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

Good morning. Thank you for joining us today for the full year 2024 earnings call of CLI. Joining us in this call is our COO, Franco Soberano and our CFO, Grant Cheng. Our presentation will cover the results of our operations for the year 2024 as well as recent business updates and corporate milestones. [Operator Instructions] The management team will answer these at the end of the presentation. Kindly note today's presentation and Q&A may contain forward-looking statements from our executives. These are subject to risks and uncertainties that may cause the actual results to differ materially from management's estimates and forecasts. Also, please note that this call is being recorded. I now turn it over to Franco.

Good morning, everyone. Good morning to our analysts, shareholders. Thank you for making time today during this Holy Week. And it's quite nice that we are able to reflect on 2024 results during Holy Week. We offer the success to our Lord, and it's great to be sharing this wonderful news with you during this prayerful week. So in 2024, we are very happy to report our sustained growth in earnings to parent. This is a fruit of lot of hard work, a lot of discipline, mixed with a lot of persistence from our entire operations. Our parent NIAT grew 8% to PHP 3.01 billion from PHP 2.8 billion in 2023. This is really driven by our top line performance. This is a sustained in launches. This is this man's strength, the outlier in the industry that is characterized by some oversupply in metro manila but definitely not where we operate. So I would like to report also steady top line of performance across major segments, with a record PHP 19.5 billion in consolidated revenues from PHP 18.82 billion, a 4% improvement, but this includes also increases from our recurring income in hotels, in leasing businesses and even in management fees, property management business. So I'd like to report that we're bucking the trend here. There is sustained strong sales takeup backed by the solid housing demand in Visayas and Mindanao. We are 94% sold across all projects while ongoing and new launches are fast selling at a 92% takeup. So for projects that we launched in the last 1 year, we are already 92% sold. So I would like to really like thank homeowners, our investors and the entire team for this special -- and I would even dare to say industry leading milestone with 94% sold across all the inventory. For the balance sheet, we're very proud to report this or proud to report our improving profitability and successful issuance of the preferred shares, resulting in a strong balance sheet as the debt to equity ratio improved significantly from 1.79x to 1.58x. Lastly, we're reporting our diversification into recurring revenue, which has really started to bear fruit in significant ways. We have a compelling lineup of leasing projects and our expanding hotel portfolio, which are really setting us up for sustainable growth and setting us up for sustainable growth. And yes, we put on our hospitality caps last year with the opening of 3 new hotels. And all we say that hotels are the most challenging to build, where there's many more things to be accounted for. So at this point, I'd like to pass on the floor to our Chief Financial Officer, Mr. Grant. Thank you.

