8990 Holdings vows to bolster income by double digits this year

MASS-HOUSING developer 8990 Holdings Inc. said it expects earnings to jump as high as 42 percent this year, even as it launches 11 new projects.

This developed as the company tries to adapt to the stringent permits and licensing environment of the new government.

8990 President and CEO Januario Jesus Gregorio Atencio III said the company’s net income is expected to reach P5.4 billion this year, or P1.59 billion higher than last year’s P3.81 billion.

The company’s income in 2016 was a mere 2-percent increase from the P3.72 billion it made in 2015. Gross sales rose by 1 percent to P9.41 billion, from P9.28 billion.

Atencio said gross revenue is seen growing this year between 7 percent and 43 percent, based on a guidance of at least P10 billion to P13.5 billion this year, from P9.41 billion last year.

Aside from the additional revenues arising from the new projects, Atencio said 8990 expects to realize revenues arising from the delay in the processing of the permits of various projects last year.

A total of 2,706 units in eight projects worth P2.4 billion in Iloilo, Cebu, Bacolod and Davao were not realized last year due to various delays in the processing of permits. “We wish to emphasize that these revenues are not lost, but merely delayed,” Atencio said.

“Given an environment of stricter licensing and permits, coupled with the possibility of interest rates increasing in the short term, the thrust for 2017 is generation of cash from increased take-out levels with government housing agencies, contract-to-sell (CTS) purchase of banks, securitization and issuance of preferred shares, which will be used to pare down debts.”

He said the company prepared to sacrifice some growth for cash generation in 2017, which would mean the stoppage of in-house CTS in most of the projects in favor of direct take-outs from the Pag-IBIG Fund, as well as the slowdown of purchase of raw land to expand the landbank.

In 2016 8990 purchased an additional 191 hectares of raw land, valued at P5 billion.

It also registered unrealized sales of 1,332 units worth P1.9 billion last year consisting of sold units with houses or buildings for construction in Tondo and Marilao, Bulacan.

The low-cost developer managed to cut operating expenses by 11 percent to P1.53 billion, from P1.72 billion, due to lower marketing and documentation costs as well as lower taxes and licenses paid. For the fourth quarter alone, the profit of 8990 increased by 12 percent to P674 million, from P673 million in the same quarter in 2015, but gross sales fell to P2.23 billion, from P2.28 billion.

The higher earnings were realized because of lower tax due on re-sold units, as well as the tax-free status of more projects under the Investment Priority Program being implemented by the Board of Investments.

8990’s board has approved another cash dividend of P0.25 per share next month, bringing the amount paid to shareholders to P1.28 per share since December 2014.

Atencio said the permits for the eight delayed projects are expected to be finished this year and would form part of the launches scheduled for this year.

8990 would launch 11 projects in Bulacan, Iloilo, Cebu, Bacolod, and Davao, adding 60,765 units to its current inventory. Of the total, about 3,994 units worth P3.7 billion would be delivered this year.

“We expect to launch three projects in the first quarter followed by five in the second, and closing the third with three more,” he said.

Another 7.894 units worth P9.8 billion from 11 ongoing projects in Pampanga, Bulacan, Cavite, Cebu, General Santos, Manila, Mandaluyong, and Muntinlupa would also be delivered this year.

8990 continued to beef up its land bank,  acquiring 191 hectares of raw land worth P5 billion last year. This brought the company’s land bank to 655.15 hectares that could accommodate 145,000 units with a gross selling value of P175 billion.