Cebu Landmasters, Inc. (CLI) Earnings Call Transcript & Summary

Good morning, and welcome, everyone, to CLI's earnings call covering the first 9 months of 2022. I'm Andre Mikhail Obierez, Investor Relations Manager. Joining us this morning is our COO, Mr. Franco Soberano; and our CFO, Mr. Grant Cheng, to deliver the minutes. Before we begin, some gentle reminders for everyone. First off, you may download the presentation materials and financial reports by scanning the QR codes below. You may also download them from the Investor Relations section in the CLI website ir.cebulandmasters.com. [Operator Instructions] And the meeting is recorded and can be accessed in the company's website or alternatively, you may view it in our YouTube channel, Cebu Landmasters Official. Now to start our briefing, Mr. Franco, the floor is yours.

Thank you, Andre. Thank you again, everyone, for making the time to attend our investors' briefings. Always a privilege to be sharing the news with you. Of course, joining me as usual is our CFO, here on my left, Grant Cheng. And together we will be reporting to you the results of July, the first 9 months of the year. And next slide. And these are very strong results. The company continues to beat expectations and perform very well. We registered a 34% increase in our net income after tax on the credit level. It was increased from PHP 1.65 billion to PHP 2.2 billion. We are really getting close to that PHP 3 billion mark. We've never reached PHP 3 billion in our history, and we are getting there. And as you all know, we are relatively new player nationally. And another strong result to report is top line growth across all segments, 43% better than the previous year. So 9 months 2022 consolidated revenues increased to PHP 11 billion from PHP 8 billion in the first 9 months of last year. We've continued buildup of unrealized revenue to PHP 30 billion, 19% growth from fiscal year 2021. Some analysts or some who follow us very closely, keep asking us how do we do it? How does CLI do it? It's really our strength in the region as well, but also us knowing where the opportunities are in the region. That's why we launched 11 projects. This can seem unprecedented to many, but this is not even enough. For us, the 11 projects, we should have launched more, but we're very happy that these 11 projects bring almost PHP 19.5 billion of project sales value, and we've sold much of these 11 projects. So with that, with the momentum for the first 9 months and, well, I can't believe that we're towards the end of the year, it's basically 1 more month of work before we close the year and all hands-on deck, Grant, some of my team members here, some tuning in, it's all hands-on deck to deliver what we've committed to our investors, which is a 20% year-on-year growth, and we're very confident of hitting or even exceeding such growth target. So with that, let's now dig into our financial performance. And of course, I'll have Grant to report that to you today. Thank you.