Thank you, Franco, for setting the stage. So we're happy to report our numbers for full year 2024, and I'd like to frame our 2024 numbers. Under -- with still very important tenets that I think users and readers of our financial statements should keep in mind as you look at these numbers. The first big one is that these are numbers that are already reported under new PFRS standards or Philippine Financial Reporting Standards that have significantly affected real estate firms. So when you look at our numbers in 2024, we are also presenting side by side restated numbers from 2023. You see -- using the new PFRS standards that are already prevailing. So with the major component of this new standard is the separation and the treatment of interest as it occurs or as and when that interest is incurring. So we are being asked to recognize interest income from our collections, and subsequently, interest expense as and when they are incurred instead of having them capitalized, which is why when you look at our top line numbers, we're compelled to separate the interest income of our sales revenues from revenues. So now you are comparing what we call apples-to-apples numbers here. So our sale of real estate, which is the core of CLI's business, which has interest income component clocked in at PHP 17.29 billion and its interest income component of PHP 1.7 billion. Our recurring income segments, which are our hotels and rental income, were at PHP 240 million, and PHP 162 million, respectively. So what you can see here is that our real estate sales continue to grow steadily. It grew by 5%, whereas our recurring income properties or recurring income business is growing quite rapidly but albeit from a small base at 74% for hotel and 45% for retail. So overall, our total revenues grew from PHP 18.8 billion to in 2024, PHP 19.525 billion, a growth of 4%. The second big thing as I continue my presentation of our profit and loss is that CLI has grown incredibly well and incredibly rapidly in the last 5 to 6 years, I would say. And we have demonstrated our ability to be able to deploy capital and put them in projects that are selling out and are growing. But as this growth strategy has piled up and has accumulated, we also have a lot of sales that we are beginning to monetize. So in order to properly appreciate the numbers you're seeing here, we want to contextualize by repeating what we've said is that we're also -- we have this dual focus strategy where we are very focused on monetizing and completing the value cycle of many of our projects that we launched a few years ago. Some of these projects were disrupted temporarily by the pandemic, which we have recovered from very strong. And we are now in a position where we are monetizing and actually harvesting the fruits of those profits that we've recognized already. So when you see the numbers here for -- and we started this a couple of cycles ago, we would -- this has to be paired -- like in any good meal, it has to be paired with an appreciation also of our cash flow numbers. So both profit and loss and cash flow. Okay. So those are the 2 overarching themes of our numbers as we present it to you. Our gross profit -- moving on. Our gross profit is steady at PHP 10.17 billion. Our profit before tax is at PHP 5.23 billion, leading to a consolidated net income after tax of just shadow under PHP 4 billion. That's a growth of 4%. And for CLI shareholders or net income attributable to the parent shareholders or the CLI shareholders, that is a net income after tax of PHP 3.01 billion, which is an 8% growth from PHP 2.795 billion the same period of last year. With no dilution, this means an earnings per share of PHP 0.82 per share. So what we're able to highlight here is that we've been able to deliver growth consistently. And the momentum of that growth should continue quite steadily even as we pursue our other important strategies of building up our recurring income portfolio and monetizing our receivables. So what are the numbers -- or what are the KPIs that underpin those revenue numbers? Well, the first is our realized revenue. So with continued collections from our buyers, with continued sales from our new launches and with continued progress on the construction of our different real estate projects, these 3 factors combined will allow us to steadily generate -- or steadily recognize revenues on sales contracts that we closed again from prior periods. Our sale of real estate grew by 3%. And if you want to break down where these sales contributed, you could see that we are also diversifying where our sales are coming from. In 2024, you could see a very well-balanced mix of where those sales are coming from, but the strongest sales are really coming still from our mid-market and affordable market segment. So combined, that's almost 2/3 of all our sales. So we know what our core business is. We know where the housing backlog is, as Franco mentioned, which is something that's actually underreported. I -- there was this one investor event where I jokingly kidded that it's strange that the oversupply is being reported but the undersupply is not being reported because you can have both at the same time because you're talking about different market segments, you're talking about different geographical locations. So the dynamics of the demand and supply of housing is very different. So we know where that demand is. We know where the backlog is. We know what market segment it's in. And it is the -- our core business that has driven our growth for the past several years, and it is what has continued the sustained success of CLI. So again, combined at 64%. But notably, notice also that we have almost 20% of slice of the pie here. That is actually our lot sales already. So as -- remember when we -- I mentioned earlier, that part of our focus is to be able to start monetizing and reaping the benefits of our significant capital investments into our commercial real estate projects and retail projects. This one is in township. So this represents sales we have made on lots -- on developed lots that we've sold to Amcor investors and locators in a couple of townships that we are building, thereby essentially already reaping that benefit and materializing the value of those investments that we have to be. And then if you break down by market -- sorry, by location of where the sales are coming from, Cebu still is the biggest slice of this pie at 46%. But Visayas and Mindanao -- Visayas ex Cebu and Mindanao continues to be very, very strong. And I know we've said this many times, and you'll see it in 2025 and beyond, but we look forward to adding Luzon as a very significant slice of this pie that I know Franco will cover in our slides later. So this represents -- our realized revenues represent, again, it's a lagging indicator. It shows how much revenue we're recognizing from sales contracts that we have closed from prior periods. Next slide. Now we would want to show you the leading indicator KPI, which is how much reservation sales we actually closed last year? What was supposed to be a down year. So we're reporting a relatively flat number. So we closed -- but still an excellent number. We closed over PHP 20.58 billion worth of real estate sales in 2024. So again, if you break down where those sales are coming from, incredibly strong demand from the middle market segment, very strong demand still from our affordable housing segment, our Casa Mira brand. And then you have lot sales in the premier segment also here. So what this underlines for us is that there's still a broad-based demand for housing products, especially in Visayas and Mindanao. And simply due to timing and the number of launches that we have on our plate that we're simultaneously executing. You will see that our mid-market and our affordable housing segment really anchor our year-to-year reservation sales. So these are the kinds of -- this is the kind of market demand. This is the kind of reception we are getting in the different markets that we are serving. And later, Franco, when he breaks down and shows you how our sales are doing, it -- those numbers simply reinforce the fact of why we are selling and we can sustain these kinds of sales numbers. And these numbers will eventually be translated into revenues in our financial statements as we build them up and as we collect on our contracts. By the way, I think JR, my colleague in Investor Relations, already mentioned this, but I see some questions in Q&A. So let me take this opportunity to encourage everyone to please type in your questions in your Q&A. I see some people already doing that, and we look forward to engaging you and addressing your questions later. So our balance sheet, we are now at PHP 109 billion, so not a small company anymore. But I always highlight in the red box what I deem to be the most key and essential asset for CLI because this is essentially who we are. It's our beating heart. It is -- what's boxed in here are accounts receivables and contract assets or in other words, the value of those sales contracts that we are already recognizing as revenues in our P&L that we have yet to convert into cash. So I highlight that because combined, that's a total of PHP 53 billion, let's call it, PHP 54 billion, and you compare that against our interest-bearing liabilities. So if you think about it a little bit, interest-bearing liabilities are your actual current or your actual loans as they are right now, whereas your accumulated assets here are the partial recognition of our sales contracts. So this is simply an insight that I want to give to investors that yes, we have used debt in order to drive our growth, in order to capture market share. But I would argue that these bankers are some of the sharpest tools in the shed who recognize a good business when they see it. So I'm really proud that -- in fact, for us, it's actually a point of pride that we -- bank and lending institutions, retail investors, when we go on into the market, they recognize our business and projects as essentially bankable, as essentially sure bets because of the performance of our sales because we know what to build for the Filipino people because we know where the demand is, and we know how we will sell out. So you compare our accounts receivables and contract assets, again, these are items in our balance sheet that represent the value of sales contracts. That's already enough to pay of all our current debt. So you add all unrecognized revenues, you add real estate inventories, which are our land bank and our units that are left to be sold, then you add our investment properties, which are hotels and our other recurring income properties and our townships that are just beginning to ramp up. They're in its infancy stage, the way I view it, our hotels and recurring income segment, we're like in a maternity ward. So I'm beginning to hear the gentle cries of new firstborns there. And there are more -- how do you call it, buns in the oven of properties that will