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Analysts’ Briefing 1H14
2
Outline
Who we are
1H14 results
Guidance
3
Who we are
Largest mass housing developer
in the Philippines
4
Baguio
Angeles
Cavite
IloiloCebu
Davao
Metro Manila
●
●●
●●
●
●● Bulacan
By the numbers
28,000 units sold and delivered since 2004
23 years experience in mass housing
₱22bn in housing loan takeouts
30 projects completed
5
Founders
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Luis N. Yu, Jr.
Chairman Emeritus & FounderMariano D. Martinez, Jr.
Chairman
Januario Jesus G. B. Atencio III
President and CEO
Successful follow-on offer
Conducted a successful follow-on offering last May
at P6.50 …
… raised P5.6 billion in new capital
7
Cornerstone investors
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TPG CAPITAL
USA
KHAZANA NASIONALMALAYSIA
$50 Billion Private Equity Fund
$30 Billion Sovereign Wealth Fund
”
“
Our mission
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To create a more inclusive Philippine
society by using mass housing as the
vehicle to provide greater value for our
buyers, sellers, employees, suppliers and
shareholders, and in the process, transform
people’s lives for the better
10
Horizontal Residential Subdivisions
Deca Homes
• Typical floor area: 35 sqm to 60 sqm
• Typical lot area: 35 sqm to 120 sqm
• Located at the outskirts of major metropolitan areas
• Unit price range: Php 450k to Php1.25m
Brands
11
Medium-Rise Residential Buildings
Urban Deca Homes
• Typical floor area: 25 sqm
• Location: Central areas of highly urban locations
• 4 to 5-storey low-rise walk-up or 8 to 12-storey with lifts
• Unit price range: Php 800k to Php 1.25m
Brands
12
Micro Living Units
Urban Deca Towers
• Typical floor area: Approx. 13 sqm
• Location: Highest density urban areas of Metro Manila
• Makati: 30-storey, 1,600 units, EDSA: 40-storey, 1,000 units
• Target unit price range: Php 875k (~US$20k)1
Brands
13
High Value Amenities
Current landbank
335 hectares…
… 89,850 units in
potential sales…
… equivalent to
₱87bn in gross sales.
14
Location Hectares
Iloilo* 150
Davao* 75
Rizal 31
Metro Manila* 41
Cebu 17
Bulacan* 13
Cavite 8
Total 335
*with new acquisitions
Recent landbank acquisitions
15
250 + 85 = 335 has. of landbank
Location Type Area (Has.) Target Units
Vitas, Tondo, Manila Vertical 8 12,000
Vitarich, Marilao Bulacan Horizontal 13 6,240
Davao City Horizontal 29 1,905
Pavia, Iloilo Horizontal 30 1,920
Mahogany, Imus, Cavite Vertical 1 650
Hampton, Imus, Cavite Vertical 4 2,730
Total 85 25,445
Project launches FY14
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Project TypeTarget/Actual Launch Date
LocationLandbank
(ha.)Units
DH Marseilles Horizontal April Cavite 4.0 426
Urban DH Tisa MRB July Cebu 8.5 2,800
Urban Tower Shaw High Rise August NCR 0.1 1,000
DH Pavia 3 Horizontal August Iloilo 40 2,724
DH Guadalupe Horizontal October Cebu 3.2 393
DHRR Prime Horizontal December Davao 3.2 217
DHRR Com. Phase 11 Horizontal December Davao 1.7 109
Total 60.7 7,669
17
Project launches FY15
Project TypeTarget Launch
DateLocation
Landbank(ha.)