Thanks, Franco. It's always a pleasure to see our friends and our fellow shareholders on the call. And I would -- I'm happy to put a little more context and details into the headline results that Franco has just shared. So diving into our financial performance and provide a little bit more context around our excellent results. So our revenues grew by 43% year-on-year from PHP 7.658 billion in 9 months 2021 to PHP 10.96 billion in 9 months 2022, once again driven primarily by our sale of real estate units, but also notably, the strong recovery of our other emerging business segments in VC, hospitality as well as our property management. This has led to a growth of our gross profit to PHP 4.89 billion from PHP 3.47 million from the same period last year, which is a 41% growth. So you will note that we've managed to maintain our margins. Now the numbers here are not showing it. It's just slightly lower than the same period last year, accounting for the fact that input costs are slightly higher. Again, this is something we've been communicating that we do expect to see some compression in our margins in the next couple of periods, although in the back of increasing import cost. But I think as you can see here, we managed well. But as far as our organization and scaling up our processes and our ability to deliver these results, our OpEx has grown, but not as grown -- not as high as that of our revenue, again, showing our ability to scale up and leverage from all the infrastructure and processes and technology that we've invested in so far. And so this all leads to a consolidated net income after tax for third quarter of PHP 2.369 billion, which is up 25%, up on an absolute basis, from PHP 1.9 billion the same period last year. And on the payment level or to the shareholders, that's PHP 2.2 billion, which is up 19% from PHP 1.854 billion from the same period last year. Now I will need then to add that if we take out the onetime tax gain, which is the onetime tax -- onetime positive effect of the [indiscernible], which allowed us to lower our deferred tax liabilities. And if you just compare the net income that is being derived from our core operations, in our core business operations, our net income on a consolidated basis actually grew by 44% from a base of 1.647 and our net income grew by 34% from a base of 1.642. The CREATE effect simply gave us that high base effect that sort of dispersed a little bit, but I wanted to show the real growth of our results from our core operations. So this all points again to our ability to deliver on contracts and sales operations that we were able to close in the years prior. Next slide. And here you see -- here you see the growth of our revenues. So you can see that so far in the third quarter of 2022, we've already managed to almost equal our revenues from that of last year. So we're very much on track to exceed -- meet or exceed our 30% growth projection that we shared with the community earlier this year. Again -- once again, underpinned by the strong growth in our real estate sales, but also strong across the broad growth in our other business segments. And for me, the most notable thing is that even while our revenues, our recognized revenues are growing, and this is what we see in our audited financial statements. What you will see on our audited financial statement, our unrecognized revenue continue to grow at pace. Which means that our -- this is a company that still has a very strong growth path that even as we keep up some of our -- the revenues that we are reserving for the future years, we're still growing that revenues. So I have close to PHP 30 billion of revenues that are not yet on our financial statements. But as we continue to deliver on those buildings and those projects are being sold, as we continue to deliver that percentage of completion and collect on the contracts, you will see this PHP 30 billion of unrecognized revenue start coming to our financial statements. And more importantly, we start to be monetized in the next 2, 3, 4 years. These sales are driven by our economic or affordable house expense, which is our flagship Casa Mira brand. This is, again, what I call our pick up the spear. It is the brand that we used to expand into new markets, which we will expand a little bit later. And these revenues are coming from -- equally from the 3 largest markets and a lot of it is coming from Cebu, 42% from Cebu. Okay. Next slide. So here, what you see are our reservation sales or rather the actual sales contracts that we were able to close this year. So while the previous slide might be a lagging indicator of our market demand, this is a leading indicator of how the market has been starting up CLI in real estate products. So last year we sold PHP 16.5 billion worth of real estate products. In the 9 months of 2022, we've already reached PHP 13.6 billion in sales underpinned by an incredible mid-market performance, particularly mid-market condominiums that we launched in Davao as well as here in downtown Cebu. The projects are called The East Village in Davao and Calle 104 [indiscernible]. And on this, I think, I'll reinforce what Franco was saying that if you actually know and are able to identify and actually are able to take advantage of where the demand is, there is so much more underserved and unmet demand that we can build into. One other highlight from this slide, you could see that we've entered into a new market, it's in Palawan. So while technically that's resolved. For me, the most important thing is it continues to show our ability to scale up and penetrate new markets, such that a significant portion of our sales for this year is coming from this new market. So we do have very strong growth plans, not only in our existing markets, but in new markets that we are developing, giving us the confidence, the ability to also say that we can sustain this growth. Okay. Next slide. Our balance sheet continues to grow. And I will have -- I will elaborate a little bit on how we're managing our balance sheet in an environment of increased interest rates. But maybe first on the asset side or on the asset side of the ledger, you could see that the bulk majority of our balance sheet items are in line items that will eventually be monetized by third parties. So these are contract -- the ones in the red box, accounts receivables and contract assets are covered by actual sales contract from our buyers. It's a matter of collections. And when you look at the inventories, I always want to remind you, this is -- this doesn't mean unsolved. It contains billions of inventory that have already been sold, but have just not qualified yet for revenue recognition as we collect and as we see some of these contracts. So accounting rule state, we can only recognize them as revenue after several months of collections. So mind you that many of the inventories that you see here or a large chunk, they are actually sold and covered by sales contracts, which will be reflected as time goes by. And this has been fueled by our -- of course, our growth in our balance sheet, it's funded by bank debt, relatively cheap bank debt and the recent retail bonds that we were able to raise. So our balance sheet stands at PHP 80 billion. And take note, of course, I always like to say that this is in addition part of the effects or dividend payouts and treasury shares, which is where we return that value to shareholders. Okay. Next slide. So we -- this is a little bit of a unique thing just for this period. What we're showing is our debt maturity profile as of September 30 or the close of our books 9 months 2022. But you need to see the next slide, I will show you the immediate effect of our retail bonds, which we issued 1 week later, on October 7. So we -- I thought that we enhance our presentation by showing you how that affected already our debt maturity profile. So very quick discussion on this first. You will note that we had some maturing debt coming up fourth quarter 2022 and that this will be a debt maturity profile, where our average cost of debt was 4.93%. So it has [indiscernible] with interest rate cost also goes up. Okay. Next slide. But as of today, you could see, it's a much more different profile. The first thing you'll notice is that we've pushed up the maturity of our debt maturity profile. A lot of our short-term debt, we've already refinanced at 3.5, 5.5-year debt is our retail bonds at the slight cost of about an average weighted cost of about PHP 20 billion. So I would submit that small or a manageable increase in our funding cost on the debt side is a reasonable price to pay for locking in our financing and moving our debt maturity profile towards the longer end of the curve. And I think that's proven to be a sound strategy given that interest rates continue to rise. And it will do well for any company to stabilize and fix their balance sheet by making sure that they're not too exposed and [indiscernible] to interest rate list. So this is where our retail bonds ended up at the 2026. This is a 3.5-year series. It is the 5.5-year series, and this is the 7-year series of our retail bonds, basically showing a very manageable ramp-up of our debt obligations and allowing us to ensure that this move our liquidity crunch and that our funding obligations will be very well met for the foreseeable future. By the way, this, of course, doesn't still take note that we have PHP 10 billion still of short registration that is still unused that -- where we have the option to raise PHP 10 billion as more of these bonds in the next 2.5 years to be able to address not only our upcoming maturity obligations, but also our [indiscernible] as we build our projects. Next slide. Okay. So at this point, I will -- before I turn it over to my friend, Franco, again, if you have any questions, just to reiterate, please use the chat box, the Q&A of the chat box or save it for later, we will be glad to address your questions later in detail. Thank you, guys. And I'll see you at the end of the year.

