Italpinas prepares for aggressive expansion

Boutique property developer Italpinas Development Corp. aims to grow into a multibillion peso profit-producing company within the next five years as it plans to scale up real estate developments in selected locations.

In 2018, Italpinas booked a net profit of P120.56 million, up by 101 percent. It also exceeded its P70-million bottom line goal for the year.

“What we’d like to replicate in the next five years is the growth that we experienced starting 2013. We would like to achieve a net profit of billions in the next five years if we’ll be able to replicate the growth we delivered so far,” Italpinas chair and chief executive officer Romolo Nati said in a briefing last week.

From 2013 to 2018, Nati noted that Italpinas’ net profit had expanded by 22 times to P120.56 million from P5.3 million.

“If we multiply 22x net income this year (2018) in the next five years until 2023, it’s going to be P2.6 billion,” Nati said, noting that the company’s goal would thus be to replicate this growth trajectory.

“Growing scale will also optimize our cost,” Nati said, adding that this would increase the company’s profit margins and return on assets.

Over the last five years, gross profit margin has improved to 66 percent in 2018 from 38 percent in 2013, mostly attributed to effective management of construction costs.

For 2019 alone, Nati expects net sales to double from last year’s P368.52 million.

Italpinas plans to raise as much as P650 million in fresh funds for expansion by offering preferred shares by the third quarter of this year. The company is now finalizing the prospectus for the preferred shares offering.

The company’s board earlier approved the issuance of at least P500 million worth of preferred shares with an over allotment of P150 million. The preferred shares, which are still subject to regulatory approvals, will be offered at P15 per share.

Unicapital Inc., the same investment house that arranged the company’s initial public offering in 2015, was mandated to underwrite the offering of preferred shares.

Nati said proceeds would be used for land acquisition alongside other capital expenditure.

Italpinas president Jose Leviste III said the company was now beginning to feel the positive impact of economies of scale. “We can now take bigger strides,” he said.

Beyond its existing projects in Cagayan de Oro and Sto. Tomas, Batangas, Leviste said the company was looking at fresh opportunities on the Negros island in the Visayas and was likewise keen on the Luzon corridor.

Sales revenues in 2018 surged to P368.52 million from P147.41 million in the previous year.