Units
DH Tanza Horizontal January Cavite 4 585
DH Catalunan Grande Horizontal January Davao 11.7 720
DH Lorenzo Horizontal January Davao 25 3,125
Urban DH Muntinlupa MRB April NCR 1.8 3,240
Urban DH Quirino MRB June Davao 0.6 540
DH San Mateo Horizontal October Rizal 31.2 3,600
DH Baywalk Talisay 3 Horizontal December Cebu 5 600
Urban Tower Yakal High Rise December NCR 0.1 1,600
Total 79.4 14,010
Our core principle
18
”
“A truly effective mass housing
program must be grounded on
understanding how a typical Filipino
middle-class family lives, and how they
earn and spend their money today
Mass housing backlog
19
Open market surplus of 0.47m units
Aggregate mass housing backlog of 3.1m units
Year Socialized Economic Low Cost Mid High End
2001 (49,860) (92,317) (7,727) 19,082 15,513
2002 (47,675) (85,977) (7,148) 20,469 16,578
2003 (42,941) (85,755) (5,035) 23,916 19,189
2004 (40,401) (43,403) (7,715) 20,983 17,016
2005 (37,042) (73,828) (3,067) 27,836 22,182
2006 (47,394) (122,436) (7,225) 32,545 26,133
2007 (81,312) (331,425) (96,772) 18,790 20,317
2008 (156,797) (620,893) (201,667) 13,162 21,776
2009 (119,077) (413,970) (124,053) 14,562 18,483
2010 50,104 64,237 21,508 29,866 22,448
2011 (90,886) (156,310) (23,259) 29,192 24,376
Total (663,281) (1,962,077) (462,160) 250,403 224,011
Deeply Aspirational
Seek Value for Money
Optimistic of their future
Our market
20
Young, college educated
Stable jobs, other income
₱25,000 monthly income
Renters, not asset owners
Little or no savings
Our growth strategy
Expand New Projects in
Existing Branches
Expand New Projects in
New Branches
Increase Landbank by another 250
Hectares
Continuous Improvement
in Management of Key Areas
Explore Securitization
and other Housing Finance Modes
Strong platform for
future growth
21
Business
Model
Fast Pre-Cast
Construction
Proactive Credit and Collection Platform
Affordable amortization
Our business model
22
Our business model
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8990’s in-house Pre Cast technology constructs housing units in an average of 8-10 days
Tremendous economies of scale that results in lower materials
cost, higher quality of panels and greater site efficiency
Fast Pre-Cast
Construction
Our business model
24
2% down payment8.5% interest rates,
25-years termMigrates to HDMF within 4 years
₱12B CTS Receivables Portfolio of which ₱4B has been delivered to
HDMF, ₱2B has been cleared, ₱1B has been taken-out
Accessible In-House Financing
25
Time lapse Construction
Receivables to cash
In ₱M Converted to Cash Receivables
Receivables by end 2013 10,011
Less: Sale to CTBC 1,000
HDMF Take-outs 4,000
Securitization 800
Full Payments 165
Projected 2013 receivables converted to cash in 2014
5,965 5,965
Net receivables 4,046
26
Funding capacity
27
In ₱M Projected Amounts
Receivables converted to cash 5,965
Credit lines 5,000
10,965
Less: Capital expenditures + Land Purchase 5,140
Net interest 372
Operating expenses 1,400
Total Expenditures 6,912
Net Cash Estimate 4,053
Business model
28
Comprehensive platform of organization, software, systems,
policies and procedures.
Collection efficiency remainsone of the HIGHEST in the
industry
Proactive Credit and Collection Platform
Collection efficiency
29
94.6% 92.6% 93.2% 93.8% 96.8%
2009 2010 2011 2012 2013
Average of 94% in the past 5 years
2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 Target
189883
2,283 2,2673,040 2,560 2,241
4,181
5,738
7,900
• Income grew from P189.0m in 2004 to ₱5.7bn in 2013.
• 2014, total revenues are expected to reach ₱8.0 bn.
• We have grown by 30 times by the end of 2013.