Thank you, Grant, for the very concise and very eloquent financial presentation. Thank you for that. I'm sure the attendees appreciate that very much. So let's go to our business updates. So you can see here, CLI has always maintained a very healthy land bank. When I say healthy, these are land banks that are right for development. So in spite of growing our asset base from only PHP 5 billion in 2016 to now PHP 80 billion, the land bank has been stable. This is because of our acquire to develop strategy that you're very familiar with, whatever we acquire, we already have a development plan in mind. Most recently, we acquired Butuan site, more than 15 hectares there. And then you can see its 3/4 are fully owned by CLI and 1/4 owned by the JVs. Next slide. You can see here where we're doing our part to support the economy. In our region, we have now spent more in the first 9 months of the year than in the full year last year, PHP 9.9 billion of CapEx going into much needed nation building, developing new essential products, commercial developments and land development. And then we are really on track to hit our $13 billion of CapEx for the full year. Next slide. So this is a very important slide. We grew our reservation sales by 43% -- sorry, we grew our top line revenue by 43%, PHP 11 billion of real estate sales in our books. And across our entire inventory, it's 92% sold in spite of headwinds this year, last year, we've been through COVID, we now have inflationary pressures. The fact remains that, that is in a demographic sweet spot. The VisMin region is a developing region, and there is basically simply not enough inventory. And it takes developers like us with a great heart and the right vision and timing to deliver that need. And you can see here $20 billion of sales value launched this year. Next slide. This is a very important chart. Just showing you our batting average. So we've now developed over PHP 100 billion of real estate inventory. If you had asked me 5 years ago, if we would deliver PHP 100 billion worth of real estate sales, I would be telling you that you're joking. Now this is really a very big validation for us that CLI brand has continued to become embraced. And we always remind our team that we should never be complacent. We have to continue improving our processes, improving our delivery, so we can sustain and really cement the leadership that we are being recognized for. So you can see here that what's keeping us busy is really these 33 projects that we're constructing and delivering, 1/3 of this is turning over, are being turned over to residents. But the corporate zone is that of all the projects we're constructing, these are 90% sold. What's even more impressive is, of the 10 projects we launched this year, is already 93% sold. Net, when we say net, these are net of whatever was returned by buyers, and it really makes us very happy to be seeing these kinds of results and sharing these with you, our shareholders and supporters. Next slide.

