Dauntless is the word that may best describe how publicly listed Century Properties Group, Inc. (CPG) has managed to compete for markets and earnings in the growing but ever-increasingly competitive property sector largely dominated by big business conglomerates.
It is also the word that aptly defines the brand of leadership of Jose “Joey” E.B. Antonio, the man who started it all and made what CPG is among the best-performing companies in the real estate business today.
CPG gained listing status through a reverse takeover of East Asia Power Resources Corp. (EAPRC) in 2011.
Performance
Total revenues of the company amounted to P4.7 billion in 2011. By 2014, this grew to P12.76 billion for a compound annual growth rate (CAGR) of 39.5 percent. Gross margin in the same period stayed within 42 to 46 percent of total revenues.
CPG’s earnings before interest, taxes, depreciation and amortization (Ebitda) for 2011 amounted to P1.35 billion. This went up by 92.6 percent to P2.6 billion in 2012, P2.81 billion in 2013 and P3.25 billion in 2014 to post a CAGR of 55 percent.
Profit after tax was P0.87 billion or 18 percent of total revenues in 2011. This doubled to P1.85 billion at 19 percent of total revenues in 2012 and slightly dropped to P1.84 billion or 17 percent of total revenues in 2013 and increased to P2.16 billion or 17 percent of total revenues in 2014. This resulted in a CAGR of 35.6 percent in the three-year period.
Strategies
The company owes its growth and profitability to the strategies employed by management, mainly its diversification to reduce risk from a single asset class. Subsidiaries and affiliates were, therefore, established “by target markets” to allow each of these entities to take advantage of the “special investment and operational opportunities” afforded by each category of projects. In this connection, CPG anchored its activities within four market segments and development projects.
First, is the construction and sale of vertical development projects of “luxury, mid-market and affordable high rise condominiums, and for sale office developments.” Under this market and project category, CPG has completed six buildings, namely the Gramercy, Knightbridge, Rio, Santoni, St. Tropez and Centuria. These projects cover a total gross floor area (GFA) of 390,606 square meters (parking space included), 5,224 units valued at P23.52 billion, with 99 percent of the units sold as of December 2014.
For 2015, CPG has another six buildings to be completed with a total GFA of 224,168 sqm, composed of 2,997 units with total value of P15.78 billion. Again, 97 percent of total units have been sold as of December 2014. Another 16 buildings are in various stages of completion up to 2019. These consist of 7,685 units valued at P47.45 billion. These 16 projects have a pre-sold status of 72 to 96 percent as of December 2014.
Second is leasing of retail, office and medical facilities for recurring income. Among these are Century City Mall, PSB Lowrise Tower, Centuria Medical Makati, Asian Century Center, Acqua 6 (Condotel) and Forbes Media Tower. Century City Mall was completed in 2013. Recurring income is expected to increase following the improvement of mall foot traffic to 59 percent in the first quarter of 2015.
Third is to venture in leisure and tourism to take advantage of its marketing and sales experience in dealing with domestic and foreign tourists. In sight is the development of a 56-hectare land with 700 meters long of white beach front in San Vicente, Palawan, “located 10 minutes away from the domestic San Vicente Airport.” Another is the development project in Batulao, Batangas, and CPG’s first hotel project in partnership with world-renowned hotel brand Novotel.
Fourth is to undertake projects in horizontal economic housing subdivisions. The size and price of the projects will be determined by the described qualification of target clients as “college graduates with stable jobs in the ‘next wave cities,’ making at least P25,000 monthly and currently renting, and OFWs with families still living in the target locations, currently renting or, if asset owners, homes are in non-subdivision locations.”
Bottom line spin
Another significant strategy that contributed to CPG’s good bottom line was having more number of banks—from 3 to 17—to bolster its financial resources that effectively lowered its weighted financial costs. This was further enhanced by the prepayment of its development loans through increased contract-to-sell (CTS) financing.
CPG continues to have a healthy balance sheet. Net debt to equity (D/E) ratio of the company as of end-2014 was 0.7x on a net debt of P9.5 billion and stockholders’ equity of P13.3 billion. And out of its P40.8 billion in receivables, P29.5 billion are due within the next three years.
In summary, as the growth potential of Philippine real estate remains to be intact, CPG will dauntlessly compete in its four market segments to enhance stockholders’ value particularly higher return on invested capital and capital distribution to shareholders.
The writer is a licensed stockbroker of Eagle Equities, Inc.. You may reach the Market Rider at marketrider@inquirer.com.ph , densomera@msn.com or at www.kapitaltek.com