come online and will start like generating revenues and cash flow for CLI in the next 3 to 4 years. And we're incredibly excited about the future of CLI in that aspect, given how successful our initial launches in these product segments are. So you put all of those pieces of the puzzle together and you can start to see how undervalued we probably are in the stock market, but just on our balance sheet, you could see how well managed our liabilities are and how the value for our shareholders and in our equity will accumulate very strongly in the next few years. Next slide, please. We skip one slide. There you go. So just to break down a little bit our balance sheet, and this is a very important slide that we started showing since the past few briefings. So while we showed you close to PHP 54 billion of assets from our sales contract, again, that's just the proportionate or the commensurate value or sales contract we're able to recognize because of percentage of completion. But if you actually total the aggregate value of all the contract, including unrecognized -- those that are still unrecognized and those that we have yet to recognize as we deliver more per POC or percentage of completion, the total is actually PHP 84.64 billion. That's PHP 84 billion worth of sales contracts that we have yet to collect, and this is net of what we've collected already, okay? So this is not even the entire contract value. These are outstanding amounts, okay, that we will monetize in the next few years, okay? In 2024, if you look at the aging of it, PHP 13.65 billion are scheduled to be monetized this year. And when I say monetize, that's simply a shortcut term that we use. That means that all the hard work has been done, the building has been completed, the customers are going to be homeowners or are going to accept those units. Their accounts have been fully paid on their payment scheme. It's time for them to pay the balance of their sales contract with us either through a home loan, a PAG-IBIG Financing or pay us in cash. So a couple of very key takeaways here. One is that you could see that our receivables are accumulating and increasing at a rate at which the growth -- that reflects the growth of our sales. So this is a good thing because it shows that our growth and our aggressive expansion as we borrowed money and acquired properties and launched projects is being rewarded and is actually generating great sales and eventually value to our shareholders and our stakeholders. The second key takeaway is that you could see that only a small portion of my receivables are going to be monetized in 2024. But the vast majority of them, over PHP 71 billion of them are still for monetization, are still for collection in the future. And these are again not sales projections. These are sales contracts, signed sales contracts and buyers who are already steady paying us monthly equity amortization. So the key question really for me and for all the executives in CLI as we look at our financial statements, what we monitor religiously is how healthy are these receivables, how reliable are these cash flows, what gives us the confidence that we can continue on the growth and expansion path, say, to Manila? How strong is our base essentially? And that is reflected in the numbers here on the right. And you realized lately that not a lot of developers probably show this for a very specific reason. But we, on the other hand, like to show it because it reflects how we organize our company and the key management principles that we implement throughout the organization that leads to these numbers. So this is a consequence of management decisions we've made. But let me report it first. Of the PHP 85 billion in contract -- uncollected contract receivables in 2024, it has a delinquency rate of less than 2.6%. In other words, less than 2.6% of that are late in their payments. But even then, on average, any one of these contracts from start to finish, the cancellation rate is 4.31%. So that means from start to finish, there is -- there are probably about 4.3% of these contracts that might back out, that might cancel. But that's a gross cancellation rate, by the way, because this is a very key number. Your sales recovery rate is 97%. And what that means is that how much of these canceled contracts will have a new buyer within the next 12 months. And the answer is 97%. So you actually slash 97% from 4.31%, the net cancellation rate is less than 1%. And that, my fellow CLI shareholders, again, reveals the core strength of CLI. What we build, we're able to sell. And our buyers, they are good buyers. They are real buyers who are very intent and committed to owning their house. For a lot of them because it's their first big investments, their first house. So they're what we call our primary buyers. And again, I don't want to give away too many trade secrets, but the quality of our portfolio and the way we address the housing backlog and demand in Visayas and Mindanao is what lies at the core of our strength. And again, forget the headlines a little bit and this is what we're talking about for -- these are numbers that reflect the reality of what we've been trying to say that if there is a backlog, right, if there's not enough supply of a certain kind of house, people who have contracts to take delivery of these housing units, they want to hang on to it. They want to be able to eventually get delivery of what they know to be their significant investment of account developer who has garnered a good reputation of delivering more for them. Next slide. And we saw this first in our 9 months. So -- and now we continue this and this brings from the point. We showed you our profit and loss, our balance sheet. Now we're showing you our cash flow statement. And again, it shows how we are accelerating our efforts into monetizing projects and contracts that hit a bump in the road 2 to 3 years ago when we had the pandemic but are now going to be monetized. So this is the number that we're particularly quite focused on. It's an operating cash flow because it means that what we are now collecting faster than we are spending on our saleable projects. And it has allowed us to -- and this has given us a very powerful foundation. We had a stable foundation by which to keep expanding and by which to keep investing in our recurring income project. That's in our investment properties. And that's in the continued acquisition of land bank for our future projects. So this is a key number for us. It reflects that dual-focus strategy where we operate -- where we focus and make sure that we not only have positive operating cash flow, but we're also delivering positive growth on the top line and bottom line. Now -- so very quickly, one of the things that we want to highlight on this is how our debt maturity profile and how our liquidity stacks up. So I have a couple of more slides before I pass it back to Franco. But again, this shows how we think about our debt management and how we plan out our capital-raising strategies. So the light green bar in the back, I think -- I hope you can see it in your respective Zoom screens, they represent our collection -- or accounts receivables collection. So PHP 85 billion [Foreign Language], this is the light green bars in the background represent them broken down according to age or when we expect to collect on debt. Whereas the dark blue towers in the foreground that's the debt maturity profile, the principal payments we are scheduled to pay. So it does show that every single year, we have enough receivables just to cover our principal payments. So theoretically, if we never launch another project again. This is what the cash flow will look like. We will have more collections than we do principal payments. And the excess amount you see there is essentially what we can use to pay down the rest of our debt and provide excess returns to our shareholders. And again, this doesn't even count inventory, land bank townships and recurring income properties. These just represent the value of sales contracts we already have in our back pocket that we are already collecting on. And remember, the quality of those receivables when I talk about receivables here. So it shows how we are constantly thinking about this because we also are very aware and sensitive about the turmoil in financial markets that could hit us. I mean we're in the world of tariffs right now, but before tariffs, there was a credit crisis in China in real estate. Before that, there's the global financial crisis. So financial markets will tend to be cyclical. But the point is that we are minimizing our refinancing risk. We're minimizing any liquidity crisis that might affect the broader market and insulated -- we're not saying we're immune from it, but we are striving to minimize refinancing risk as a real estate developer so that we don't also overleverage ourselves. Okay. Next. So finally, I end my portion. I think -- and I thank all of you here and our investors by highlighting that we still -- we have a very strong reputation in the market, and I think it's only improving. So in our last capital-raising activities that we're showcasing here, we had 4 of our most trusted financing institutions who underwrote our bonds. So it was over 3x oversubscribed. We were able to raise PHP 5 billion in sustainability-linked bonds. So I'll just cap off my presentation by saying that not only are our -- is our financial position and our ability to raise money stronger than ever, putting us in a great position to achieve more growth, paying more -- or to pay and undertake more CapEx to expand into new markets, puts us in a great position because we know that we have the resources to do so. To execute those growth strategies, it also reflects the increasing stability and recognition of CLI as a compelling investment instrument in the capital markets, given that we were able to raise this money at the narrowest end of our regions. So it allows us to manage our liquidity needs both on the financing, the investing and the operating side quite strongly. So this is just a highlight of that. But at the same time, also, we're one of the very few non-finance institutions in the Philippines to carry a sustainability label, not just any sustainability label by the way, sustainability-linked issuance, which means that we put our money where our mouths are. We chose a KPI under the sustainability framework where meeting or not meeting that KPI will have tangible effect on our cost of money. So we're committed to performing and delivering certain key performance indicators after the sustainability framework, that was approved by the SEC. We plan on delivering that. And again, we put our money where mouths are. And we are happy to contribute and become a pioneer in fact, in this space in expanding what sustainability means in the Philippine capital markets. Okay. So that wraps up my segment. I'll address some questions later. In the meantime, I'll pass it back to my friend, Franco.

