8990 Holdings nets P4.05B

LEADING mass housing developer 8990 Holdings grew its net profit last year by 23 percent to P4.05 billion on the back of strong sales and increased construction capacity.

For this year, the mass housing developer sees net income rising by 20 percent to P4.8 billion, driven by a projected 24 percent increase in revenues to P12 billion.

8990 Holdings plans to launch 14 new projects that will add 75,608 units worth P7.3 billion to its inventory this year.

Last year’s double-digit growth was attributed by the company to its strong presence, brand
acceptance, building innovation and track record of housing delivery in the following growth centers: National Capital Region. Angeles, Cebu, Iloilo and Davao.

For the fourth quarter of 2015 alone, the company’s net income surged by 86 percent to P887 million as sales increased by 67 percent to P2.59 billion.

For full-year 2015, revenues rose by 24 percent to P9.65 billion. Net margin was steady at 42 percent. In the last five years, revenues had a compounded annual growth rate of 42 percent.

Core business income – which comprises housing and net revenues from contract-to-sell (CTS) receivables – expanded by 27 percent last year to P10.7 billion. Income from CTS receivables alone jumped by 33 percent to P1.2 billion.

As of end-2015, 8990 Holdings had P19 billion worth of portfolio under its in-house financing program called CTS Gold consisting of around 20,330 accounts. Under this CTS gold program, homebuyers are required to shell out as low as 4 percent equity with a five-year rebate of 1.5 percent for promt payment. Effective interest rate is 9.5 percent per annum. Qualified homebuyers are those earning at least P35,000 monthly while monthly amortization cap is equivalent to 33 percent of salary.

8990 Holdings encourages buyers to eventually get long-term financing from the state-owned Home Development Mutual Fund or Pag-Ibig, which offers a lower interest rate of 6.5 percent. Typically, buyers enter into CTS financing with 8990 Holdings while their Pag-IBIG takeout is being processed.

About 85 percent of total revenues booked by 8990 Holdings last year came from DECA Homes subdivisions located in Cavite, Pampanga, Iloilo, Davao and General Santos, while 15 percent were contributed by medium-rise Urban DECA Homes projects in Cebu and Muntinlupa.

8990 Holdings was able to expand its land bank close to 500 hectares with an expected yield of a little over 100,000 housing units worth P109 billion. The property company purchased land in Davao, Iloilo, Bacolod, and Davao as well as in Las Piñas and Cubao last year.

This 2016, the company plans to launch new horizontal developments under the Deca Homes brand in Bulacan, Iloilo, Cebu, Davao, and Bacolod as well as medium-rise building projects under the Urban Deca Homes in Cavite, Cebu, and Manila.

In addition to the new projects lined up for this year, the company expects 11 ongoing projects to provide 5,377 additional units worth P4.8 billion this year.

Among the key challenges to the housing industry seen by 8990 Holdings this year include a potential delay in the release of permits for new projects due to the presidential, national and local elections in May alongside the longer processing of accreditation by the Board of Investments (BOI).

8990 Holdings also cited the tension in the Middle East particularly between Saudi Arabia and Iran as well as the continued softening of oil prices that may affect the monthly amortization payments of overseas Filipino workers in the petroleum industry as well as seafarers manning the oil tankers.