Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cebu Landmasters Inc (PHS:CLI, Financial) reported a 24% increase in parent net income after tax, reaching PHP1.7 billion.
- Consolidated revenue grew by 24% year-on-year, driven by strong sales across all segments.
- The company achieved a 94% sell-out status across various stages of development, indicating strong demand.
- Improved debt-to-equity ratio from 1.83 times to 1.49 times due to the successful issuance of preferred shares.
- Expansion of recurring revenue projects, including three new hotel openings, is expected to drive future growth.
Negative Points
- Gross margins experienced a dip quarter-on-quarter, attributed to timing and inflationary pressures.
- The company is sensitive to rising interest rates, which have increased the cost of capital.
- CLI's business model relies heavily on accruals, which may not fully reflect cash flow realities.
- The company faces challenges in maintaining margins due to inflation and rising costs of materials.
- CLI's expansion into Luzon is still in the due diligence phase, indicating potential delays in project launches.
Q & A Highlights
Q: Can you provide more details on the new joint venture with NTT UD?
A: Jose Soberano, CEO, explained that the partnership with NTT UD is significant as CLI is their first partner in the Philippines and second in Southeast Asia. The project is in the design development stage, with plans to launch a two-tower premium residential offering in Cebu I.T. Park before the year ends.
Q: Are there plans for CLI to develop a property in Japan?
A: Jose Soberano, CEO, mentioned that while it would be a great opportunity, there are no immediate plans to develop in Japan. The focus remains on leveraging the greater returns available in the Philippines.
Q: Gross margins appear to have dipped quarter-on-quarter. Is this a timing issue?
A: Beauregard Grant Cheng, CFO, confirmed that the dip is primarily due to timing, influenced by project completion stages and collections. He noted that while inflationary pressures exist, CLI has managed to maintain margins by gradually increasing prices.
Q: What is the value of land sales booked in the first half of 2024, and are further lot sales expected?
A: Beauregard Grant Cheng, CFO, stated that the lot sale was PHP1.9 billion, considered a one-off. While there are discussions for more sales, the primary focus remains on developing land for housing.
Q: Is CLI considering capital-raising initiatives in Q4 2024 or Q1 2025?
A: Beauregard Grant Cheng, CFO, confirmed plans for a bond issuance, likely in early 2025, to refinance existing debt at lower rates and optimize capital expenditures.
Q: Can you provide updates on the Luzon acquisition?
A: Jose Soberano, CEO, shared that CLI is conducting due diligence on a vertical project in Metro Manila and a horizontal project in Cavite. The focus is on bringing CLI's successful VisMin approach to Metro Manila.
Q: After completing new hotels and leasing projects, does CLI have a target date for a REIT IPO?
A: Beauregard Grant Cheng, CFO, indicated that while there is no specific date, CLI plans to launch a REIT around 2026-2027, focusing on establishing a strong track record with quality tenants.
Q: Do you have any updated launch guidance for the rest of the year?
A: Jose Soberano, CEO, outlined plans to launch several projects, including residential offerings in Manresa township, Casa Mira South, and a new residential project in Davao Global Township, among others.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