Yes. So thank you, Grant. I always -- I'm very happy to hear from Grant. I always appreciate how comprehensive his reporting is, and I hope it really paints the best picture -- the right picture about our performance, and I do feel very motivated after hearing from Grant about that, and I feel reassured. And I hope our investors are appreciative of the good news from our CFO. So at this point, I'll go into the business updates. So while we expand new projects, launch new projects, and you saw from Grant that we registered a very strong positive operating cash flow. And yet, we are in a position where we're collecting more that we're spending. However, we have not lost sight of the continued growth, and we are positioning by having new land bank. So aside from the 107 hectares of land bank, we are actually targeting over 175 hectares for acquisition in the next few years. You can see here that Mindanao holds the majority of our land bank now at 56%, followed by Visayas at 24% and Cebu at 17%. So recently, we have positioned ourselves in Metro Manila. So we'll be updating you more on that in the upcoming briefings as well. So this CapEx spending shows you our commitment to our shareholders. And it shows you the strength of our operations. So we're spending as it goes hand in hand with our growth. So we had our highest actual CapEx spending with PHP 13.83 billion in 2024. And most of this went into the residential development with 73% followed by land acquisition at 18.5%, and our expenditures into our investment properties at 8%. So this is our pride and joy, our portfolio that has now grown to 125 projects. You can see here at the residential portion, our Mivela project that we just recently turned over. It's reflected in our market share. Our leading market share is not an arbitrary number. It's a result of a big -- result of a great effort. It's a result of tremendous partnerships with our JV partners, with our suppliers, contractors. You can see here our growth in our recurring portfolio with now 6 offices, 10 hotels, 10 mixed-use projects and are very popular estates. So the DGT or the Davao Global Township just recently opened its part development as well. And it's the go-to-place now in Davao. And our Xavier University development. I'll report more on that later. And it's becoming a very popular investment choice for many Cagayanons and many of our friends in the region. Next. So for real estate sales, where it's contributing the bulk of our reported revenue. We're still very proud even if it's a 4% growth in real estate sales, it's a tremendous growth in real estate sales and a springboard for more growth this year. It's 96% sold across all stages. What my challenge is now, I have to launch more projects because I'm running out of inventory. I always say that it's a good problem that we have here. And I get calls from my sales head, Rose, frequently as she needs more projects to be launched. I think this is where, it's -- well, others may be holding launches. We are launching more. I think we're in a position where we are bringing the fresh inventory into the region. Because of this, because the numbers guide us, the numbers inform us that there is dwindling supply out there, and we need to cater to that demand. So we launched over PHP 14 billion in sales value in 2024. Next please. So this is really our batting average. So how reassuring -- how comforting is this healthy consolidated sell-out rate of 94%, across 100 property for sale portfolio, we've now reached the 40,000 unit mark and it's 94% sold across the board, generating over PHP 129 billion in sales, our completed projects are 97% sold. Our ongoing projects which are also -- which also include our ongoing turnover projects are 97% sold. And you can note here that for those that were launched in 2024, sell-out rate is at 89%, and we just launched a project at the last month of the year. That's why you see the 57%. But as of to date, it's already increased in the sales performance. Next please. So you can see our real sales here. I just want to highlight several -- I think I want to highlight our presence in the region. So Cebu City here with baseline Casa Mira Iloilo. I was there to turn over the keys to some buyers, Bohol Cagayan, Bacolod, Dumaguete, Davao. I already did a good job of putting together -- really our -- this is the happiness we feel now that we were accepted into different cities coming from a Cebu City base and now really established a very strong base in all the major cities in the Visayas and Mindanao. So we have, I want to probably emphasize that, 1,200 employees already of CLI, 1/3 of which are really spread across the region. And these are not just, I would say, symbolic offices. These are fully operating offices with engineering, with sales, with documentation, with customer services. So this allows us to expand more and go where the demand is in the region. Next please. So you can see here our construction in progress. You have Astra Centre turning over very soon. Casa Mira Ormoc also turning over soon. You can see the clubhouse in the pool there. Casa Mira Homes Dumaguete already started turning over and One Paragon Place already started turning over. And I would like to give credit to my team. You can see here look at that sales performance, 100% sold 94%, 99%, so our buyers are just really waiting to get the units and we are delivering it to them this year. Next. So a special milestone for us when we talk of our iconic Masters Tower, the home of the first Sofitel brand in the Visayas and Mindanao region. And I believe by the time it opens, it will be the only Sofitel brand operating in the Philippines when we open next year. It is now the tallest structure in the business district of Cebu in the Cebu business park, what I can say here is, in the next 5 years, I believe we're the only new 5-star hotel operating as there is no new 5 star that launched in the city, so we are positioned very strongly. We would like to thank the contractors that all contributed to this. And we hope to invite you, our analysts, our shareholders when we open towards end of next year, 2026. I have to discuss with Grant if that is complementary or we can charge you discount. So for recent launches, you can see here very good diversity in Consolacion Cebu, Mindara in Davao, Casa Mira Homes in Butuan, already 84% sold. We started our new product line, which are our walk-up units already 100% sold. So please expect us to launch these walk-ups, and we're able to price these very affordably at only PHP 2.5 million. So you can see how strong housing are. So last year, it was our Davao projects that had records. So housing projects selling out in 2 days, our condo selling out in less than a week. Next please. So in terms of our office and retail projects, you can see here good growth. And we've added a lot into our gross leasable areas. Next please. So while our leasing footprint is at 40,000 gross leasable, you can see a good CAGR of that, and the earlier slide showed you 70,000 to be delivered in the next 2 to 3 years. We have our first mall, the Astra mall opening very soon. So you can see this on a different trajectory this year -- an improved trajectory this year. So one of our -- next slide, please. So one of our special milestones on how we, as a real estate player, we're able to now become a leading hospitality player in the region. Our strategy was that since we have a lot of these mixed-use development in prime areas, we complemented this with branded hotels. So our decision was to partner with leading hotel brands internationally as they have the network, they have the operational excellence, and it's starting to bear fruit with 74% totality revenue growth. Next please. So you can see here that we opened lyf Cebu City. Citadines Bacolod City is turning into the leading hotel in Bacolod City within less than 1 year of operations. We're now 640 rooms operating. And you can see our next hotel opening would be Radisson Red opening second half of this year. So that's very exciting. It's going to be a very trendy brand. Then we have Citadines Davao that will be operating by the later part of 2025, then Mercure Cebu City in our historic downtown area opening also at the end of this year to early next year. Next please. So in terms of estates in townships, next slide. We are very proud of our -- we're starting as a estate player. As you all know, estates are the most capital intensive with big tracks with large site developments. And we are the proud owner of 3 of these in the region. DGT as Grant mentioned, was already contributing lot sales. So our capital, we recovered with some lot sales already. We opened our DGT park here, a very popular destination. And you can see our East Village, our very popular East Village, 6 tower condo complex rising very fast. Next please. So I'll hand with some significant milestones, and I really hope to interact with you. Grant and I hope to interact with you with some good questions that you may have about us, about the industry or about the different dynamics where CLI operates in the Visayas and Mindanao area so -- for significant milestones. So once again, we've captured the leading market share across the Visayas and Mindanao region jumping from 16% to 19%. I would say why? Because the sales directed us to launch more, the absorption has been strong. The delinquency rates have been low, and we even have the recovery rates now. So whatever is canceled, 97% is recovered. So it's not just a market share supply or sales absorption, it's in different aspects of real estate from customer service to turn over, to maintaining healthy receivables, to having strong takeouts from the banks. Next please. So just some very -- we're just 4 months into the year. That's why Holy Week comes at a very good time. It's been a very fast 3, 3.5 months. But it was -- we celebrated at the end of the first quarter having an 89% sold project in 2 days. So we can do some virtual applauses because it gives our market some good news, some refreshing news. There is really demand out there. I think our job as developers is really to identify where the demand is, and I can really tell you the demand is in Visayas and Mindanao. It's developing well. There is a good mix of affordability because for the same price, you can live closer to the city. Now for the same price, you can get more in the Visayas and Mindanao area. So that one Manresa place is just the first launch in our Manresa Town complex, our 15-hectare township beside the future Masterson campus of the Xavier Ateneo de Cagayan. So we still have over PHP 36 billion of launches this year and up to early next year, which will include the 2 towers that are part of our partnership with the NTT Group, NTT UD Group of Japan. We have our first housing development in Gensan launching soon, expansion areas in our Bohol City and Cebu and the West Village, another offering in our Davao Global Township. So good news. We are in Metro Manila. So while we are very busy investment, I think the direction was to spread our wins, bring our value-for-money brand of real estate to Luzon. We have acquired our first development in Metro Manila, and we will be disclosing more information on that in the coming months. So why Metro Manila? You can say, yes, we want to be closer to our shareholders, to the investor community in Manila, but also we see opportunity now. We want to be one of the first to bring fresh inventory to the Metro Manila market next year. I do believe preselling presents you an opportunity to plan your investment over a 4- to 6-year horizon. It's not just affordability. Without showing all our cards, we're going to bring innovation. We're going to bring better technology. I'm a believer in -- as a real estate student, I'm a believer in demographics, and the demographics show that we are a young population. We just registered one of our lowest unemployment rates. So it's just really about what affordability in Metro Manila should we set it at, what offering would cater to the young emerging population, emerging middle class population and really that education. We need to educate our target market well that homeownership really is wealth generating, homeownership is wealth preservation and wealth accumulation, and it's applying what we learned 100 residential projects we've done over the last decade or so and bringing that to Manila. I can probably say that we are ready for the challenge, Manila Sigrad. Of course, we have studied the market carefully. So -- and please visit our Metro Manila office when you can. Our Investor Relations Head, JR is there, our business development heads are also there. [Foreign Language]. Just to recap, that course, the apples are great, but I am prouder of the sustainability and governance awards that we have achieved, the AEGS Golden Arrow Awards. We have two. I think we're aiming for even better this year. So this is -- we're showing this as our thank you to our team. We have worked very hard to help us garner all these awards. Next slide. And of course, I think we did not show this in our previous briefing, but this is really our way of taking care of our shareholders. We've distributed PHP 3.76 billion in dividends since 2018. So that's our first full year as a publicly-listed company. It's a 15% CAGR of dividend payments since our IPO. So it really reflects how we take care of our stakeholders. We take care of our buyers, our homeowners, our contractors, our partners, and we want to take care of our shareholders. And our hope is more we will realize that, our hope that our growing shareholder value will affect more and how our share price really show should lead us well. We have leading market share. We have leading -- I would say, we are leading shareholder value. So we are very hopeful that it will reflect in the market appreciating us more, especially now that we have -- we're there in Luzon closer to the major players in the market. Yes, and Grant, do you have...