I just wanted to add, if you allow me.

Go ahead. Yes.

Remember, you are a key speaker in that shareholder conference where our housing Secretary said they wanted to build 1 million houses. So in our own small part, we were able to build 3,000 or delivered, say, 3,000 houses last year. People are asking, is the growth going to be sustainable, just and the demand is certainly there.

Yes. Just to share with you, for those keeping track of the housing industry, our new housing chair is aiming for 1 million homes built or launched every year. And for the past few years, we've only been able to do 200,000 as a country.

Yes, for the entire industry.

For the entire industry. So they're asking us to do 5x more. And can I just share this with you, some smaller developers made a decision to stop projects. And we are the ones here launching 11 new projects because we're very -- the sales are there. The quality sales are there, meaning these are sales that are really catering to end users, to investors who we know, who we know have the capacity to complete their payments. So you can see here, these are what we launched. Casa Mira Towers Palawan, 85% sold in 1 week. And it's now fully sold. So we're now preparing for the next phase. Calle 104 in Cebu. This is our record -- one of our many records this year. We sold PHP 2.4 billion in 3 days. So we're now actually in reconstruction, the contractor is now onboard. Casa Mira Dumaguete Phase 2, it's healthy, 34% sold here. We have a corporate center here, 11% sold, it's moving. And of course our award-winning East Village selling out PHP 4 billion in 4 days. So that's PHP 1 billion a day. And then we have Phase 2 of our Mira Beach as well. So all our newly launched projects this year, 93% sold, delivering PHP 10 billion in sales value. So that's just 2,500 units, contributing to the 1 million goal. That's really not enough [indiscernible]. And we just really need to be decisive and have the organizational support to move fast on these projects. I'll talk more about how we're managing the current inflationary pressures. Next slide. Okay. So this is my -- what keeps me busy. We are constructing all these projects. But you can see photos. We're about to turn over our project in Ormoc, Dumaguete, Iloilo is almost done, MesaVirre, which already turned over the 2 towers there, 38 Park Avenue in Cebu is turning over. We've turned over 200 of the 700 units. So I think what's very important is that developers manage the time well. We are unable to manage inflation when we lock in the best prices, when we lock in the schedule of these installations, but Cebu Landmasters really looks after its cash flow very well. It's very positive when you allow projects to extend unnecessarily. So we've really done a good job of minimizing delays and aiming for high customer satisfaction that enables turnover and allows us to get fully paid by our buyers as well. So yes, go ahead Grant.

Yes, I just wanted to add to what you were saying and we recently got a question from an investor that we met in Manila last week, our chairman and I. And what we reiterated is that there are CLI engineers on the ground in all of these projects that not only supervises the projects, but it's not perfect, but they do ensure that where we can have cost engineering, where we can avoid wastages, we can drive efficiencies. It's our own people doing that. So we don't hire third-party construction managers or third-party project managers to do. It's our own engineers on the CLI team that does that. And I know you personally put on your hard hat and walk all of these sites yourself to look at this, to personally make sure that they're being delivered well. So I think that also makes a big difference where we have a good relationship with our contractors and suppliers. We try to support other in good times, especially in bad times or in challenging times like this to be able to deliver these projects on time.

