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The rise of RSA

Between Nov. 7, 2016 and early November 2017, the share price of San Miguel Corp. has slowly but surely gone north, from a low of P79.05 to P115 per share on Nov. 7, 2017, a new 12-month high and an increase of 45.5 percent.  In value, the surge has been P85.47 billion ($1.67 billion), from P188 billion in November 2016 to P273.47 billion in November 2017.

Since Ramon S. Ang owns 20.3 percent of the company, the vice chairman, president and chief operating officer of SMC gained $340.5 million in wealth, from $748 million last year to $1.088 billion this November.

Add the value of RSA’s 86.57 percent ownership of newly listed Eagle Cement Corp.  (which had market capitalization as of Nov. 7, 2017 of P74.8 billion), and the entrepreneur-businessman is easily worth $2.357 billion, 3.15 times from $748 million a year ago.   RSA is now one of the 10 richest Filipinos.

The stock market has only recently begun to appreciate how profound has been the impact of Ang’s strategic moves and management of colossal San Miguel Corp. and Eagle Cement, today the single largest, most efficient, most modern and most profitable cement company in the Philippines.

RSA’s rise to enormous wealth seems to cap his nearly half century of entrepreneurship and deal making.  Still, he doesn’t seem to have even begun.  Enormous prospects are clearly ahead.

He began doing business when as a teener in short pants in what is now upscale (for business) Jose Abad Santos in Tondo, Manila, helping manage his father’s auto parts shop.  His most valuable tool then was the once ubiquitous and ponderous PLDT Telephone Directory. 

Young Ramon would look for clients interested in buying parts and other supplies and he would scan the phone directory for suppliers who could provide him what the customer wanted.  He would borrow the parts and sell them to his client, even at a small profit.  But then, he did not employ capital because, in effect, he was selling by consigment.

Fast forward to January 1999.  Eduardo “Danding” Cojuangco Jr. dragoons his subaltern, friend and most trusted aide to join him in the management of SMC, with the title of vice chairman.  Initially, Ramon was rather reticent exercising the prerogative of an executive given enormous mandate and leeway by the majority owner of SMC.   When the company seemed to be going nowhere, Ramon took matters literally in his own hands.  In 2002, he became San Miguel’s president and chief operating officer.  Cojuangco told him to manage the behemoth as he deemed best. 

“Ramon was a diamond in the raw,” says Danding with evident pride of his prized catch. The CEO says now he could not have found a better man to manage the company. And the rest is history.

Ramon Ang has transformed San Miguel in ways no one could imagine or have done better.  No Philippine company or conglomerate has transformed itself so dramatically and radically in the last half decade as has San Miguel Corp..

Even while growing and strengthening its core businesses like beer, foods, and packaging, SMC went into petroleum refining and marketing, power generation, infrastructure, airports, mining, mass transit and airlines.

RSA disrupted the business of utilities, power generation and infrastructure building with SMC moving into these businesses far ahead of the others.

Remarkably, San Miguel began its reengineering in earnest in October 2008 at a time of the severest global recession and credit crunch in 80 years, amid the most unprecedented of challenges to any company’s existence, and amid the lingering shocks of the 1997 Asian financial crisis.

The sea change was so revolutionary and successful it changed or disrupted the way business is done in the Philippines and in the region.  It also gave San Miguel size, scale and sustainability that will make it extremely difficult for its rivals to catch up.

Between 2008 and 2013, the impact of San Miguel’s acquisitions and investments was spectacular.

San Miguel assets ballooned 3.45 times from P339.37 billion in 2008 to P1,170 billion (P1.17 trillion) in 2013, sales rose 4.32 times from P183.4 billion to P792.45 billion, equity expanded 2.2 times from P168 billion to P365.77 billion, and annual profits increased 2.6 times from P19.34 billion a year in 2008 to P50.72 billion last year.  If reckoned from end-2007, profits actually expanded 5.8 times, from P8.63 billion to P50.7 billion in six years.

In six years, from 2008 to 2013, SMC sales increased by an average of 55.3 percent per year, assets by 41 percent  and equity by 20 percent.

In contrast, during the same five years, Ayala Corp. increased revenues 16.8 percent per year, net income 9.6 percent, assets 26 percent, and equity 6.7 percent.

SM Investments Corp. grew revenues by an average of 12 percent per year, income 15.9 percent, assets 19.3 percent, and equity 16.6 percent.

In five years, JG Summit grew revenues 7.08 percent per year,  income 1.03 percent, assets 7.06 percent, and equity 22.8 percent.

Under RSA, during those five years, SMC revenues were doubling every 24 months while assets were doubling every 2.5 years.

Today, San Miguel is the Philippines’ fastest-growing conglomerate, the largest in annual revenues, profits,

San Miguel has become No. 1 in beer (90 percent of the market), No. 1 in expressways and tollways (70 percent share), No. 1 in the world in gin, No. 1 in branded food products (through 85.37 percent-owned San Miguel Pure Foods Co.), No. 1 in packaging (aluminum can is its latest business) and No. 1 in power generation with 22 percent of installed power generation in Luzon and 17 percent of the national grid.

SMC has become more relevant to the national economy and better able to meet the basic needs of the Filipino, even while raising the profile of the Philippine enterprise abroad as a world-class and excellent operation.

SMC sales are 5 percent of the Philippine gross domestic product (GDP).  The company employs 18,000 and operates more than 100 factories or production facilities in the Asia Pacific. 

 

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Topics: Ramon S. Ang , RSA , San Miguel Corp
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