So again, fellow CLI shareholders. Thank you for Franco. We'd like to close our annual briefing by sharing really the themes and the key investment messages. The first is the oversupply concerns are a little bit, I wouldn't say overblown, but rather, it's not affecting CLI because as I mentioned, the key thought here is that, yes, there is an oversupply. And yes, there is a backlog. So how can an oversupply and the backlog exist at the same time? The answer is that in real estate, you have to look at the nuances, you have to break it down because the oversupply exists in a particular location, in a particular market segment, and it won't apply, won't spillover to another market segment and another location. Again, I keep in that [Foreign Language] when the time comes, that you can chop a PHP 30 million condo in Metro Manila and then helicopter that to General Santos and make it 6 affordable housing units worth PHP 5 million each is when we get a little concerned. But if you know where the backlog is where there is not enough supply, and that's where you build, that underscores the different markets that we're operating. We're just in a different ball game. So in Visayas and Mindanao, in affordable market segment, that is that 6.5 million housing backlog that we were continuing to address. And that's point number two. We will continue to address that 6.7 million housing in backlog. This is statistic not from CLI, but from the government and from different NGOs and academic institutions. 50% of that backlog is in VisMin. And most of that backlog is in the affordable housing market. In other words, where our wheel -- it's in our wheelhouse in the markets where we are strongest. We know where to get that growth, and we know that we can sustain our success there. It's not as headline grabbing a 34 years' worth of inventory you need to clear out, but this has been a reality in the Philippines since I was born. Since we were born in 1980, we just don't have enough houses. A quick drive through any of the cities in a lot of the regions in the Philippines will confirm this fact. Third, we continue to not only enjoy strong investor support, but this investor support has grown, has expanded, has only become stronger. Not only are we seeing a lot of demand for investments into CLI. We were proud to be the vessel of investment even for big international conglomerates like NTT, the third largest conglomerate in Japan, choosing to partner with CLI over any other Philippine-based partner. So we're doing business, and we're in 2025 with very strong optimism. Our recent condo launch in Manresa in Cagayan de Oro, as Franco mentioned, we generated over PHP 4 billion worth of sales in the first 1 week of its launch, and we're now at over PHP 5 billion. We've got another 10 to 12 projects in our pipeline. Again, we know what works or at least we -- based on our track record, based on the quality of our receivables and our buyers, we know what the market is demanding. And we will continue to serve into that demand and generate above-market returns for our shareholders and for our investors, for our stakeholders. We thank you for following CLI, and we hope to reward your trust in us for many years to come. Okay. Thank you, everyone, and I think we can move on to our Q&A now. JR, I think you can -- I see a number of Q&As in our chatbox. Let's address them one by one.