Yes. And I would say it's not just our engineers with better hands on. I'll actually be traveling to 3 cities this week, I will be in [indiscernible] and Bohol, I added Bohol because we're completing a project there and launching a new one, Casa Mira, Panglao, will be launched soon. Next slide. And of course, you know our completed inventory. And what I'm prouder obvious is that we continue to manage all the projects that we completed and it allows us to sustain that quality and protect that brand that we built through the years. Next slide. And going into our office and retail portfolio. As you all know, this is really one of our newer parts of the portfolio and yet it's starting to contribute. We now have close to 30,000 of gross usable area and initial 47,000 is going to be delivered soon. There are some small wins here. There is 16% growth in our leasing business with the school reopening and with virtually no restrictions left, a lot of our retail spaces are taking up very well here in our region. Next slide. So you can see here the growth in the gross usable area with the addition of our Latitude Corporate Center. And you have our 2 major malls in Cebu that will be opening next year and the next 2 years with Astra Lifestyle Mall and Patria de Cebu in our downtown area. And we're quite selective with our retail partners. We're very proud to be partnering with top brands to -- that suits our well-developed projects. Next slide. So with the hotel developments, we're very happy to see a more than 100% increase in the performance of our hotel assets, especially with Citadines Cebu City. You can see here 2 of our very iconic projects with the Masters Tower here. And with Abaca Resort Mactan. These are 2 sites that are very busy construction sites, and we're very excited to really open this for the market. We had a concrete pour of our foundation there in Masters Tower. I think it took almost 300 concrete mixers to complete that foundation pouring. Next slide. So you can see here our collection of top hotel brands. We've mentioned many times that we want to have one of the best collections of hospitality assets in the Visayas-Mindanao region. And this includes our own brands like the Pad, holiday concept, and MagsPeak, a mountain resort, which we launched virtually a few weeks ago. Next slide. We're very busy with townships as well. We have the Davao Global Township, which is really our showcase. It was awarded best township in Asia due to it sustainability features and generous amenities for the public. We're very close to completing land development and opening this to the public. And we decided to offer limited commercial lots for sale, and this can potentially raise PHP 7.7 billion of cash for CLI. Next slide. This year our 3 sites with Ming-Mori, our reclamation project in Minglanilla Cebu, our Xavier University, Manresa Town in Cagayan de Oro and our Davao Global Township. So I'll do significant milestones, and then I'll ask our CFO to do the closing. Next slide. Of course, this was a very happy milestone for us. We were able to issue one of the curated retail bonds outside Manila. And I remember the messages from the issuers or the bond directors there that they really welcome new names and new names that have a proven track record like CLI. So this was a very momentous occasion for us. You can see our photo and we thank those who made it possible for us. And we were able to lock it in, as Grant said, with very advantageous rates. And we have seen these kinds of rates before, and we know how to match this with the projects and the risks related to these projects. Grant, do you want to add anything?

[indiscernible] the rates are good, but always never happy. I was telling I wish I could have reached that sooner, 2 months earlier. But we raised it while it was on the upstream. So actually we were able to get it out and get good demand for our retail bond. Even I think rates continue to rise as we speak. So we were already able to lock in rates. But yes, if you look back at it right now, it's already 50, 80 basis points higher than when we issued this a month ago. But I just kept it away, maybe I should have done this 2 months earlier, but interest rate, that's what it is you -- interest rate, margin, I think, rising environment right now. So we will and always strategically continue to look at opportunities, and we'll just say that our cost of funds and our funding will be strategically taken up. Also our ability to pass on cost. But if anything, since real estate is at least in buying property is the best hedge for inflation. This is going to be a real test of the buying power, and we will see how much of that we can pass on.

Thanks, again, to Grant, who led this effort for us. Next slide. Okay. Yes. And I just wanted to highlight record-breaking pace of sales in 2022. And we are all familiar with the macro environment today with rising interest rates, rising costs, but I would say end users that we cater to really appreciate the locations where we're launching projects, know that real estate is a long-term play. I mean, for many of our buyers, and this is really the advice I give, buyers are not buying for today. They're buying for tomorrow. They're buying for the next 3 to 4 years. And what -- the buyers who buy it this year are not really going to get hit by the inflationary pressures. In fact, they are buying and able to pay down payment at 0% interest. Now they're able to lock in their pricing today and spread out down payments over 3 years to 4 years at 0% interest. I think we just do a good job of making our buyers aware of this. We do a good job of creating the best type of projects that are hard to refuse today. So yes, with our CEO, saying our new projects already sold out in a matter of pace. Calle 104, The East Village in Davao and Palawan. So I think we covered Luzon, [indiscernible] in this slide.

