CLI remains bullish, projects still on track

CEBU, Philippines — Cebu Landmasters Inc., (CLI) is determined to pursue 27 projects in the pipeline, despite COVID-19 distractions.

In its 2020 Annual Stockholders’ Meeting held yesterday via zoom, CLI chairman and chief executive officer (CEO) Jose R. Soberano III announced that 14 of the total planned projects are to be laid down in 2020, two of which will be formally launched towards the second half of this year. The company already launched two of these projects earlier.

Despite market fragility due to the pandemic, the Cebuano-owned company is bullish about the sustained demand for residential products, confirmed by its P2 billion sales take up generated for the months of April and May 2020, at the height of Enhanced Community Quarantine (ECQ).

According to Soberano, the projects that will be pursued by the company post-Covid are largely on residential, both condominium and house and lot packages.

These projects are spread in different parts of Visayas and Mindanao, where the publicly-listed firm is making strong presence.

These 14 projects residential projects are seen to generate an approximate value of P19.4 billion.

The 13 remaining planned projects will be started next year, these are mixed-use or hospitality related investments. However, Soberano admitted that the company is on high calculated risk posture, depending how the recovery will turn out starting 2021 especially in tourism, and leasing businesses.

“CLI is moving forward with both prudence and conviction. We will still be launching over 13 projects this year, especially in key segments with sustained demand including economic vertical and horizontal housing. The VisMin will recover faster, as restrictions have eased sooner with strong measures in place. There is sustained demand amid a low supply environment in key VisMin cities, as evidenced by our P2 billion sales take-up over April to May. As we are quick to adapt to this new normal and catch-up to 100 percent site operations, we are aiming to achieve a full-year guidance that will closely match the 2019 levels,” said Soberano.

While CLI has not resorted to retrenchment, he said it is exercising a limited hiring rule for this year to cushion some revenue distractions caused by the pandemic.

For the first quarter 2020, CLI registered a 13 percent year-on- year in consolidated revenues from P1.87 billion to P2.1 billion.

The increase in revenue was driven by robust sales from various segments and sustained construction of new developments alongside growing contributions from its expanding recurring business.

Net income to CLI shareholders came in at P572 million.

CLI’s gross profit margin of 50 percent and net income margin of 31 percent for the year is within the company’s target ratios and above industry average.

During the first five months of the year, the company registered P4.8 billion in reservation sales take-up or close to its first-half 2019 level of P5.26 billion.

Sales of P2 billion driven by its economic housing brand Casa Mira were recorded in the months of April and May, a period widely forecast to have little economic activity. Over-all, CLI’s unsold inventory is down to only 10 percent of total inventory.

Soberano vowed that CLI continues to address the still underserved demand for residential projects in Visayas and Mindanao through its wide network of partner brokers and sales agents.

The listed firm has digitalized buyer transactions from end-to-end and made payment terms more affordable and attractive to customers.

“We expect demand for quality housing and residential units to rise prompted by the greater desire for safer and better planned living environments in the aftermath of COVID 19. Over the years, CLI has built a reputation for offering great value to its buyers and is ideally positioned to serve this rising demand,” Soberano said.

To fund these expansions, Cebu Landmasters has secured P8 billion worth of corporate notes and several bilateral facilities with major banks, tailored per project. CLI’s incremental cost of borrowing is between 3.8 percent to 4.2 percent for 5-, 7- and 10-year money, making it well positioned to manage its balance sheet, lower its financing costs and having sufficient resources to allocating funding for judicious capital expenditures.

Accounting for a total market share of 12 percent, CLI was dubbed as the leading residential developer in the Visayas and Mindanao regions in a 2019 study by Santos Knight Frank.