Thank you so much, Grant and Franco.

Yes. And if you also got other questions from any other channels, just feel free to facilitate that.

Yes. Yes. Of course, there are multiple questions about our plans for Luzon, our design expansion. Maybe we can shed more light into it?

Yes. Franco, do you want to give more details. A lot of people are asking for specifics about what we're doing in Luzon. I'm not sure if we're already at liberty to disclose how we're moving there because things are moving.

Yes, I think we are prepared to share that, I think, in an upcoming briefing. But we are, we have acquired a Metro Manila property and as we will disclose the specific area in due time. So we are looking for a vertical development in Metro Manila. And secondly, we're looking at a housing development, significant housing development in the Cavite area. So it's a mix of a vertical and a horizontal project. And we are going to report the specifics soon as we complete the necessary positioning. But we want to share it with you not half big we want to share it to deal with more concrete detailed information, especially as our first offering in Metro Manila and with Luzon market.

Great. Another question. Is the CLI looking into joint manager with former investors or partnering with luxury brands as part of diversification plans?

We already have. So we are the Philippine partner of the NTT UD Group. So NTT UD is the real estate arm of the NTT Telecom Group of Japan. So we have one project with them so far. And that project is located in Cebu City. So together with the NTT UD Group, we invested in a very pristine prime 6,000 square meter property in the Cebu IT Park district and we are launching our first 2 towers very soon. So this is precision on the premium side. I believe we're the only new residential offering in the business district of Cebu. The business districts are the planned developments. And then these are originally developed by the Ayala Land Group, our main business districts in Cebu. If we are looking for more foreign joint ventures, I think we're very happy with NTT UD being the third largest in terms of market capital. I looked at the trillions of course, in Japanese yen. So we want to prove it to them that we are a good partner. In terms of luxury brands, I think we -- these luxury residential, this is where that probably caters to the less than 1% of the market, whereas if it's a premium segment. Now when we say premium, this is not luxury, but let's say, these are PHP 5 million to PHP 20 million range in terms of this. So that caters to not just 1% of the market, but caters to 5% to 10%. So we'd like to be there in the 5% to 10%. You want to add, Grant?

No, I think it was also asked on hospitality where we actually have both Abaca and Sofitel coming up. So those are squarely within the luxury segment. So aside from -- interestingly enough, we're catering to affordable housing. In our hospitality segment, we're very broad-based. We have hospitality projects across the entire market spectrum from dormitels and co-living spaces here in Cebu to very high-end boutique and what we anticipate to be cut properties in Cebu like Sofitel and Abaca that will come. I for one will wait to give an analyst briefing -- annual shareholders' meeting. On the shores of the white sand beaches of Mactan in our new open Sofitel, maybe in a couple of years' time. So yes, we have those.

Next question will be from Ralph Fajado. Cebu Landmasters reported the strong 90.4% sell-out central rates in the market for 2024. Could you provide the comparative figure for 2023? What are the key strategies and initiatives that you believe were most instrumental in achieving the success.

