The booming property sector
The property sector is expected to continue its robust performance in the next four years.
Note that the revenues of the property industry grew at a compounded annual growth rate of 17 percent from 2010 to 2015. The major players to have captured the lion’s share were: Ayala Land, Inc. (ALI), SM Prime Holdings, Inc. (SMPH), Megaworld Corp. (MEG) and Robinsons Land Corporation (RLC).
A look into the firms
Ayala Land, a subsidiary of listed Ayala Corp., is the largest property developer in the country today. Its core businesses include landbank management, residential development, shopping centers, corporate businesses and hotels.
Ayala Land’s “net profit rose 19 percent year on year to P12.8 billion in the first nine months of 2015 from P10.79 billion, anchored on a 10 percent jump in consolidated revenues to P75 billion.” The firm is targeting a 20-percent annual growth rate to hit a net income of P40 billion by 2020.
Per Wall Street Journal report, key market data are: P/E ratio (Trailing Twelve Months or TTM), 31.45x; EPS (TTM), P1.24; market cap, P573.79 billion; shares outstanding, 14.71 billion; public float, 7.66 billion; latest dividend, P0.238; ex-dividend date, March 8, 2018.
While it is present in the residential and hotel sectors, SM Prime is known for being the largest shopping mall and retail operator in the Philippines. It has 57 malls in the Philippines and six in China, for a total retail space of 8.4 million square meters.
It reported a core net income growth of 12 percent in the first quarter of 2016 equivalent to P5.8 billion, while consolidated revenues rose 10 percent to P18.2 billion.
Per Wall Street Journal, key market data are: P/E ratio (TTM), 37.11x (7/1/2016); EPS (TTM), P0.75; market cap, P798.51 billion; shares outstanding, 28.88 billion; public float, 7.19 billion; ield, 0.83 percent; latest dividend, P0.23; ex-dividend date, April 28, 2016.
Megaworld also develops large-scale, mix-use, planned communities. Through the years, the company has built and delivered up to 240 buildings that include residential condominiums, office towers and hotel buildings with a total footprint of more than 6 million sq m.
Megaworld expects to double its rental income within the next 5 years. It has a net cash position of P26.8 billion and debt of only P20 billion.
Per Wall Street Journal, key market data are: P/E ratio (TTM), 14.11x (7/1/2016); EPS (TTM), P0.33; market cap, P148.30 billion; shares outstanding, 32.24 billion; public float, 10.86 billion; yield, 1.10 percent; latest dividend, P0.0505 (7/22/2016); ex-dividend date, June 24, 2016.
Robinsons Land is the real estate investment arm of listed JG Summit Holdings, Inc. of the Gokongwei Group. Its local operations are divided into four business divisions: Commercial centers, residential, office buildings and hotels.
Outside the Philippines, the firm was looking at developing a residential project with a commercial component in Chengu, China.
Per Wall Street Journal, key market data are: P/E ratio (TTM), 19.80x (7/1/2016); EPS (TTM), P1.49; market cap, P120.77 billion; shares outstanding, 4.09 billion; public float, 1.57 billion; yield, 1.22 percent (7/1/2016); latest dividend, P0.36 (4/22/2016); ex-dividend date, March 22, 2016.
Bottom line spin
Real estate service provider Colliers reported it was the office sector that boosted the property market’s performance in Metro Manila in the first quarter of 2016. The BPO sector led the demand for office space.
Residential condo demand was also seen growing steadily. Retail demand, however, may face challenges in the near term as more shopping center spaces become available.
Nevertheless, “due to strong OFW remittances, rising household income, low inflationary environment, increasing employment opportunities and stable political conditions,” the medium term outlook of all of the different segments or classes of the property sector would be positive.
This means all of the reviewed property players—Vista Land, Century Properties, Double Dragon and DMCI included—would continue to do well in the medium term.
Those that will do well are those that have the capability to gamble in the affordable housing market.
(You may reach the Market Rider at [email protected] , [email protected] or at www.kapitaltek.com)