[indiscernible].

Yes. So next slide. Of course, to cut it off, we're not really the type that changes the warrants. But of course, when they come, we're very honored. We're very honored that 50 property awards continues to recognize CLI's efforts where we were judged the best developer in Visayas and Mindanao for the second year in a row. We were their awardee for Best Developer in the Philippines in 2019 and several of our projects won accolades there. So you can see our photo there joined by our SVP, Joanna Bergundthal, Grant, Mathias Bergundthal and [indiscernible] there in the photo. So thank you to all our supporters for making this possible for us. Next slide. Okay. And back to you, Grant.

Thanks, Franco.

On the 2022 outlook.

Yes. So this will be very short because, look, there is just the last 2 months of the outlook. Go ahead, next slide. I just wanted to quickly highlight, first, we still have more launches. So aside from what we already launched, we're pretty excited and energized to continue our launch. And you'll notice that we're charging on a trail that already has given us success. So we're not selling anything new or we're not going to frontier products or even expanding into unknown markets. If you look at what we're launching, we're expanding new phases, win projects that are already sold out or in markets that we're already familiar with and where we can already start scaling up our logistics, our network, our network of brokers and contractors and suppliers. So this gives us the confidence to be able to deliver these projects. And there's just so much more of that unmet demand besides now where we've built up our business model and we've build up a need for delivering these large projects. And so we have here this Casa Mira Towers in Mandaue, the beautiful Costa Mira Beachtown Mactan. Yes, I still remember, this was sold out in less than 2 weeks with so many buyers around the Philippines just trying to own a piece of this, a beautiful white sand Beachtown condo, natural beach white sand [indiscernible]. And then, of course, our second Costa Mira that we're going to launch in Bohol and expansion projects in, here in Cebu called Mandtra and our flagship Casa Mira that we're going to launch in the north of Cebu, Danao. I'm expecting this to sell like hotcakes given the success we've had for a similar project in the south of [indiscernible]. So we're really excited to launch these projects. Okay. Next slide. Just to [indiscernible] also, we said that last -- when 2022 started, we were looking forward, and we are confident that we could deliver a 20% growth, both on our top line revenues and our bottom line revenues for 2022. And I'm proud to reiterate and just reinforce that guidance, we're on track to meet that guidance. So far third quarter we're already 19% year-on-year. Of course if you look at it on a normalized basis, general operations, we're already -- we are about 30% to 40% high already. But with the fourth quarter coming in, we feel that we can sustain this momentum and would be able to deliver this projected growth. So once again, thank you, everyone, for attending this call and for your time. In a few short months, it will be 2023 already. We will celebrate Christmas and then 2023, and then we'll see you for 2023 -- the full year 2022 earning calls. So with that, I'd like to end our presentation -- formal presentation, sorry, and open the floor for questions and answers.

Okay. Thank you so much Sir Franco and Sir Grant for sharing the good news. So now we'll be moving on to the Q&A portion. And I'll be reading the questions in chronological order. So our first 2 questions are from [indiscernible]. So the first question is how has rising interest rates and inflation affects CLI's sales performance? And the second question is what's the outlook for next year?

Yes, it hasn't dampened sales at all. Actually we see not just continued or maintain our sales, we actually strengthened. Andre, could you go back to that slide on our sales performance on the residential segment that Franco covered, when he began his business update. It's that slide that showed our residential pickup. So if you actually look at the sales velocity of -- there you go. If you look at the sale -- one slide before, yes, that one. Thank you. So if you look at the sales velocity of the projects we launched in 2022, we're already 93% sold. And so as the years go by, these are pre-selling projects, so while they're in construction, we expect that eventually we reach this 97% sold out number as well. And this is actually an improvement over our total portfolio. So that means that our sales velocity and sales pick-up for the projects that we launched this year have been very, very well received. So have we seen a slowdown in demand? Not yet. But as we continue to pass on some of these increased inflation interest rate costs, then we will see where the margin of the market is. But we're optimistic that because of the unmet housing demand as well as inflation's ability to trickle down. And eventually there's that transmission mechanism where wages and real earning power of people actually have to catch up, that this very fundamental basic human demand, if you remember, [indiscernible] it will continue to be strong. And so we project that we should just be there, continue building this basic need for the Filipino family, and we continue strong -- we continue to expect strong sales for next year.

