FINANCIAL REPORT 1H19 · by BCI Asia 2016 Outstanding Developer in Low Rise mass Housing by...

FINANCIAL REPORT 1H19

2

Philippines’ leading mass housing developer

Quality Homes, Quality Living

• Leading mass housing1 developer in the Philippines

• Targeting the most under-served housing segment—

Mass housing comprises ~ 80% of Philippines’

substantial housing backlog3

• Unique business model tailored to serve this

needs-based segment

− Faster construction: In-house pre-cast construction

system allows 8990 to construct town houses and

single attached units in 8–10 days

− Innovative financing scheme: In-house CTS

financing product allows buyers to purchase units with

a relatively small upfront payment (3%–5% vs. typical

10%–20%)

− Robust credit management: Rigorous credit

screening and collection processes in place to support

its business model

8990 Holdings

Notes:

1 Mass housing defined to include socialized housing, economic housing and low cost housing (up to PHP 3m price range) throughout the presentation

2 Based on 2018 HDMF aw ard

3 Based on housing backlog as of 2011

Annual revenue in PHPm

Unique opportunity to access the most under-served housing segment in the Philippines

Horizontal subdivisions Medium-rise buildings High-rise buildings

2,349

3,831

5,267

7,657

9,280 9,271 10,182

11,745

0

2,500

5,000

7,500

10,000

12,500

2011 2012 2013 2014 2015 2016 2017 2018

3

2,349

3,831

5,267

7,657

9,280 9,271

10,182

11,745

0

2,500

5,000

7,500

10,000

12,500

2011 2012 2013 2014 2015 2016 2017 2018

Annual

reve

nue (

PH

Pm

)

Proven track record—16 years of growth

Growing units sold with a total of 64,093 units sold to date

2015 Prestigious Seal

Awardee for Best Developer in

Low-Cost Housing

by Gawad Sulo Foundation

2015 Best Mid-Cap Firm in the

Philippines

by Finance Asia

2015 & 2016 Top 10 Developer

in the Philippines

by BCI Asia

2016 Outstanding Developer in

Low Rise mass Housing

by FIABCI-Philippines

2017 Best National Low Cost

Housing Developer

by Q Asia's Seal of Product and

Quality Service

Multiple corporate awardsEstablished track record in the affordable housing segment

Current mkt cap of PHP83.8bn1

Re-IPO

Source: Company information

Note:

1 As of 23 May 2019

2015 Prestigious Seal Awardee for

Best Developer in Low-Cost Housing

by Gawad Sulo Foundation

2015 Best Mid-Cap Firm in the

Philippines

by Finance Asia

2015 & 2016 Top 10 Developer in

the Philippines

by BCI Asia

2016 Outstanding Developer in

Low Rise mass Housing

by FIABCI-Philippines

2017 Best National Low Cost

Housing Developer

by Q Asia’s Seal of Product and

Quality Service

2017-2018 Top Housing

Developer - Nationwide

by PAG-IBIG

Mass housing—the most underserved market

5

Mass housing remains the most under-served segment …

3.9

6.5

6.2 3.6

0

5

10

15

Housing backlogas of Dec 2011

Est housingdemand (2012 to

2030)

Est housingsupply (2012 to

2030)

Backlog by 2030

No.

of units

(m

)

Mass housing segment has historically been most under-served

Source: The Housing Industry Roadmap report 2012–2030, SHDA and CRC

1.14

2.50

0.70

0.07 0.02

(0.48) (0.54)

(0.24)(0.32) (0.24)

(1)

0

1

2

3

SocialisedHousing

EconomicHousing

Low Cost Mid End High End

No.

of units

(m

)

Demand Supply

(0.66) (1.96) (0.46) 0.25 0.22

Total

surplus/ (deficit) (m)

Housing demand and supply profile, 2001–2011

Mass housing


Housing backlog is expected to reach 6.5m housing units by 2030F

Mass housing to comprise >75% of total housing demand by 2030F

6.2m

housing units

Demand-supply gap in the mass housing segment continues to persist, driven by growing demand and limited supply

