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2016 RESULTS OF OPERATIONSGUIDANCE FOR 2017 THE PRESIDENT’S REPORTMedia/PSE Analysts BriefingFebruary 7, 2017Makati, Philippines
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2016RESULTSOFOPERATIONS
8990’s4Q16NETINCOMEGROWS12%
1Q16 2Q16 3Q16 4Q16 4Q15 GrowthRate
Gross Sales P 2,174 P 2,571 2,441 2,226 2,283 (2%)
Gross Profit 1,228 1,506 1,300 980 1,105 (11%)
Operating Expense 325 463 327 411 614 (33%)
Net Income Before Tax 1,094 1,183 1,099 674 673 0%
Net IncomeAfter Tax 1,032 1,150 1,008 620 556 12%
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4Q16 net income grew by 12% versus thesame quarter in 2015 despite flat grosssales.
A 5% increase in resale of cancelled unitsincreased cost of goods, resulting in an 11%decline in gross profit. There was a 33%decline in operating expenses, resultingfrom lower documentation and marketingexpenses.
After tax profit rose 12% because of a lowertax due on re-sold units and the tax-freestatus of more projects under the BOIInvestment Priority Program (IPP) comparedto last year.
2016RESULTSOFOPERATIONS
2016 net income grows 2% in 2016.
While Deca Tower EDSA, UDH Tisa, DH Indangan, andDH Catalunan Grande over-performed their annualquotas, they failed to offset the loss of potentialrevenues from the eight unlaunched projects.
Worthwhile to note is that DECA Tower EDSA wasable to contribute P900 million ahead of its timeline.
Operating expenses decreased by 11% because oflower marketing and documentation expenses aswell as lower taxes and licenses paid.
Gross margin slipped to 53% because of the resaleaccounts. Net Margin remains steady at 40%.
8990GROWS2%in2016
2016 2015 GrowthRate
Gross Sales P 9,411 P 9,280 1%
Gross Profit 5,014 5,105 (2%)
Operating Expense 1,526 1,724 (11%)
Net Income Before Tax 4,050 4,114 (2%)
Net Income After Tax 3,809 3,723 2%
Gross Margin 53% 55%
NetMargin 40% 40%
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PERMITS PROCESSING AFFECTS 2016 PERFORMANCE
We wish to emphasize that these revenues arenot lost, but merely delayed.
8 projects, totaling 2,706 units with a gross value of P2.4Billion, did not get permits on time. Permits are about tobe finished and these are now part of the launches for2017. There were new requirements and permits askedin 2016 such as:
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Project LocationUnitstobeDeliveredfor2016
Value(inM Php)
DH Pavia RR 2 Iloilo 706 692
DH Sta. Barbara Iloilo 280 126
DH Mactan Prime Cebu 280 274
Urban DH Tisa 2 Cebu 400 440
DH South of Bacolod Bacolod 160 136
DH Toril Davao 80 76
DH Mulig 1 Davao 280 128
DH San Lorenzo Davao 520 510
Total 2,706 2,382
Davao : Certificate from Water Resource Task ForceCertificate from Floodway Mitigating Zone Task ForceAdditional Land Usage Certificate
Iloilo : Certificate from Provincial Assessor that land isclassified as residential by the local government
Cebu : Traffic Study and Detailed Drainage Study which arenew requirements for the ECC
2015RESULTSOFOPERATIONS 5
Unrealized Sales Reach 1,332 Units by End 2016
The Company has nationwide unrealized salesof 1,332 units ending 2016, amounting to P1.9Billion.
These unrealized sales were combination of soldunits with houses/buildings for construction likein UDH Marilao and UDH H. Cortes.
Of the total unrealized sales, 873 units will betaken out in 1Q17 and the remaining 459 unitsare scheduled in 2Q17.
