CFO Asia rated PLDT 16th among Asia’s top 50 firms whose management team consistently increased the Company’s shareholder value from 1999 to 2004. PLDT was the only Philippine company in the top Asian 50 list.
To identify the top management teams in Asia, the magazine measured "Company Edge," defined as the excess shareholder returns of the company over its regional peers, adjusted for country differences.
"Company Edge" sums up the Company’s total shareholder return (TSR) over a period of time and then prunes out the effects of background influences that are beyond the control of management such as interest rate changes, shifts in investor optimism, and effects of natural catastrophes.
CFO Asia calculated the five-year annual average TSR for the 462 biggest companies in Asia excluding Japan. The result for each company was modified to remove the average TSR of the country in which it is based. It was further modified to remove the average regional TSR of the industry sector for each company. The final result is a measure of shareholder value that a firm’s management can reasonably take credit for.
The ranking is based on the figures derived from multiplying the firm’s annual average "Company Edge" by its market capitalization as of 31st December, 1999.
According to the magazine, PLDT’s results showed a 6-percent fiveyear annual average total shareholder return, a 20percent five-year annual average "company edge," and US$618-million fiveyear annual average excess value created. Its market value was US$4.12 billion as of 31st December 2004.
Sandeep Malik of Marakon’s Associates, CFO Asia’s partner in the study, said that companies should begin to have a clearer philosophy and framework with regard to shareholder value.
"A lot of companies in Asia are still making decisions using only traditional metrics like sales, margin, and net income," Malik said. "What they should also be doing is thinking about economic profit. They need tools that analyze future cash flows and discount them at the appropriate cost of capital. And they need clearer ideas of how to allocate costs and capital to different parts of the business."
PLDT President and CEO Napoleon L. Nazareno said it has always been the Company’s goal to maximize shareholder value. "We are glad that the finance community has recognized our hard work. It validates our efforts toward making PLDT a stronger Company amidst the formidable challenges ahead," Nazareno said.
PLDT has also been cited recently as one of Asia’s top 50 best performing publicly-listed companies by BusinessWeek, the world’s leading business newsweekly. The list of top 50 companies in Asia represents BusinessWeek’s first annual ranking of such enterprises.
PLDT, the only Philippine firm to make it to the list, was ranked 23rd in a roster dominated by regional energy giants such as Thailand’s PTT PLC (No.1), China’s PetroChina (No.2) and India’s Oil and Natural Gas (No. 3). It was the highest-ranking telecommunications service provider in "The Asian BW50".
