The Market Monitor Minding the Nation's Business
Lito Gagni / Special to The Market Monitor
Shares of mass-housing developer 8990 Holdings soared more than 30 percent last week mirroring the record close of the Philippine Stock Exchange index (PSEI), which hit 7,689.91 points, as foreign investors entered the Philippines market in a big way.
The surge in 8990 Holdings, seen to record a banner year in profits of more than 50 percent from its 2013 net income, reflects the new-found confidence in the Philippine equities market buoyed by better economic fundamentals, including the surprising fourth-quarter rebound in gross domestic product (GDP).
Two weeks ago, the property firm was trading within the P7 price range but the entry of foreign investors resulted in ever-rising share prices, flirting at more than P9 per share before closing two centavos shy.
8990 Holdings has had a remarkable entry into the Philippines equities market with an enviable niche in the low-cost housing segment where those who buy units can do so at just a down payment of two percent of the contract price.
Last Thursday, 8990 Holdings traded P408.04 million shares making it one of the most active shares. A day later, total transactions hit P198.4 million, reaching a trading high of P9.11 per share before retreating to P8.98.
In an investors’ briefing, 8990 President Januario Jesus Atencio said the company sees revenues to rise 22 percent to 27 percent to P9.6-10 billion this year after jumping by 48 percent to P7.9 billion in 2014 from P5.36 billion in the previous year.
Atencio said 8990 expects to launch nine projects comprising 96.9 hectares and 10,855 housing units. Of these, 49 percent have already been sold, contributing 53 percent of total sales in 2014.
Housing revenues, plus its innovative contract to sell (CTS) proprietary financing program led to its income rising 46 percent to P8.6 billion in 2014 from P5.89 billion in 2013. CTS income went up 71 percent to P908 million from P532 million. Take-outs of housing remain to be 88 percent of the core business.
“We note a higher sales surplus of more than 800 reservations in 2014, with zero ready-for-occupancy units similar to last year,” Atencio said. “Revenue from CTS is contributing more than 10 percent to the operating performance of 8990. In 2014, CTS revenue is now 12 percent of core business performance, from 10 percent in 2013.”
Atencio said growth is coming on the back of continuous economic growth, increase in OFW remittances, the growing BPO/CC/IT sector and the 4 million housing backlog.
“These were the main external drivers for our growth. These factors are still in play,” he said.
Among the vertical projects this year will include Urban Deca Homes Muntinlupa, which will be launched in April. It will be a medium- rise building development over a 1.8-hectare lot with 3,240 units. To be launched in June is the Urban Deca Homes Quirino, another MRB on a 6,000 square-meter lot in Davao City.
To be launched in December is the high-rise Urban Tower Yakal in Makati, which will have 1,600 units on a 1,000-square-meter lot.
For its horizontal projects, 8990 launched developments in January: Deca Homes on a four-hectare property in Cavite with 585 units, Deca Homes Catalunan Grande with 720 units over 11.7 hectares in Davao, and Deca Homes San Lorenzo, which is a 25-hectare project with 3,125 units, and in Davao.
8990 will launch in October the 31.2-hectare Deca Homes San Mateo in Rizal with 3,600 units, and in December Deca Homes Baywalk Talisay 3 in Cebu. It will have 600 units developed on a five-hectare property.
Last year, the firm’s vertical projects consisted of Urban Deca Tower Edsa in Mandaluyong and Urban Deca Homes Tisa in Cebu. Its horizontal projects were launched in Baywalk Talisay, Cebu; Guadalupe, Cebu; Marseilles, Cavite; two projects in Angeles City, Pampanga; two in Iloilo; and three projects in Davao City.
Atencio said 8990 is planning to boost its engineering capacity by almost 50 percent to 15,000 units a year from the current 10,500 units.