Branch TotalUnits
ValueMillions
North Luzon 462 716
South Luzon 64 66
NCR 527 738
Cebu 206 314
Iloilo 1 1
DavaoandGensan 72 68
Total 1,332 1,903
Status2016 2015 GrowthRate
Unit Value Unit Value Unit ValueTotalHDMFFolders 5,990 5,850 4,341 4,088 38% 43%
BreakdownPre-EvaluationwithHDMF 845 982 1,446 1,379
ForComplianceby8990Branches
2,240 2,015 285 292
ForTake-Out 290 308 0 0
2016TAKE-OUT 2,615 2,545 2,610 2,417 0% 5%
2016 HDMF TAKE-OUT VALUE INCREASES BY 5%
We experienced bottlenecks in thecompliance of requirements mainly dueto:
• Expiration of buyer’s proof of income;• Delayed release of titles;• Piecemeal release of findings;• Lack of HDMF manpower.• Slow processing by the Register ofDeeds
Take-out period is currently stretched to3 to 5 months
2016RESULTSOFOPERATIONS
In Million pesos 2016 2015 Growth Rate
Cash, beginning balance 600 605 (0.8%)
Net Cash used for operations 541 2,215 (76%)
Total new borrowings 7,566 3,709 104%
Net Cash used for capital expenditure 6,636 1,499 343%
Cash balance at the end of the year 989 600 65%
8990ImprovesCashFlowin2016
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8990’s 2016 cash flow shows a significant76% decline in net cash used inoperations. Internally generated fundsfrom take-outs from Pag-IBIG Fund,purchase of receivables of banks, and thehigher levels of recurring income from theCTS Portfolio are the drivers for thisdecrease in net cash used in operations.
The substantial increase in newborrowings was the cash used for capitalexpenditure to purchase 191 hectares ofland bank, valued at P5.0 Billion.
2016RESULTSOFOPERATIONS
8990CTSIncomeJumps18%byend2016For 2016, 8990’s CTS Portfolio yieldedP1.4 Billion in recurring income – an18% increase from last year.
Total value of 8990’s CTS Portfoliostands at P20 Billion, up 9% from 2015.This marks the smallest increase in CTSsince 2011.
In 2016, 8990 was able to sell P945Million of its CTS Portfolio to BDO andSBC, and a migration to HDMF of P865million.
2016 2015 GrowthRate
Units 20,863 20,093 4%
Value (in millions) P 20,425 P 18,767 9%
Interest Income from CTS P 1,439 P 1,204 18%
Performing Accounts Ratio 95% 96% (1%)
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2016RESULTSOFOPERATIONS
CurrentLandBankis655.15Hectaresin2016
Location Area(inHA)
Cost(Millions)
EstimatedUnits
EstimatedValue
LUZON 117.90 5,000 76,000 P99B
VISAYAS 363.64 3,017 51,000 P56B
MINDANAO 173.61 844 18,000 P20B
GrandTotal 655.15 8,861 145,000 P175 B
In 2016, 8990 purchased 191 hectares of rawland, valued atabout P5 Billion, bringing the total landbank to 655.15today. These acquisitions are the following;
MetroManila• Alabang Zapote,LasPinas - 3.4ha• Litex Road,Commonwealth,QC– 2.0ha• Brgy.OldBalara,QC– 5.0ha• Mendiola/Otisproperty– 2.8ha
Provinces• Meycauyan,Bulacan – 44.0ha• ASFortuna,Banilad,Cebu– 1.8ha• Granada,Bacolod– 62.0ha• SanMiguel,Iloilo– 70.0ha
Thepresentlandbank willprovideanestimated145,000unitswithGrossSellingValueofP175Billion.
2016RESULTSOFOPERATIONS 10
Ø Change the existing Organizational Structurefrom Centralized National to 3 Main Regions.
Ø Increase manpower nationwide from 287 to370, which includes personnel for HDMFdocumentation from 45 to 67 personnel,including the hiring of two experiencedexecutives to bring more leadership in theHDMF take-out operations.
Ø Identify projects for 100% HDMF take-out toraise HDMF level to as much as 70%.
Ø Increase the number of production from 58sets of casting forms to 103 sets, therebyincreasing annual capacity from 13,920 to24,720 housing units.
Ø Create a Central Document warehouse formore efficient storage and access of files anddocuments.
Ø Increase the engineering force from 27 to 39,and establish a Quality Assurance Group toprovide technical support at the site level.
OURADJUSTMENTSFOR2017Given the need to focus on strengthening the company’s balance sheet, in the wake of increasing interestrates, and a tougher permits and licensing environment, the goal for 2017 is cash generation to pare downshort-term and medium-term debt.
