outlets of flagship brand Pancake House for a total of 300 other outlets across other brands like Dencio’s, Kabisera ng Dencio’s, Teriyaki Boy, Sizzlin’ Pepper Steak, Le Coeur De France, The Chicken Rice Shop, Maple and Yellow Cab.
The Battle of The Fast Foods Brands
JFC Group: Jollibee, Chowking, Greenwich Pizza, Red Ribbon, Mang Inasal and Burger King Philippines.
Max's Group :Max's Fried Chicken, Philippine licensee for Krispy Kreme and Jamba Juice, Pancake House, Dencio’s, Kabisera ng Dencio’s, Teriyaki Boy, Sizzlin’ Pepper Steak, Le Coeur De France, The Chicken Rice Shop, Maple and Yellow Cab.
If a capitalist had been present at Kitty Hawk back in the early 1900s, he should have shot Orville Wright. He would have saved his progeny money. But seriously, the airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in.

I have an 800 number now that I call if I get the urge to buy an airline stock. I call at 2 in the morning and I say: 'My name is Warren, and I'm an aeroholic.' And then they talk me down.
Warren Buffett
‘I have five (landing) slots, but I want two more’ Ramon Ang
It’s still a 14-hour ride, but the flight is now direct, with no extra hours for layovers or the risk of missing connecting flights, not to mention having to haul carry-on baggage while sprinting toward far-off boarding gates.
Travel from Manila to London—and by extension Paris, Rome and the rest of Europe—just got considerably faster and more convenient with Philippine Airlines’ Nov. 4 resumption of commercial flights to Heathrow Airport.
After 15 years, PAL is back in Europe’s busiest air hub.
“Although this is billed as our inaugural flight, this is not PAL’s first time [in London],” said PAL president Ramon Ang in his remarks at a cocktail reception at Corinthia Hotel London to celebrate the occasion.
“We are old friends. PAL first arrived here 66 years ago, in 1947. We were the first airline from Southeast Asia to fly into Heathrow, which opened for civilian use a year earlier, in 1946,” he added.
It used to be an “epic transcontinental journey,” said Ang—London being “the last stop of a flight that departed Manila once a week, stopped in five countries along the way and landed here [London] more than 44 hours later,” then “the longest sector in the PAL timetable.”
Nonstop service
That veritable odyssey had been trimmed in the intervening years with advances in aircraft technology and civil aviation. But, since 1998, with no direct flights between Manila and the UK capital, OFWs and travelers still had to make do with up to 20 hours’ travel time that included stopovers in Dubai, Hong Kong, Singapore or other airports.
Now, using its new Boeing 777-300ER aircraft in place of the old DC-8 jets that used to serve London, PAL offers nonstop service that cuts down flying time to 14 hours.
Ang said travel time will be further reduced when overflight negotiations with Russia are completed (right now, flights detour through southern Asia before entering European airspace).
The flight back to Manila is even faster at 12 hours.
Refleeting is the linchpin of Ang’s strategy to modernize PAL (“We have bought 71 aircraft already from Airbus,” he said), and reacquire its stalwart status as Asia’s first airline.
The Boeing 777-300ER planes can seat up to 370 passengers and are said to be more fuel-efficient. They now service direct flights to Toronto and London—and soon Frankfurt, Paris, Rome and Amsterdam, Ang promised.
The upgrading also extends to cabin services. Six award-winning chefs—Bruce Lim, Clifton Lyles, Suwanna Puangdee, See Cheong Yan, Masahiro Mizumoto and Fernando Aracama—who joined the inaugural flight, are responsible for the gourmet cuisine on PAL’s international flights.
WiFi onboard is available, allowing passengers connectivity. Seats have more legroom, especially in Business Class which has fully-reclining Recaro seatbeds.
On top of such service innovations, the signature PAL touches remain: the warmest cabin crew of any airline, for one, and still the smoothest landings ever. From Inquirer

From FlightGlobal
NO-FRILLER IN MANILA
Lance Gokongwei is an extremely busy man, but do not expect to find him playing golf or sampling fine wine in order to relax.
“Making money is the best way to relax,” the boyish-looking chief executive of Cebu Pacific says with a grin at the low-cost carrier’s office, adjacent to Manila’s Ninoy Aquino International Airport (NAIA). “I like running a business; I enjoy interacting with people. Work is not a chore at all.”
If Cebu Pacific’s success is any gauge, he must be very relaxed. The airline became the market leader in the Philippines in 2010, when it carried more passengers than flag carrier Philippine Airlines (PAL). It also raised $620 million in an initial public offering that year, a record for a low-cost carrier. It has ordered new aircraft and is holding its market share in a country where competition is growing rapidly.
The success has probably surpassed the expectations of his boss and father John Gokongwei, the third-richest man in the Philippines and chairman of Cebu Pacific’s parent company, JG Summit Holdings.
The 85-year-old bought Cebu Pacific in 1995 following a failed bid for a stake in PAL and it began operations a year later.
He called upon his only son, Lance – who was then 29 and had only graduated with degrees in engineering and finance from Pennsylvania University a few years previously – to create a viable competitor to PAL from scratch.
MOVE TO LOW-COST
With a fleet of Boeing 757s and McDonnell Douglas DC-9s, the airline started offering domestic services such as between Manila and Cebu, with fares pegged around 40% lower than PAL’s. Profits came and its market share grew to around 30%, but the SARS crisis of 2003 and rising fuel prices in 2004 and 2005 forced a rethink of its model. That led to Cebu Pacific’s eureka moment.
“With oil prices going up, we did not have a genuine cost advantage against PAL, who also started to match our ticket price,” says Gokongwei. “So we had the classic dilemma. Yes, we were a low-fare carrier, but we had to decide if we should become a full-service carrier or a proper low-cost carrier. Given our low-fare legacy, the answer was obvious.”
Using Ryanair and EasyJet as models, Gokongwei went to Airbus and ordered 10 A319s.  Cebu  Pacific then forced authorities to redevelop domestic airports and won rights to international destinations, while developing a marketing strategy aimed at making a fun and lively brand. By 2008, the airline had grown so fast that it decided to consolidate its domestic and international operations at a mothballed terminal in NAIA.
It unlocked a latent demand for air travel within an archipelago where an extensive network of ferries is still the main mode of transport. It tapped into the growing number of overseas Filipino workers and residents, offering them cheap fares, no-frills services and extensive connections. It has been a boon to the tourism industry, with both Filipinos and foreigners discovering more about the country’s natural beauty. Cebu Pacific is largely responsible for the Philippine airline market’s growth from 2 million passengers in 2005 to 12 million in 2011.