And just to add, I want to emphasize again what buyers are thinking of. When they invest this year, they're investing to own -- to really get their units in 3 to 4 years. So it's the smartest move you can do because you're actually in a way overcoming inflation. You are locking in your investment at 0% interest down payment. And CLI just really does a good job of finding the best pricing, that we know our buyers will emerge as winners. There is a value appreciation that really makes them winners when the project is completed. Now then it becomes our job to make sure these are delivered as promised and with the right communication with buyers over the construction period. So I would say inflation has an impact on construction costs. And again, how is CLI managing construction costs? We are constructing -- we are one of the largest builders now with in-house construction management. We command very good volume. We command very good relationships with our suppliers and contractors. So we need to work together to come up with solutions to minimize the impact of these costs. And basically that's really how we're able to overcome this phase of our economy. Of course the prices of real estate that we sell also inch up, but reasonably. We are not artificially bloating any real estate prices. We know what -- we know what real owner -- home ownership should really be like. It should be at a good value for money in proposition. And so what's the outlook for next year? We are riding a very strong momentum to our friend from SunStar [indiscernible]. And we've sold almost PHP 14 billion in the first 9 months, and we still have 5 projects to launch actually in the next few months. So really looking at hitting almost PHP 19 billion to PHP 20 billion this year. And we have no townships like Xavier in Manresa Town, that will have its first project there. We'll have our Butuan. We'll have our Davao Global Township with a new residential offering. We'll have some new projects here in Cebu. So we're actually preparing. We prepare for the next year 2 to 3 years before. And that's really how we're in a position of leadership. And as we mentioned, we have lot sales. We're selling commercial lots for the very first time. And these are going to give that added boost to our sales performance as well. So thank you to our friends from SunStar for always keeping track of us.

All right. So the next question is from [indiscernible]. What's the CapEx for next year? And there's another question. How many projects are we expecting to launch?

For what period?

2023.

For 2023. Okay. For CapEx of next year, I think it's a little too early right now. I will give a range though, because we haven't said, usually we announced that in time of our full year results, so that's next year. But we expect our CapEx to be between the region of PHP 12 billion to 14 billion. And this includes some of the higher-value projects such as our townships as well as our ongoing investment into our hospitality asset that we are continuing to build up. So it's around that volume.

And I see here a comment from [ Christopher ], right? This was answered already. One of our longtime shareholders here. Congratulations, CLI, for relentlessly going ahead to providing good quality homes for owners and team members. I think similar to running marathoner, just keep on going. You must have known about the New York Marathon I have completed last week. So thank you for the comment.

So we have a question addressed to Mr. Franco from an anonymous attendee. What is the company's revenue growth projections in the next 10 years? And will there be a ceiling to the number of projects, you can oversee all at once? And are there quality assurance systems in place, which allows projects to be developed without your presence?

