Megaworld sees net profit breaching P10B mark

Property developer Megaworld Corp. expects to develop more than five million square meters of residential, office, property and retail space over the next 10 years, replicating its scale of production during the last 25 years.

On its silver anniversary this 2014, Megaworld expects to grow its net income and revenues by a double-digit level, said company executive director Kingson Sian.

If the company were to grow by at least 10 percent this year, this suggests that Megaworld may end the year with a net profit breaching the P10-billion mark. Net profit in 2013 amounted to P9.04 billion, which included P763 million in non-recurring income from the acquisition of a subsidiary with a landbank whose values have increased even prior to development.

Reservation sales this year are seen breaching P70 billion from last year’s P68 billion.

Since the company’s inception, Sian said the company had completed five million square meters of residential, office and retail space in various township projects. About the same amount of projects had been either launched or already under construction to date. “What we’ve done in the last 25 years, we’ll do in the next 10 years,” Sian told stockholders.

In line with this, Sian said the company was on track to build up rental assets that would generate an annual recurring income of at least P10 billion by 2017 or 2018. This year, rental income was seen reaching P7 billion compared to about P6 billion last year, he said.

“We pretty much add close to a billion (pesos) a year in rental income,” Sian said, noting this would come from the development of new assets as well as in the escalation of leasing rates in the existing portfolio.

Megaworld has likewise ruled out tapping the equity market to cover the recently announced P230-billion capital spending for the next five years.

“We have already mapped it out in terms of financial plan. Bulk of that P230 billion will go to residential, which is pre-sold so it’s self-funding. The remaining 35 percent will be funded by the rental revenue that we’re collecting and the P30 billion cash that we’re keeping in our balance sheet and potentially some debt. But definitely, (there’s) no equity fund-raising,” Sian said.

In a report to stockholders, Megaworld chair Andrew Tan said long-term value creation was at the core of his company’s business. “It is through this strategy that we have differentiated our real estate offerings from the competition and carved out a path toward the company’s longevity and sustainability,” he told stockholders.

Megaworld’s P230-billion capital spending budget for the next five years was meant to introduce new real estate projects, expand existing townships and grow its landbank across the country.