Can’t Afford23.0%

Socialised Housing

25.2%

Economic Housing

41.1%

Low Cost9.6%

Mid End0.9%

High End0.2%

6

1,5681,712

2,800

655

59 110

1,000

2,000

3,000

Up to PHP

78k

PHP 78k to

130k

PHP 130k to

405k

PHP 405k to

1.1m

PHP 1.1m

to 2.2m

Above PHP

2.2m

Expecte

d h

ousehold

in

cre

ase

from

2010 t

o 2

030 (

'000)

Majority of Philippine households belong to target income groups for mass housing …

Housing segments and required income level estimations1

Price range

(PHP)

Est. minimum annual

income requirement

(PHP)

Socialized Housing Up to 450,0002 Up to 78k

Economic Housing A

Economic Housing B

450,0012–750,000

750,000 – 1,750,000

78k -130k

130k – 405k

Low Cost 1,750,001–3,000,000 405k – 1.1m

Mid End 3,000,001–6,000,000 1.1m – 2.2m

High End 6,000,001 and above Above 2.2m


Notes:

1 Refer to Appendix A for key assumptions used in the SHDA report for deriving the annual income

requirements2 Subsequent to the SHDA report, the price ceiling for socialized housing was revised to PHP450k by HUDCC

(Housing & Urban Development Coordinating Council)

Target income groups for mass housing comprise ~ 76% of

Philippines by no. of households in 2011…

Defined as mass housing

… and is expected to experience the largest increase in no. of

households by 2030



… and are expected to increase the most in terms of no. of households over the medium term

Income groups which drive demand for mass housing comprise more than 75% of Philippines’ total population …

23.0%

25.2%

41.1%

9.6%

0.9% 0.2%

Up to PHP 78k

PHP 78k to 130k

PHP 130k to 405k

PHP 405k to 1.1m

PHP 1.1m to 2.2m

Above PHP 2.2m

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Affordable housing shortage across all regions in the Philippines

Regional analysis of housing surplus/(deficit) by segments (2001–2011

• Shortage of affordable housing remains prevalent throughout

the Philippines

• Metro Manila (“NCR”) registered as the region with the highest need for

affordable housing at 353,968 units1

– Mid and high-end housing segments, on the other hand, had a surplus

of 174,687 units within Metro Manila

– This indicates the segments which developers within Metro Manila

tend to focus on

• Other key regions with significant shortage of affordable housing include

– Western Vissayas

– Ilocos Region

– Bicol Region

– Central Luzon

Regions served by existing branches of 8990

Note:

1 Affordable housing data for NCR does not include socialized housing as the SHDA report notes that this data point is l ikely an overestimate driven by HLURB's records based on the minimum 20% compliance threshold for socialized housing applicable to Manila-based developers

Source: The Housing Industry Roadmap report 2012-2030, SHDA and CRC

8

163 236

300 372

446

527

640

777

858

958

1,044

1,146

1,250

1,359

1,800

2.23.3

4.96.1

7.3

8.9

11.0

13.2

15.8

18

20.5

22.9

24.5

27.1

38.9

2005 2007 2009 2011 2013 2015 2017 2022E

No. of fulltime employees ('000) BPO revenue (US$bn)

10.7

12.8

14.4

16.417.3

18.8

20.1

21.4

23.0

24.625.6

26.9

28.128.9

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

OF

W R

em

itta

nce

(U

S$b

n)

Continued growth in OFW remittances & IT-BPO sector contributes

to overall resilience of the Philippine economy

Resilient and growing OFW remittances

Global Financial Crisis period

Source: Bangko Sentral ng Pilipinas

Continued growth in IT-BPO sector—revenues are expected to grow

to US$38.9bn and have over 1.8 million full-time employees by 2022

Source: Philippines Board of Investments, Business Processing Association of the Philippines

8990 Business Model

10

Customer-focused product and pricing

Full suite of mass housing products at affordable price points and innovative new products