I'll help pick up. And then let's address the second question, too. What are CLI's primary strategies and priorities for sustaining growth momentum moving forward into 2025 in specific market segments? Just to provide some context, this sell-through figure and why we're able to sell our project. Again, the key strategies and initiatives here is to simply know and to do your due diligence on where the demand is, right? So ours is a strategy that not a lot of developers will do. Some of them, they have a lot of dry powder, they have extremely large land banks. They will prioritize having that inventory and land bank. CLI prioritize sustainability. We prioritize sales velocity and to be able to convert of capital and return capital to our shareholders. That's why this strategy, this initiative is very focused intent on building our projects in the housing or in the market segment that has a backlog. It's what has fueled our success in 2024 and what will future fuel our success in 2025 and beyond. So in fact, Franco mentioned our expansion in Luzon. I'm quite familiar, of course, with the prospects of that expansion. And I can tell you that the properties that we are looking at as potential expansion sites in Luzon fall within those strategies. We're not looking to build the next luxury condo in Metro Manila. There are more than enough players doing that there, and that's where the housing backlog is. But our core strength of affordable, more for the Filipino family type of housing that addresses a lot of housing demand, I mean, guys, as promised I'm from Metro Manila. You drive around Makati, you've you driven 10 minutes outside of the business center. Have you driven just outside of BGC and Taguig and taken a look at how much, let's call it, informal structures are there? And people who are probably working these high rises who can afford mid-market and affordable housing but whose structures are actually, let's face it, they're not regulated structure. How much more demand there is for that population to be able to get affordable housing, there's still so much. You just have to know again which market segment it is.

Yes. I'll address -- Ralph, this is a very good question. So I think in 2023, we were at 93% sold out across our 38,000 inventory. And we improved that to 94% sold out across now 40,000 inventory. So what our key strategies, definitely, it's calculated. We do have existing land bank now and we do have our township. So we're able to capitalize on the townships we established like the Davao Global Township becoming a very popular destination in Davao. The South Davao, we were able to capitalize on the East Village sales there. As we said, the nice thing maybe, it's supply. Let's say, in the entire Cebu last year, I read in a statistic that there are only 3,000 condo units launched. I mean let's try to absorb that, what is 3,000 units launched across a city of 5 million people? So if you come to think of it, if I have to battle against 3,000 units, how do I differentiate myself? Location, location, location. I'm always value for money. So we always fit ourselves against this other inventory. Like how am I better located? What is my value for money? I'd like to be the most affordably priced but give more for that price. Of course, costs have gone up, costs have definitely gone up. So how can we be efficient with the costing so we can deliver an affordable product or a competitive product? And really the [indiscernible] would be delivering. But as a developer, reputation is everything. I will be very honest to tell you, I reply to customers. Some who escalate, we're very hands on in spite of us not becoming a small developer anymore. We're very grounded, very humble in our approach and our buyers here recognize that now. We have so many repeat buyers quite honestly, I got an e-mail from a buyer. He's actually bought in 4 properties of ours already. So this is it. This is how we look at it. Our supply in the Visayas and Mindanao is not much, and if I launch a new project, it does not create an oversupply basically. And the demand is there, especially in the key areas. The question was where. So I'd say Cagayan, Davao, of course, Cebu, then you have, even Panglao now is a very popular destination, Ormoc. Bacolod is very strong for us. Iloilo, so the key investments centers that are regional centers of those areas.

Yes. I'll take the next question. I see there, in fact, two questions from Mr. Luis Francisco. So I'll just read them out loud for the benefit of the other people on call. So ex lot sales were both realized revenues and reservation sales declined in 2024. And then given the timing of the launch, should we expect a re-acceleration in 2025. The second question about dividends. So I'll answer both. Don't worry, Luis. So the answer, and I want to answer this carefully and in the right context. Yes, if you take it that way, but the answer, actually, you shouldn't take it that way because lot sales were a deliberate part of our strategy. It's just what we meant by the dual focus on monetizing a lot of the significant investments. We are forged into ex residential projects. So projects that are not presidential, recurring income. So commercial, retail and in this case, townships with poured billions -- tens of billions of pesos in developing these properties. We have so far not yet really built out this development. We're only beginning to see the value of them. But the value of them is on paper. We know that they increased so much in value. So the strategic decision to sell some lots in our townships to anchor locators. I can share this, you've seen in the news. Those anchor locators are very well-respected institutions. So that's Insular Life and BDO Unibank who has been -- who has bought some of those lot sales in our Davao Global Township has allowed us to recuperate, some of the capital we have invested here has allowed us to generate liquidity out of this project to continue the further development of these townships without putting such a liquidity strain on our core business. So the answer is, yes, but lot sales are already an integral part of our business model, given that we've been talking about townships for several years, and that's an integral part of our business development. And given the time of the launches, we expect a reacceleration in 2025. Also, again, if the launches are there, which are very dependent on many things, on permits, the availability of land and the timing of -- we have to time it carefully because it's not exactly -- you always still have to navigate the intricacies of the market. If these things go our way, yes, you'll see an acceleration in 2025 even with ex lot sales. But here's the thing, lot sales will continue to be a part of our business strategy, at least in the short-term future. While we make a strategic call of which part of those townships we would develop ourselves, which parts of those townships we will release to third-party and other developers or other locators there in order to break up the overall value of the townships as well. Okay. Your second question, Luis, is on dividend per share -- to the common shares have been stable. While earnings have grown and what are our views on the recent divergence. The key answer there is cost of money, meaning that a few years ago, you could borrow when reference rates, we call them deval rate in the banking world, reference rate of bank or the repurchase rate on the BSP. They were really bottom rates, historically low in the history of modern finance. Companies could borrow at 2% and 3%, right? So -- but as interest rates have gone up, companies like us, borrowers like us, those that have been gradually been replaced. In other words, if I had a 5-year loan when I'm paying 3% only back in 2021, 2022 when interest rates were really low, some of those debt is maturing. And when we cycle out and we refinance them, we're refinancing them at a very competitive rates in today's market, but more expensive compared to 5 years ago, again, naturally because the reference rates have gone up. This is a long answer to say that when cost of money goes up, you have to recalibrate your decision on how much cash you're going to give out and how much cash you're going to keep in the company -- you're going to retain in the company for further growth. So it's always a balancing act. Instead of we know we can do a lot of good, we can generate so much value from the liquidity that we are generating from our operations, from our internally generated business. So we still do want to acknowledge that a lot of our shareholders are looking forward to our regular predictable annual dividend. So we want to give importance to that, that we want to give priority to that. But at the same time, all the liquidity that we generated instead of paying a higher cost of money, we can redeploy it generating more value for a longer-termed more sustainable and a more diversified business for CLI.