Establishing a Solid Track Record
Growth trajectory
30
1H14 results
Financial highlights
Sales in Number of Units Unit Sales Breakdown in 2014
32
2,421
4,187
5,738
3,5373,812
2011 2012 2013 1H13 1H14
MRB11%
Low Cost Housing89%
2.34
3.83
5.35
3.1
4.1
2011 2012 2013 1H13 1H14
PHP billion
Total Revenue Revenue Breakdown
33
90% 85%
7%
11%
0.6% 2%
1.3% 1%
1H13 1H14
Subdivision MRB Timeshare Azalea
Financial highlights
Gross Profit
1.01
2.38
3.38
1.95
2.5
2011 2012 2013 1H13 1H14
PHP billion
Net Income Before Tax
34
0.44
1.75
2.44
1.55
1.96
2011 2012 2013 1st Sem 1st Sem
PHP billion
2013 2014
Financial highlights
Gross and Net Income Margins
60%63% 64%
61%
39%44%
40%44%
2011 2012 2013 1H14
GROSS NET
35
Financial highlights
Equity Total Asset
1.26
3.94
6.595.46
13.68
2011 2012 2013 1st Sem 1st Sem
PHP billion
2013 2014
5.83
8.84
17.61
12
22.9
2011 2012 2013 1st Sem 1st Sem
PHP billion
2013 2014
36
Financial highlights
Debt to Equity
3.60
1.24
1.67
1.20
0.68
2011 2012 2013 1H13 1H14
Return On Equity
37
34.62%
43.17%
33.11%
27.69%
13.22%
2011 2012 2013 1H13 1H14
Financial highlights
Interest Coverage Ratio Current Ratio
0.3x
10.88x
7.83x
10.90x
12.68x
2011 2012 2013 1st Sem 1st Sem
2013 2014
1.09x
1.48x
0.60x
1.11x
1.43x
2011 2012 2013 1st Sem2013
1st Sem2014
38
Strong balance sheet
Total Outstanding Debt Average Funding Cost
Strong balance sheet
39
4.6 4.9
11
6.5
9.3
2011 2012 2013 1H13 1H14
PHP billion
7
6.2 6.2
4.67
0
1
2
3
4
5
6
7
8
2011 2012 2013 2014
40
Financial Highlights (Php M)
1H13 1H14 Growth Rate
Total Revenue 3,137 4,096 31%
Gross Income 1,950 2,513 29%
Income Before Tax 1,553 1,956 26%
Net Income After Tax 1,512 1,808 20%
Gross Income Margin 62% 61%
EBIT Margin 50% 48%
Strong 1H14 Performance
41
(Php M) 1H13 1H14 Growth Rate
Marketing and Selling 172 263 53%
Documentation 155 164 6%
Taxes and Licenses 33 63 61%
Salaries and Employee Benefits 33 53 20%
Management and Professional Fees 5 33 544%
Security, Messengerial and Janitorial 14 26 88%
Transportation and travel 10 17 71%
Rent 5 12 133%
Communication, Light and water 15 26 72%
Major Operating Expenses
42
Financial Highlights (Php M)
1H13 1H14 Growth Rate
Total Assets 12,004 22,942 91%
Total Liabilities 6,544 9,261 42%
Total Equity 5,460 13,680 151%
Total Retained Earnings 1,603 3,750 134%
Interest Coverage Ratio 10.9 12.7
Current Ratio 1.1 1.4
Return on Equity 22.9 13.2
Strong 1H14 Performance
Balance sheet
43
In ₱M 1H13 1H14 Growth Rate
Total Assets 12,004 22,942 91%
Current Assets 3,464 4,946 43%
Trade Receivables 10,036 12,294 23%
Total Liabilities 6,544 9,261 42%
Current Liabilities 3,118 3,465 11%
Loan Payable 4,905 6,798 39%
Stockholder’s Equity 6,596 13,680 107%
Updates – 1H14
44
In ₱M 1Q14 2Q14 1H14 1H13 Growth Rate
Total Revenue 1,915 2,181 4,096 3,137 31%
Gross Profit 1,189 1,324 2,513 1,950 29%
Gross Margin (%) 62 61 61 62
Net Income 936 872 1,808 1,512 20%
Net Margin (%) 49 40 44 48
Updates – 1H14
45
1Q14 2Q14
Units Rev/Unit Units Rev/Unit
Deca Homes 1,776 944,429 1,610 1,161,491
Urban Deca Homes 196 1,059,981 230 1,095,786
Total 1,972 1,840
Guidance
Guidance – 2014
Revenue: ₱7.6bn - ₱8.0bn
Net Income: ₱3.6bn - ₱4.0bn
2014 vs 2013 income growth: 60% - 80%
47
• Provides recurring income base; comparable to
rental yield for 25 years
• About P800 million interest income for
2014, at 8% to 11.5% interest rate
• 96% collection efficiency > 85% occupancy
rate for mall space
48
Managing Receivables
• CTS pool provides commercial banks access to
mass markets
• $HOUSE is preferred intermediary to grow
client base of commercial banks
• Pag-ibig is mandated to loan P50.0bn
49
Managing Receivables
Manageable Receivables
50
(Pm) 2014
Target Sales 8,300
Cost of Sales + OPEX 4,150
Funding / Week 80
Cash from Receivables 30
Take - outs 50
• Cost of sales at 40% vs. 60% for
others; efficiency
• P80m cash needed to fund sales
cost+OPEX
• P30m from existing receivables
• P50m take-outs from Pag-ibig or
comm’l banks = 55 units or 11
accounts per week per branch.