• Typical floor area: 35 sqm to 60 sqm

• Typical lot area: 35 sqm to 120 sqm

• Location: Outskirts of major metropolitan areas nationwide (excludes Metro Manila)

• Unit price range: PHP 450k to PHP 1.70m

• Typical floor area: 25 sqm to 42 sqm

• Location: Central areas of highly urban locations

(i.e., Metro Manila, Metro Cebu, Davao) within

walking distance of major public transportation routes

• 4 to 5-storey low-rise walk-up or 8 to 16-storey

with lifts

• Unit price range: PHP 800k to PHP 2.0m

• Typical floor area: Approx. 13.06 sqm

• Location: Highest density urban areas of Metro

Manila

• Walking distance to place of work

• Target unit price range: c. PHP 1.7m

Single-storey Townhouse

Medium-rise building

Urban Deca Towers

Horizontal residential subdivisions –DECA HOMES

Medium-rise residential buildings – URBAN DECA HOMES

Micro living units – URBAN DECA TOWERS

11

Deep understanding of our target customer base

We take a holistic view of our target customers’ needs and capabilities in designing our products and services

Young families and professionals Gainfully employed but with

limited savings

Rigid demand coming from primary

home purchase

~80% within 25–45 years oldCustomer base largely comprised of salaried

employees with monthly gross income >P26kBreakdown of investment vs primary home

Condominium buyers


Subdivision home buyers

Monthly income

Source of income

48% 51%

38% 31%

14%18%

Subdivision Condominium

25-35 yrs 36-45 yrs Above 45 yrs

76% 85%

24% 15%


Salaried Self-employed

89%73%

11%27%


Above PHP 26k Below PHP 26k

Primary home

94%

Investment

6%

Primary home

77%

Investment

23%

12

Amenities

8990’s aim is to create value for its customers by building homes with communal amenities/features …

Selected features of 8990’s developed subdivisions

… which allows them to enjoy family life and take pride in their home ownership

Clubhouse Church

Gated entrance with security Swimming pool Wakeboard park

13

Pre-cast construction system for rapid turnover

Casting: Day 1 Assembly: Day 2Roofing and

Retouching: Day 3–8

Finishing & Detailing:

Day 5–10

Quality control

• Production of pre-cast in controlled casting environment allows greater quality control

• Lower material wastage compared to traditional construction methods

Time and cost savings

• The in-house concrete mix formulated by 8990 has a faster curing time which allows for faster setting of pre-cast moulds

• Significant savings on labor costs

• Ability to construct town houses and single attached units in 8–10 days and additional 5 days for detached houses with loft units

Durability

• The Company’s pre-cast moulds, once set, are capable of withstanding approx. 4x more pressure per square inch than traditional hollow block structures

Scalability

• Ability to expand capacity by increasing the number of pre-fabrication molds

Pre-cast construction process—two-story townhouse


14

Megawide partnership

1H19 Financial Performance

Click to edit Master title style

• Click to edit Master text styles• Second level

• Third level

• Fourth level

• Fifth level

3Q18 PRESIDE N T’ S REPORT 16

6,006

7,010

Gross Sales

1H18 H19

17%

8990 Delivers Solid First Half Results

2,390

2,819

Income After Tax

1H18 1H19

18%

52.1%

57.8%

Gross Margin

1H18 1H19

39.8% 40.2%

1H18 1H19

Net Margin

Net Margin Target: 37.5%

17

Current Landbank Offers Php154 billion in Potential Sales

143.8

426.1

142.1

In Hectares

107 bn

39 bn

8 bn

In Value (In Pesos)

Mindanao

Visayas

Luzon

Php154 billion

712 Hectares

In million pesos 1H19 1H18Growth

Rate

Gross Sales P 7,010 P 6,006 17%

Direct Costs 2,955 2,879 3%

Gross Profit 4,055 3,127 30%

Operating Expense 1,049 724 45%

Finance Costs 652 606 8%

Other Income 578 712 (19%)

Income Before Tax 2,932 2,509 17%

Income After Tax 2,819 2,391 18%

Gross Margin 58% 52%

Net Margin 40% 40%

Strong 1H19 performance gave PhP 7 Billionrevenue, a 17% increase from 1H18. Luzoncontributed 67%, Visayas achieved 23% andMindanao delivered 10%.

