Boulevard Holdings, Inc. (PSE: BHI)

The tourism industry has been resilient during the global financial crisis in 2008-2009. According to the records of National Statistics Coordination Board(NSCB), visitors for 2008 increased by 2% while 2009 visitor arrivals only decreased by 4%. Since 2009, visitor arrivals has steadily been rising.

BHI is one of the companies that would benefit in the bullish tourism industry. Below is BHI’s corporate structure:

Askar Ltd., a company that operates two aircrafts under a lease agreement is discontinued. Infocast Asia Ltd, is not yet in commercial operations. BHI’s only revenue generating subsidiary is Friday’s Holdings, Inc. (FHI) which owns Friday’s Boracay Beach Resort (FBBR).

BHI operates with a thin profit margin of less than 10%. In other words, BHI earns less than P.10 for every P1 revenue it generates. FBBR will be at a disadvantage should competitors lower rates. Despite the operational disadvantage, BHI stands with a strong balance sheet due to capital infusion. Debt of BHI is only 11% of total assets as of August 2012.

BHI has strategic investments in potentially profitable locations for tourism. All their investments are as follows:

  1. Purchased 7,480 sq. m. of land in Boquete Island, Puerto Galera, Oriental Midoro which is to be used for Friday’s Puerto Galera Beach Resort. The resort is expected to be in commercial operations in February 2013.
  2. Payment of P128 million as advance payment for a land in Moal Boal, Cebu which they plan to develop as Friday’s Moal Boal Beach Resort. Moalboal owes its popularity to snorkeling and scuba diving.
  3. Purchase of 106,000 ha. of land located within the Puerto Azul complex, Terante, Cavite which they are also planning to put up a resort under the Friday’s brand.

Most Promising Business Development of BHI

BHI intends to have a 30% interest in a joint venture with JP Guilds for a 30-year development of Puerto Azul in exchange for BHI or other subsidiaries rendering marketing and financial representations. JP Guilds, the principal owner of the 3,000 ha resort-residential complex in Ternate Cavite, is also the majority owner of BHI. The accessibility of Puerto Azul has substantially improved since the opening of Cavitex in April 27, 2011 which brought down the travel time from Manila to Ternate, Cavite to just less than an hour from 2.5 hours.

Moreover, the Ternate-Nasugbu tunnel which would connect the towns of Nasugbu, Batangas and Ternate, Cavite, would shorten travel time to the Batangas coastline from four hours to just less than two.

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.

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