Thank you for the very -- very good question. We just had our [ strat ] plan session. And we came out of that strat plan session with a lot of optimism and a lot of positivism. CLI is really -- if you notice, we've been growing at least 20% to 30% every year. And I think we have to really decide how we want to grow for the next 5 to 10 years. And I believe our goal now is we need to sustain that growth. We'll be able to grow at least 20%, let's say, in the next 3 to 5 years, that's our plan. And going beyond 5 to 10 years, we will see. But this is what you have to also know. It won't just be residential sales that will be driving us. We'll have over 200,000 gross feasible area coming in online. We'll have up to 9 hotels with over 1,700 hotel rooms contributing revenues. And I would say these are cash. When it's hotel, it's a cash business. They cannot [indiscernible] in a hotel. So we'll be having strong cash flows from leasing and hotel revenues and we'll have sustained launches of residential projects, over 15 to 20 new residential projects a year. So you have to keep an eye on this. You have to really dig into CLI and I would say we want to maintain our residential leadership, but this will really be strongly accompanied and complemented by a strong retail, hospitality and office portfolio, which is coming in strongly. And are there quality assurance systems in place, which allow projects to be developed without your presence? I would say the best quality assurance system is our human resources. We have 800 people now. And we focus very well on ensuring they're trained well, they're rewarded well, and they're motivated well. I think the best quality assurance systems are people. Of course, we are listed companies, so we have a lot of compliance tests and standards that we come up to. But I would say we're investing in the people to make sure that the CLI delivery -- it doesn't mean Mr. Jose Soberano, Grant Cheng, to be there in all 30 sites. We have very good people. I can assure you. And these are leaders and who will represent the company well. Thank you for the good question.

All right. So we have Justin, [indiscernible] asking us 4 questions. One question which was already answered because it was a CapEx related question for 2023, so. The first question from Justin is, can you give a general description on how CLI performed in the third quarter? And what are the expectations for the fourth quarter? Next is, you said that there are 8 more projects in the pipeline, are we expecting some of these to be launched in Q4. If not, what project will be launched the earliest and when?

Yes, I'll take the first part. I mean, how CLI performed in the third quarter. I think I -- well, there are many dimensions we can answer to this. But first, on the sales side, our sales velocity or reservation sales for the third quarter doubled versus the same period of quarter 1. So our ability to identify and sell into strong demand is still there. And on that metric, CLI has performed quite well if I [indiscernible] myself. Our ability to deliver and continue construction progress on our projects, where we have almost completely moved past the COVID pandemic restrictions where we're now fully back in our construction capacity and [indiscernible] and with God's grace, we can continue to deliver and -- we can continue to operate at full capacity and we've gotten this pandemic behind us. We're able to deliver that construction progress that counts towards our revenue recognition. We've managed to collect payments and bring down our delinquency rates. We've kept -- our cancellation rates are pretty constant at about 4%. So overall it was a good quarter. We continued our growth path and we are confident that continuing this growth path, we will be able to meet, if not exceed, our full year projections. So hopefully that also answers your question about what we can look forward to for the next 5 years.

Yes. And I think specifically, we're really looking to launch 4 to 6 more projects. We will have our first Altamira, it's our Costa Mira, it's our beachtown condo concept in Panglao. We're looking to launch our first project in Danao City, Cebu, Casa Mira. We are also looking to launch a Velmiro [indiscernible] Cebu. We're hoping to really get our first housing project in [indiscernible] Casa Mira, Magtuod. And then because the Casa Mira Towers Bacolod, Casa Mira Towers Palawan, first phase are sold out, we are prepared to launch the second phase of these respective projects. So a lot to keep us busy and I said, we have 1 more month to go. And then very positive it might be, and that we can hit our targets for the remainder of the year.

All right. I think we covered all the questions already. So let me just wrap this up by greeting everyone. And advance Merry Christmas. I think it's the holiday seasons are upon us. Thank you once again for following and supporting CLI as fellow shareholders. We have a long, long way to go. We're always -- we're never satisfied, but in a good sense that we know that there's just so much more work to do. There's a big initiative, a big part of play in our nation's need for good, affordable and quality housing. So we continue to report and do our part in that.

Yes. So thank you again on behalf of our Chairman, Mr. Jose Soberano. We really express our excitement about our results. We hope you can spread the good news about Cebu Landmasters. And I'm now inviting my team to really give our best push for the last quarter. So we can reach a very healthy and rosy full year when we meet again in April. So have a great day. Advanced Merry Christmas, but there's still a lot of work to do before we celebrate, but thank you to other analysts, to media, to our shareholders. Thank you very much.

Thanks, everyone. Bye.