Manila, May 7 - San Miguel Corp., Southeast Asia's largest food and beverage group, will branch into mining, power, infrastructure and the utility sector in the Philippines to boost growth in its saturated home market.
San Miguel President Ramon Ang confirmed to Reuters on Monday that the plan, a surprise about face, will be presented to stockholders at the firm's annual meeting on June 19.
San Miguel's B shares open to all investors lost 2.04 percent to 72 pesos ($1.50) amid investor concern about the shift, which jars with a previous policy of concentrating on its core food and drink businesses, including beer, liquor, grains and feeds.
San Miguel's A shares, restricted to local investors, fell 0.78 percent. The main index was up nearly 1 percent.
"There may be questions raised on their competence to handle these new businesses, whether they can pull it off or not," said Leo Venezuela, analyst at ATR Kim-Eng Securities,
San Miguel's stock trades at 20.7 times 2007 earnings compared to a sector average of 15.7 times,largely due to the group's dominance in its home market.
The new strategy will require a two-thirds vote of stockholders for approval and not simply a majority vote, according to a statement filed by the Philippines' second largest listed firm with the securities regulator.
ENGINES OF GROWTH
San Miguel embarked on a wave of overseas acquisitions several years ago, including Australian diary firm National Foods for $1.5 billion in 2005, to reduce reliance on its maturing home market.
But the group's continuing dependence on the Philippines was highlighted last month when its operating profit rose just 3.5 percent in the fourth quarter due to a slowdown in domestic consumer spending.
In its regulatory filing, the company described the power, utility, mining and infrastructure sectors as, "new engines of growth".
The Philippines is selling dozens of power assets, including a 25-year concession to run the national power grid, to raise between $4 billion to $5 billion as part of a wider power and fiscal sector reform.
Ang, along with two other local businessmen, had already formed a consortium called Triratna Holdings Corp to bid for the Philippines national grid in February. The auction failed and fresh bidding is expected later this year.
When asked if San Miguel would now be in involved in the Triratna consortium, Ang told Reuters: "We're studying it now."
San Miguel is set to release first quarter earnings on Tuesday.
Analysts expect San Miguel -- partly owned by Japan's Kirin Brewery Co Ltd -- to post net income of 11.19 billion pesos this year, up 5.6 percent from 10.6 billion pesos in 2006, according to Reuters Estimates. ($1 = 47.46 pesos)