PRESIDENT'S REPORT - 2008

It is always a pleasure to welcome and meet our valued shareholders at this annual gathering of Mabuhay Holdings Corporation.

First of all, let us take a quick look at the Philippine economy. In the year 2007, the GDP of the Philippines expanded at the rate of 7.3%, the highest in more than 30 years. However, with the sharp increase of energy and food prices in recent months, the global community is now experiencing an extremely difficult time, and more serious impacts are being felt by the developing countries. This global economic undercurrent has certainly damaged the Philippine economy and we do expect our inflation and unemployment rates to be adversely affected.  Nevertheless, we believe that our country is reasonably well positioned to navigate this worldwide financial crisis on account of its strong fundamentals and optimistic prospects. In fact, our Central Bank has just reported a $499 million surplus of Balance of Payment for the month of April this year. Central Bank also expects our gross international reserve to go up to $37 billion by the yearend. We all notice that Peso has gained so much strength against U.S. dollars in the past months. We are very confident that the Philippine economy will be stable and will definitely grow steadily in the years to come.

On the micro operational level, our Company’s total assets increased by Php 252.5 million, mainly due to the increase in value of our overseas investments. The unrealized gain on such investment amounts to P511.7M which was lodged in the equity account. Total liabilities decreased by P1.1M due to the elimination of the deferred tax liability. Our shareholders should not be too much alarmed by the fact that we registered a net loss of P26M for last year, again this was largely due to the unrealized foreign currency conversion loss in view of the fast appreciation of Peso last year.

Our valued shareholders must have noticed that Mabuhay and its subsidiaries and affiliates are the registered owners of vast properties in various strategic locations. These assets pose great potential income once developed. However, the investing public must be puzzled by the fact that our share prices have not been gaining momentum in the past months. In the past year, the share price of Mabuhay did rise to the height of 95 centavos, but recently we see the weakening of the share price again.

As you all know, the bleak outlook on the global economy has negatively affected the psychology of the institutional and individual investors alike, resulting in the slump of the stock markets around the world, led by Wall Street. Unavoidably, the Philippine stock market is following the bandwagon. The weakening local bourse has not been able to regain its vigor since the fourth quarter of last year, and so is the share price of our Company. Nevertheless, we believe that after the negative exterior factors are rationally digested by the local and international investors, the Philippine stock market will likely rebound very soon.

As I mentioned in our last shareholders’ meeting almost a year ago, the management of Mabuhay Holdings Corporation would exert efforts to tackle some old problems, such as the squatters problem on our Tagaytay property and the Agrarian Reform issue over our Batangas properties.

Allow me to report to you that in the past months, significant advances had been achieved towards the solution of these problems. We have won court cases to eject the squatters and to demolish the illegal constructions on our Tagaytay property. Only the process of executing the court orders is being delayed due to certain legal loopholes. We expect this issue to be finally resolved before the end of this year. We had likewise obtained the understanding of the local Agrarian Reform officials to exempt our Batangas properties from CARP coverage based on topographic reports certifying our properties to have an inclination of more than 18 degrees. We expect the legal documentation in this regard to be released very soon. Recently, we had also cleared the land title of our General Santos property and updated the real estate tax payments.

In our last meeting, I also informed our shareholders that we will look into new business opportunities, particularly in the mining and financial services areas. In the past months, we had seriously explored the possibilities and feasibilities of entering into new business ventures. We even invited specialists and geologists from China to visit nickel and iron ore mining concessions in Surigao and Sibugao provinces. However, negotiations on joint venture proposals to develop these mining concessions were discontinued based on the opinions of the specialists. We had also scrutinized proposals for our Company to take over certain lending institutions. Regrettably, the American sub-prime housing loan crisis had seriously affected the worldwide financial circle and we had to apply a brake to our endeavors in this area for the time being. We will continue to access the international and domestic economic situation diligently and pay attention to new business opportunities.

For the past few months, the major efforts of the Management were focused on the revival of Interport Resources Corporation, a listed company wherein we have heavy investments, holding more than 40% of its equities. Despite the fact that we are the single biggest shareholder, we had not been able to involve ourselves in the management of Interport over the past years. In fact, Interport became a dormant company and was not even able to convene a stockholders’ meeting for almost a decade. Trading of its shares was suspended by the Philippine Stock Exchange since July last year. With our joint efforts, Interport successfully called a stockholders’ meeting last March. The suspension on the trading of its shares was also lifted by the PSE. At present, almost all Mabuhay directors are sitting in the new board of directors of Interport, and I was elected as its new Chairman. We are now in the process of generating new capital for Interport and in fact, development projects are already on the drawing board.

Contributing much to the Philippine economic boom last year was the real estate sector, with many property firms registering record sales and profits. As we pointed out, our Company is sitting on some valuable properties, and with the recent bullish and rapid growth of the local real estate market, the development of these properties is in the offing. We are now targeting the development of the Interport property as the first project of our group. We do hope that you will receive exciting results in our report for the next shareholders’ meeting. The Board of Directors, the Management and the Staff of Mabuhay are committed to working hard to ensure the success of the Company’s projects for the well-being of all shareholders.

I am also happy to inform you that our Company has already lodged its website pages. All stockholders and the public are welcome to visit our website and give us your valuable comments and opinions. The website address is www.mabuhayholdingscorp.com.

Again, let me reiterate the gratitude and appreciation of the management of Mabuhay Holdings Corporation for your continued support and trust.

Thank you.



Esteban G. Peña Sy
President
May 20, 2008