Happy Monday, Barkada --
The PSE closed up 41 points to 6686 ▲0.6%.
Apologies to anyone who sent messages or commented on Reddit in the past few days: my account was accidentally disabled. Shout-out to /@ky_gal, who had to manually approve everything that I tried to do while Reddit fixed the problem! I'll be working through the backlog this week.
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COVID Update
Top 3 MB indices:
Code:
Logistics ▲3.80%
Telco ▲2.98%
D30 Targets ▲1.67%
Bottom 3 MB indices:
Code:
#COVID-19 ▼1.45%
2020 IPOs ▼0.73%
MiddleClass ▼0.68%
Main stories covered:
- [Q3] Ayala Land [ALI 35.00 ▲2.79%] profit ▼77% y/y... Q3/20 profit of P1.8bn, down 77% from Q3/19 profit of P8.1bn. ALI reported an increase in foot traffic at its malls, but volume is still down 30 to 35% from the same quarter last year. Residential revenue down 52%, while commercial leasing revenue down “only” 37%. Construction on existing projects resumed in June. ALI reported that residential sales reservations jumped 66% quarter-on-quarter to P22.5bn.
- MB: While the result is still brutal from a year-on-year perspective (Q3/20 v Q3/19), the 73% increase in profit from Q2/20 demonstrates the earnings wet blanket that the COVID movement restrictions have been for our property sector. Residential reservations improved dramatically in Q3 (still a far way off from 2019 levels), and foot traffic in malls improved dramatically (still a far way off from 2019 as well). The fate of ALI is tied directly to the severity of COVID-related movement restrictions.
- [Q3] Robinsons Land [RLC 16.80 ▲2.44%] profit ▼78% y/y... Q3/20 profit of P0.7bn, down 78% from Q3/19 profit of P3.3bn. RLC’s 9M results by operational segment: Office Buildings Division ▲20%, Commercial Centers Division ▼65%, Residential Division ▲36%, Industrial and Integrated Developments Division ▲101%, Hotels and Resorts Division ▼49%.
- MB: This was only a press release, we haven’t had a chance to see the full earnings report yet. Like it should, RLC focused on the quarter on quarter (Q2 v Q3) differences to measure and model a potential recovery. Rubbernecking at the year on year earnings destruction isn’t constructive; the RLC profit drop is in line with what industry-leaders like ALI just reported, so there isn’t much we can glean from that. RLC also announced that it is planning a commercial building REIT for listing in 2021, and revealed that it has 25 office buildings with a net leasable area of over 600,000 sqm that could be injected into the REIT; that’s pretty big, considering AREIT [AREIT 25.60 unch] only has some 250,000 sqm under its control (though it has been consistently adding).
- [Q3] Kepwealth Property [KPPI 5.50 ▼0.72%] profit ▲160% y/y... Q3/20 profit of P4.6m, up 160% from Q3/19 profit of P1.7m. The company, which leases and re-leases residential and commercial space, posted big gains from its first quarterly report after its Q3 2019 IPO. Gross revenues were down 27%, but gross expenses were down 41% (down-er). KPPI splits its business up into two segments: “Leasing”, where KPPI leases condos and parking slots in Kepwealth Center; and “Asset Management”, where KPPI earns commission on the lease of various properties across Metro Manila. Leasing segment revenue fell 23%, and the Asset Management revenue figure fell 42% y/y.
- MB: If you dig into the report, the real reason for the huge pop in profit is... KPPI didn’t have to pay a butt-load of fees and whatnot to IPO this quarter. It paid almost P11.5m in Q3 2019 to IPO, and that definitely put a damper on its profitability. Remove that charge, and KPPI’s profits do not look as rosy. Still, I have such a soft spot for this company, after the shafting they took at their IPO, and the flurry of IPO activity that their “successful” IPO (for investors waaay more than KPPI) encouraged. Now that the “SOGO backdoor listing” rumors are a thing of the past, the real work of the company gets to take center stage. Too bad it’s such a harsh business environment for property firms at the moment.
- [UPDATE] Megawide [MWIDE 7.54 ▼0.53%] offer period for FOO prefs begins tomorrow... and runs until November 17, with listing on November 27. Here's a link to the prospectus (thanks, /@pentecostal1ness!).
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