2016RESULTSOFOPERATIONS 11
Guidance – 2017 EARNINGS
Gross Revenue P10.0BilliontoP13.5Billion60%grossmargin
NetIncome P4.0BilliontoP 5.4Billion40%grossmargin
GROWTHTARGETSGross Revenue 43%NetIncome 41%
CASHFLOWTARGETS
HDMFTake-out P6.0BillionSecuritization P3.0BillionPurchaseofCTS P3.0BillionPreferredShares P5.0Billion
2016RESULTSOFOPERATIONS
8990toLaunch11NewProjectsfor2017 Project Type Total
Units LocationUnitstobeDeliveredfor2017
Value(inM Php)
LaunchDate
DH Marilao MRB MRB 3,788 Bulacan 320 288 March
DH Pavia RR 2 Horizontal 2,967 Iloilo 875 963 March
DH Mactan Prime Horizontal 6,828 Cebu 400 480 March
DH Sta. Barbara Horizontal 10,189 Iloilo 515 232 April
DH South of Bacolod Horizontal 9,044 Bacolod 520 416 April
UDH Mactan MRB 3,507 Cebu 80 76 April
DH Mulig Horizontal 7,005 Davao 380 342 June
DH Lorenzo Horizontal 3,749 Davao 340 323 June
DH Ignatius Horizontal 6,800 Davao 220 209 August
Leganes Horizontal 3,085 Iloilo 220 220 September
Urban DH Tisa 2 MRB 3,803 Cebu 124 149 September
Total 60,765 3,994 3,698
This year, 8990 will start elevennew projects, adding 60,765 unitsto the inventory.
We expect to launch threeprojects in the first quarter,followed by 5 in the second andclosing the third with 3 more.
For 2017, 3,994 units will form34% of this year’s performance,with a value totaling P 3.7 Billion.
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2016RESULTSOFOPERATIONS
11On-GoingProjectsContribute66%toRevenue
in2017
Project Type Location TotalUnits
UnitstobeDeliveredfor2017
Value(inM Php)
DCRR (Economic) Horizontal Angeles 3,145 690 621
DH Marilao TH Horizontal Bulacan 6,378 700 945
UDH Hampton MRB Cavite 1,988 408 490
UDH Mahogany MRB Cavite 546 182 218
DH BT3 Horizontal Cebu 730 221 287
UDH H. Cortez MRB Cebu 1,596 584 730
UDH Manila MRB Manila 13,308 3,924 5,473
UDT EDSA HRB Mandaluyong 1,142 400 440
UDH Campville MRB Muntinlupa 1,068 276 359
DH GenSan(Socialized) Horizontal General Santos 2,531 480 216
DH GenSan(Economic) Horizontal General Santos 249 29 26
Total 32,681 7,894 9,805
In addition to new projects,8990’s eleven ongoing projectsprovide for this year, 7,894 unitsnationwide, with a gross value ofalmost P 10 Billion.
In sum, both new and ongoingprojects will provide a total of11,888 housing units and a grossvalue of P13.5 Billion for 2017.
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M A N A G E M E N T O P E R A T I O N S C O N F E R E N C E 4 Q 1 6 14
Branch Units ValueS.Luzon 1,965 1,825
N.Luzon 561 653
Cebu 1,836 1,802
Iloilo 2,288 2,415
Bacolod 270 216
Davao 1,648 1,721
Gensan 1,416 884
Total 9,984 9,517
All 8990 branches nationwide havecommitted to hit P9.5 Billion HDMFtake-out for 2017.
At least P6 Billion of the target will befresh accounts, and 40% will comefrom the backlog of 2016 and 2015accounts that are scheduled formigration this year.
9.5BillionHDMFTake-OutTargetfor2017
Dividend Pay-Out
Date Amount Pay-Out
December 12, 2014 275,899,536.00 0.05 / share
March 30, 2015 993,238,329.60 0.18 / share
September 06, 2015 275,899,536.00 0.05 / share
February 18, 2016 1,379,497,680.00 0.25 / share
November 28, 2016 275,899,536.00 0.05 / share
March 06, 2017 1,379,497,680.00 0.25 / share
Total 4,579,932,297.60 0.83 / share
8990 Board approved the declaration of cash
dividends in the amount of Twenty five
centavos (Php0.25) per share to
stockholders of record of the Company as of
February 20, 2017. The cash dividends shall
be paid on March 6, 2017.
