The Market Monitor Minding the Nation's Business
Listed mass-housing developer 8990 Holdings Inc. continued to book double-digit growth in earnings on the back of strong sales and increased construction capacity in the first nine months of the year.
The company’s consolidated net income reached P3.16 billion from January to September this year or 11.8 percent higher compared to P2.83 billion in the same period last year. Gross revenues of 8990 grew by 13.1 percent to P7.06 billion from P6.24 billion from the same period. The company also reported growth in sales of 6.2 percent to P5.85 billion from P5.51 billion, and a 10 percent growth in housing production to 6,443 from 5,843 last year.
Notable in this year’s performance of 8990 is the increasing revenue share of its Luzon projects. Of the total number of units delivered, about 48 percent or 3,103 units were in Luzon particularly the National Capital Region, Cavite, and Pampanga. About 26 percent or 1,704 units were in the Visayas while 25 percent or 1,636 units were located in Mindanao.
Other bright spots for the third quarter were the company’s unrealized sales of 890 units valued at 900 million, as well as the completion of all 9 project launches programmed for the year in Muntinlupa, Cavite, Iloilo, Davao, and Cebu, adding 7,827 housing units to the remaining inventory.
8990 President and Chief Executive Officer Januario Jesus Atencio noted that, “our growth is sustained because majority of Deca Homes buyers are young, college-educated gainfully employed as office workers particularly the business-process outsourcing (BPO) sector and overseas Filipino workers earning gross family incomes of at least P35,000 a month, and so we see this demographic continue to expand and buy our houses as our GNP grows over the long term.” Atencio termed this demographic as the “sunrise market.”
Atencio added that internally generated funds were sourced primarily from the take-out from Pag-Ibig funds covering 2,601 units worth P2.4 billion in the first nine months of the year. Atencio also cited the 42 percent increased in its contract to sell (CTS) portfolio to P18.3 billion covering 20,874 units from P12.87 billion covering 14,721 units as a major source of funds. It sold P1 billion worth of CTS portfolio to Ayala-led BPI Family Savings Bank last October 30. Additional purchase of CTS with two other banks are underway, he further said.
For the third quarter, net earnings of 8990 inched up by two percent to P1.04 billion from P1.02 billion despite the 16 percent jump in gross revenues to P2.55 billion from P2.2 billion. Atencio explained that this was due to “the sales recognition policy for resold cancelled accounts which comprised 17 percent of total sales versus only 10 percent last month.” He added that, “Under our audit rules, sales recognition of cancelled accounts are based on current market value and not its original cost of production; thus, the stated production of these units would be significantly higher.”
The property CEO also reported that the company “continues to beef up its landbank with the acquisition of 25,4 hectares in Leganes, Iloilo, and 60.2 hectares in Cabug, Bacolod, bringing the company’s total land bank to 503 hectares with an equivalent inventory of 98,535 housing units.