Gross Profit grew by 30% due to well managedand controlled direct costs such as materials andlabor.

8990 registered PhP 2.8 Billion Income after tax,an 18% increase from same period last year.

8990 Net Income Increased by 18% in 1H19

In units / Million pesos 1H19 1H18 Growth

Rate

Sales Reservations 5,785 4,535 28%

Housing Production 4,883 4,703 4%

Housing Delivered 4,934 4,159 19%

Housing Revenues P6,804 P6,000 13%

CTS Income 546 682 (20%)

Total Revenues from Housing Operations

P7,350 P6,682 10%

PAR 94% 94%

8990 Core Revenues At Php7.35 Billion in 1H19

Housing revenues went up 13% year onyear and housing deliveries rise by 19%due to increased sales for 1H19.

Our Performing Accounts Ratio (PAR)indicating collection efficiency remainsstable at 94%.

Balance Sheet Highlights(in PhP M)

1H19 1H18Growth

Rate

Current Assets P 43,676 P 33,511 30%

Noncurrent Assets 21,426 22,596 (5%)

Total Assets 65,102 56,107 16%

Current Liabilities 14,346 10,995 30%

Noncurrent Liabilities 19,827 17,550 13%

Total Liabilities 34,173 28,545 20%

Equity 30,929 27,562 12%

14% Increase In Asset Strengthens 8990 Balance Sheet

8990’s assets are up 16%, mainly frommedium and high rise building work-in-progress inventories. Increased current assetsand decreased non current assets are due toreclassification of land held for futuredevelopment to inventory based on the newAccounting standard for 2018.

Key Performance

Indicators

Covenant

Ratios1H19 1H18

Current Ratio 1.0 3.04 3.05

Book Value per Share - 5.55 4.95

Net Debt to Equity Ratio 1.5 0.91 0.86

Asset to Equity Ratio - 2.10 2.04

Asset to Debt Ratio - 1.91 1.97

Debt Service Ratio 1.25 4.53 2.85

EPS - 0.58 0.43

8990 Meets All Covenant Ratios in 1H19

8990 continues to meet its bond covenantratios, in relation to its Corporate Bondissuance in July 2015, such as: (a) minimumCurrent Ratio of 1.0, (b) maximum Debt-to-Equity Ratio of 1.5, and (c) minimum DebtService Ratio of 1.25.

8990 AR Portfolio Decreased in 1H19

For 1H19, 8990’s CTS Portfolio yieldedPhP 546 million in recurring incomewhile the portfolio size has decreasedby 9% from last year.

Total value of 8990’s CTS Portfoliostands at PhP 19.6 billion. Thedecreased portfolio level is a result ofsuccessful liquidation activities insecond half of 2018.

1H19 1H18Growth

Rate

Units 17,779 20,859 (15%)

Value (in millions) P 19,610 P 21,589 (9%)

Interest Income

from CTS P 546 P 682 (20%)

Performing Accounts

Ratio94% 94%

Unrealized Sales of 851 Units in 1H19

BranchTotalUnits

ValueMillions

Pampanga 20 25

Bulacan 0 0

NCR 537 859

South Luzon 9 15

Cebu 167 269

Iloilo/Bacolod 16 18

Davao/Gensan 102 133

Total 851 1,319

Unrealized sales for 1H19 is at 851 units worthPhp1.3 Billion.

These unrealized sales were combination of soldunits with houses/buildings for construction orsold units with constructed houses/buildingsbut with buyers’ and or technical documentarycompliance.

These unrealized sales will be recognized in 3rd

and 4th quarters of the year.

FINANCIAL REPORT 1H19 · by BCI Asia 2016 Outstanding Developer in Low Rise mass Housing by...

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