7BranchesNorthLuzon 3
NCR 3
SouthLuzon 2
Cebu 5
Iloilo 3
Davao 3
GeneralSantos 2
Bacolod 116
ProjectStatusUpdateWehave2FinishedProjects
Wehave11On-GoingProjectsWehave11ProjectsforLaunching
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DECAHOMESBELLAVISTA SOUTHLUZON
TotalNo.ofUnits: 3,881UNITSPercentofCompletion: 100%DatetoFinish: DECEMBER2016
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DECAHOMESTANZA
TotalNo.ofUnits: 632UNITSPercentofCompletion: 100%DatetoFinish: DECEMBER2016
SOUTHLUZON
TotalNo.ofUnits: 5,237UNITSPercentofCompletion: 72%DatetoFinish: DECEMBER2017
DECACLARKRESORTANDRESIDENCES NORTHLUZON
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ON-GOING
DECAHOMESMARILAO/URBANDECAHOMESMARILAO(MIXEDMRBANDTOWNHOUSES) NORTHLUZON
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TotalNo.ofUnits: 4,606UNITSPercentofCompletion: 10%DatetoFinish: DECEMBER2020
ON-GOING
21
URBANDECATOWER- EDSA NCR
TotalNo.ofUnits: 1,148UNITSPercentofCompletion: 86%DatetoFinish: JULY2017
ON-GOING
22
URBANDECAHOMESCAMPVILLE NCR
TotalNo.ofUnits: 1,024UNITSPercentofCompletion: 85%DatetoFinish: September2017
ON-GOING
23
URBANDECAHOMESMANILA NCR
TotalNo.ofUnits: 13,212UNITS(Totalof13Buildings)PercentofCompletion: 12%DatetoFinish: DECEMBER2020
ON-GOING
24
TotalNo.ofUnits: 1,988UNITSPercentofCompletion: 15%DatetoFinish: DECEMBER2018
URBANDECAHOMESHAMPTON SOUTHLUZON
ON-GOING
25
TotalNo.ofUnits: 548UNITSPercentofCompletion: 1%DatetoFinish: DECEMBER2018
URBANDECAHOMESMAHOGANY SOUTHLUZON
ON-GOING
26
URBANDECAHOMESH.CORTES VISAYAS
TotalNo.ofUnits: 1,400UNITSPercentofCompletion: 23%DatetoFinish: December2018
ON-GOING
27
DECAHOMESPAVIARESORTANDRESIDENCESPHASE1 VISAYAS
TotalNo.ofUnits: 2,125UNITSPercentofCompletion: 95%DatetoFinish: September2017
ON-GOING
28
DECAHOMESPAVIARESORTANDRESIDENCESPHASE2 VISAYAS
TotalNo.ofUnits: 2,982UNITSPercentofCompletion: 37%DatetoFinish: November2019
ON-GOING
29
URBANDECAHOMESMACTAN VISAYAS
TotalNo.ofUnits: 3,507UNITSPercentofCompletion: 0%DatetoFinish: DECEMBER2021
FOR LAUNCHING
30
DECAHOMESMACTANPRIME VISAYAS
TotalNo.ofUnits: 6,828UNITSPercentofCompletion: 0%DatetoFinish: March2020
FOR LAUNCHING
31
URBANDECAHOMESTISAPHASE2 VISAYAS
TotalNo.ofUnits: 3,803UNITSPercentofCompletion: 0%DatetoFinish: June2021
FOR LAUNCHING
32
URBANDECAHOMESTISAPHASE1 VISAYAS
TotalNo.ofUnits: 976UNITSPercentofCompletion: 96%DatetoFinish: March2017
ON-GOING
33
DECAHOMESBAYWALKTALISAY3
TotalNo.ofUnits: 729UNITSPercentofCompletion: 61%DatetoFinish: December2017
VISAYAS
ON-GOING
34
STA.BARBARA
TotalNo.ofUnits: 10,187UNITSPercentofCompletion: 3%DatetoFinish: July2021
VISAYAS
FOR LAUNCHING
35
DECAHOMESSOUTHBACOLOD
TotalNo.ofUnits: 9,044UNITSPercentofCompletion: 1%DatetoFinish: December2020
VISAYAS
FOR LAUNCHING
36
LEGANES
TotalNo.ofUnits: 3,085UNITSPercentofCompletion: 0%DatetoFinish: September2020
VISAYAS
FOR LAUNCHING
TotalNo.ofUnits: 6,800UNITSPercentofCompletion: 0%DatetoFinish: September2023
DECAHOMESIGNATIUS MINDANAO
37
FOR LAUNCHING
TotalNo.ofUnits: 7,005UNITSPercentofCompletion: 0%DatetoFinish: July2019
DECAHOMESMULIG MINDANAO
38
FOR LAUNCHING
TotalNo.ofUnits: 3,239UNITSPercentofCompletion: 98%DatetoFinish: May2017
39
DECAHOMESINDANGAN MINDANAO
ON-GOING
TotalNo.ofUnits: 649UNITSPercentofCompletion: 98%DatetoFinish: May2017
40
DECAHOMESCATALUNANGRANDE MINDANAO
ON-GOING
TotalNo.ofUnits: 2,778UNITSPercentofCompletion: 70%DatetoFinish: December2017
DECAHOMESGENSAN1 MINDANAO
41
ON-GOING
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