8990 books solid 74% profit growth to P1.02B

Mass-housing proponent 8990 Holdings Inc. booked a 74-percent increase in net income for the third quarter to P1.02 billion from P589 million a year ago on the back of a sustained 60-percent gross and a 45-percent net margin for the past three quarters. 8990 is traded in the PSE under the ticker name House.

In the company’s third-quarter briefing, 8890 Holdings President and CEO Januario Jesus Atencio said the 74-percent profit growth is a result of both the present bullish economic environment as well as the preparations they started early this year that enabled them to continuously capture a bigger portion of the affordable housing market.

“Externally, we believe that our consistent GNP growth, OFW remittances and the growth in the business process outsourcing (BPO)/call center/information technology (IT) sectors have meant bigger disposable incomes for the middle and lower levels of our social pyramid that ultimately provides the basis for increased home sales amid the 4 million backlog in affordable housing,” he said.

“Internally, we’ve anticipated this, so we worked hard to open up 9 new projects this year with three more scheduled to start before the year ends. At the same time, we increased our annual production capacity by 35 percent to 10,560 units, or an additional 2,500 units from 8,000 units from last year,” Atencio added.

A main driver to the impressive profit growth during the period was the growing acceptance of Deca Home’s innovative in-house financing program called CTS-Gold that continues to provide working-class Filipinos easy access to owning their first primary asset.

Customer demographics for 8990 indicate that 66 percent of buyers comprises the youth (23-39 year years old), college educated, gainfully employed, earning a monthly salary of at least P30,000, generally optimistic about their future and aspiring to move up from being renters into primary home asset owners.

Atencio reported that out of the 5,867 housing units that have already been delivered to homeowners this year, their projects in Cebu and Davao accounted for 54 percent or 3,161 units.

Luzon projects in Angeles and Cavite accounted for 35 percent with 2,064 units, while Iloilo contributed 642 units or 11 percent of total delivery.

He added 87 percent of revenue in the quarter was derived from housing subdivision projects, while 13 percent came from their medium-rise building (MRB) project in Mandaue City, Cebu.

For the third quarter, 8990’s migration of their CTS accounts to Pag-IBIG Fund amounted to P425 million, or P1.573 billion total for 2014 up to September.

Atencio further stated that, “the faster processing of take-outs of Pag-IBIG Fund has provided us greater liquidity resulting in lesser borrowings this quarter, and we continue to work closely with the Fund to further increase the momentum of take-outs which we hope will double by year-end.”

8990’s total CTS portfolio now stands at P12.9 billion, earning an average annual yield of 9.5 percent at 95-percent collection efficiency.

“With the first three quarters’ gross earnings of P6.16 billion, we are clearly on track to keep our commitment to end this year with P7.6 billion to P8 billion in gross income with at least 60-percent gross margin, and a net income of P3 billion to P3.2 billion with at least 40-percent net margin.