8990 seen to net P4.31B
Leading mass housing developer 8990 Holdings expects to sustain a net profit of over P4 billion this year and sell more housing receivables to free up more funds for expansion.
In a press briefing last week, 8990 president Willie Uy said the company was targeting at least P11.5 billion in gross revenues this year, replicating last year’s level which amounted to P11.78 billion.
“Hopefully we can do even better,” Uy said. “But I’m quite confident for the year.”
Based on the company’s stated goal of maintaining a net income margin of 37.5 percent, the guidance on gross revenues thus suggests a bottomline goal of at least P4.31 billion, up by 4.16 percent compared to last year’s P4.138 billion.
But this is a conservative target given the company’s historical margin of over 40 percent. In the first quarter of 2018, 8990’s margin was at 40.4 percent, slower than the year-ago level of 46.2 percent but better than the full-year target of margin of 37.5 percent.
Uy said the softer margin targeted for the year factored in escalating competition as 8990 pursues large-scale vertical developments in Metro Manila while construction costs are trending higher in line with the uptick in global commodity prices.
This second half, 8990 Holdings is set to bring to the property market P35 billion of new inventory with the launch of its new residential condominium development in Ortigas Avenue Extension, which offers 19,046 units. This is part of P60 billion worth of total product launches planned for the year.
In the first quarter, 8990 liquefied P3.7 billion worth of contract-to-sell housing receivables, ending the period with P20.3 billion of these receivables. For the rest of the year, the company expects to unload P7 billion more receivables by selling these assets to banks and other institutions. Another P6-billion reduction in account receivables expected for the rest of the year via loan take-up by the state-owned PagIBIG or Housing Development Mutual Fund.
He expressed confidence that 8990 would be able to maintain a net profit of over P4 billion for the full year.
“The first quarter has been probably the best first quarter we’ve had in recent years. We ourselves were surprised at the sales take-up of our units,” Uy said.
8990 posted a 37-percent year-on-year growth in first quarter net profit to P1 billion on higher real estate sales and better-than-targeted margins. Gross revenues rose by 57 percent year-on-year to P2.5 billion, posting its strongest first-quarter residential topline performance so far.
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