FRIDAY, 30 JANUARY 2015

8990 Holdings, Inc:

FY14 earnings of Php3.3Bil exceeds guidance but lags

consensus estimates

Reports net profit of Php3.3Bil for 2014. HOUSE reported Php497Mil in net income during
the fourth quarter, almost five times that of its reported earnings during 4Q13. This brought its
full-year results to Php3.3Bil, up by 52.4% year-on-year. 2014 earnings beat managements
guidance of Php3Bil in profits for the year but underperformed consensus estimate of Php3.85
Bil. Broken down, revenues were able to exceed expectations, accounting for 111% of forecasts
but missed estimates on the bottom line on weaker-than-expected margins. Based on consensus
forecasts, net margins were expected to hover at 54%, while actual net margin for the year
settled at 42.1%. (see exhibit 1)
Increased production and new projects contribute to revenue growth. HOUSE generated
Php7.9Bil in revenues in 2014, reflecting an increase of 47.5% from 2013 figures. Housing
production for the period increased by 32% to 6,351 units, allowing the company to deliver 22%
more units (7,324 units) this year. New projects were able to contribute 53% of total 2014 sales.
Nine new projects comprising 96.9 hectares and 10,855 housing units were launched in 2014,
of which 49% have been sold by the end of the year.
Management guidance of Php3.8 to Php4Bil in earnings for 2015. Management also revealed
its expectations for 2015. The company expects to generate Php9.6 to Php10Bil in revenues for
the year, with a minimum gross margin of 60%. Meanwhile, it anticipates profits of Php3.8 to
Php4Bil, having a minimum net margin of 40%. Revenue guidance is in line with consensus
estimates but net income is way below the consensus forecast of Php5.6 Bil. 2015 projected
revenues are expected to be come on the back of new and on-going projects. HOUSEs ten
ongoing projects are expected to provide an additional 6,598 units with a value of Php6.1Bil. On
the other hand, it expects to launch another nine new projects this year, which will provide an
additional 4,486 housing units with a value of almost Php4Bil.
There is a consensus BUY rating on HOUSE with a consensus average FV estimate of Php10.85/
sh.
FORECAST SUMMARY
Year to December 31 (Php Mil)
Real Estate Revenues

2011

63

40

1,009

2,382

3,389

% change y/y
Gross Margin (%)
Net Income

EPS (in Php)

136.2

42.3

62.2

63.3

446

1,704

2,184

282.1

28.2

19.0

44.5

40.8

0.17

0.52

0.52

205.9

15.8

15.8

65.0

41.0

% change y/y
Relative Valuations
P/E (X)
ROAE (%)
Source: HOUSE

48.2

N/A

Rating
Ticker
Fair Value (Php)
Current Price
Upside (%)

HOUSE
N/A
8.10
N/A

SHARE PRICE MOVEMENT

120

110

100

90

80
30-Oct-14

30-Nov-14
HOUSE

31-Dec-14
PSEi

ABSOLUTE PERFORMANCE
HOUSE
PSEi

1M
13.76
5.35

3M
18.17
6.22

YTD
13.76
5.35

MARKET DATA
Market Cap
Outstanding Shares
52 Wk Range
3Mo Ave Daily T/O

44,695.72Mil
5,517.99Mil
5.97 - 8.71
37.77Mil

5,356

42.9

% change y/y
Net Margin (%)

2013

3,831

% change y/y
Gross Profit

2012

2,349

SHARE DATA

Meredith Hazel Cua

meredith.cua@colfinancial.com

PHILIPPINE EQUITY RESEARCH

Exhibit 1: Results Summary

in PhpBil
Revenues
Gross Profit
Gross Margin (%)

Net Income
Net Margin (%)
source: HOUSE, Bloomberg

FRIDAY, 30 JANUARY 2015

4Q13
989
668

4Q14
1,572
950

67.5%

60.4%

83

497

8.4%

31.6%

HOUSE

% Change
58.9
42.2
498.8

FY 2013
5,356
3,389

FY 2014
7,901
4,756

63.3%

60.2%

2,184

3,329

40.8%

42.1%

EARNINGS ANALYSIS

% Change
47.5
40.3

% of Consensus
110.5

52.4

86.5

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PHILIPPINE EQUITY RESEARCH

Investment Rating Definitions

BUY

HOLD

SELL

Stocks that have a BUY rating have attractive

fundamentals and valuations, based on
our analysis. We expect the share price
to outperform the market in the next six to
twelve months.

Stocks that have a HOLD rating have either

1.) attractive fundamentals but expensive
valuations; 2.) attractive valuations but
near term earnings outlook might be poor
or vulnerable to numerous risks. Given the
said factors, the share price of the stock may
perform merely inline or underperform the
market in the next six to twelve months.

We dislike both the valuations and

fundamentals of stocks with a SELL rating.
We expect the share price to underperform in
the next six to twelve months.

Important Disclaimers
Securities recommended, offered or sold by COL Financial Group, Inc.are subject to investment risks, including the possible loss of the principal amount
invested. Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and it may
be incomplete or condensed. All opinions and estimates constitute the judgment of COLs Equity Research Department as of the date of the report and are
subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a
security. COL Financial ans/or its employees not involved in the preparation of this report may have investments in securities or derivatives of securities of
securities of the companies mentioned in this report, and may trade them in ways different from those discussed in this report.

2401-B East Tower, Philippine Stock Exchange Centre, Exchange Road, Ortigas Center, Pasig City, 1605 Philippines
Tel: +632 636-5411

FRIDAY, 30 JANUARY 2015

HOUSE

Fax: +632 635-4632

EARNINGS ANALYSIS

Website: http://www.colfinancial.com

page 3