On dividends. But of course, we talk about it in the ex-call and with our Board. For those who have held shares since our IPO, it would have -- the dividend yield would be almost 8% given that. I believe our analysts -- our Investor Relation showing here that we have one of the highest dividend yields among our peers in the real estate sector. So we hope to keep it that way. And it's justified by a good performance. So please continue to keep track of us. We do want to return more to our shareholders. And we're gearing up for a strong 2025.

The next question will be from Matt.

[Foreign Language].

Yes. Okay. On that sale, how much was booked in the year? And do we expect more transactions for the upcoming year?

Yes, pretty [indiscernible] question. We can take this offline.

Okay. And then second question is how much was [indiscernible] for 2024 and target outlook for 2025? And third will be on the external risk and opportunities. It's ongoing external policy, uncertainty a major risk factor their business? Or are there emerging opportunities from this that we can take advantage of?

Which one do you want? Yes, I think it's [indiscernible]. So lot sales, is that correct? That's the PHP 3.6 billion was booked as lot sales. So we're very happy of that because I mean lot sales is a vindication that our townships model has worked. However, these are, I would say, less than 20% of the salable area. So we are still keeping a big chunk for our own developments. I do -- it's a bit more model. You saw us registering one of our healthiest net operating cash flows, which we're very proud of and gives us room to acquire more projects. So these kinds of lot sales allow our mass with capacity to acquire in areas where we feel are our growth areas. So that's one of the good results of these lot sales. And for the second one, on the takeup, how much was rebase sales can be for -- sorry. Sorry, PHP 16.9 million residential sales and PHP 3.6 million for lot sales.

So almost 17 million for residential and lot sales. Franco, I'll just add in that, that it's important to add context to that question to that answer in that, lot sales, if you look at the residential sales, right, that still feeds into the overall 96% sold-out. In other words, it was a strategic decision. We put a lot of capital into projects we've been building up townships for the last several years. So while we didn't launch as many projects last year, that gives a strategic decision because we knew we had an inventory in townships that we can combine and blend with our existing residential inventory to maintain the velocity of our sales without committing and putting out too much more capital on the -- in other words adding more to the pipeline, which would incur more debt. So it's this dual focused strategy that bears out numbers like this. So I think at the end of the day, we simply -- so we sold out what we wanted to launch and we are beginning to sell and monetize products and real estate -- real estate products that we've been building and we've been investing into for the past several years.

Then on external there is an opportunities. I mean, just last month, we sold PHP 4 billion in 2 days. I think the opportunity for us is that we might be the ones bringing fresh inventory when others have decided to pause. So we -- by being impressive in 18 different cities, we can control the timing of where we want to launch this in places that have really no inventory at all. So we are going to be first to market basically in this current environment where there's some doubt, especially in Metro Manila, but I can really tell you very honestly, seeing 94% sell-out rate, our success in Cagayan de Oro last month, and we're now preparing for General Santos. We had a trading for brokers, and they're very excited. I can say we're not really different, but we are monitoring the external situation. However, CLI is catering into Filipinos. I think we are catering to the low market, and we're not catering to a speculative market. We're catering to the end user market that is really investing for long term. We have never sold a floor to a big investor who will flip a unit. We actually review buyers like that. So the end user focus of CLI in a growing developing region of VisMin, I think, partly shields us from these current external risks and opportunities.

I'm not sure what external policy is Rusty you're referring. Is it the tariffs? It's okay. We're not importing on. Is it the ban on POGOS, which has affected the industry. Again, Franco has definitely answered that and we don't cater to that market.

I think we've never, I think we have no imports also from the U.S. right now. It's really mostly locally and in Asia, where we get most of our materials to construct. So even on the cost side, I don't see the immediate risk to us on the cost side. So delivery. It's really more project management and delivering on schedule and realizing our forecast as flat. And that's how Chairman Joe would want it. And he is -- he has his eyes on the ball and, and that's how the attitude we carry, we have our eyes on the ball all the time.

I think we have time for 1 more.

Yes, it's 11:20, yes 1 or 2 more.

1 or 2 more. I think this question is from Meg, I think the question is regarding Manila. So regarding -- do we have an oversupply of NCR and why CLI choose to acquire property in Metro Manila?

Yes. Good question and allows me to expand or expound on my answer.

I'll add something to it.

So our take being a leading developer in the South, when we now look from the outside are the oversight supply in Manila is not widespread for sure. The oversupply in Manila is concentrated to particular, I would say, areas or CBDs. So that way -- and reflects in the numbers, we've done market research, we've done all that. So why did we still choose to acquire party in Metro Manila? Because we see opportunity. We feel that RFOs are the challenge, not ready for occupancy units. However, we have the opportunity to bring a very competitive preselling product that allows a buyer to affordably invest over a 5-year, 6-year horizon and plan for home ownership by that time. When you say preselling, it gives you a chance to plan. You can see our cancellation rate, 2% to 3%. That's our hope for Metro Manila, but it's also in qualifying the buyers properly. When people reserve, we check the income documents that have the capacity to afford this. So -- and it's the timing. Now we are buying today for the opportunity to launch by the second half of 2026. So we are seeing confidence improve over the next 1 year because when the dust settles, we -- our country is fundamentally growing, not just in the population, but also in our income capacity. You can see it in our education alone. Also I hosted guest here from abroad who were looking to invest in the education. So I'm a believer in that. But basically, the business side is we're buying now to launch 1.5 years from now.

And then delivery probably that depends 4 to 5 years later.

And we're a bit lucky because we're going there with 0 inventory. And we have 40,000 in the VisMin. So we're very excited about that opportunity, and we're confident that the market recovery is there. I think it's not just market recovery per se, Meg. It's market sentiment recovery because when the dust settles, as I said, you'll have a lot of end users wanting to buy their home because they're probably renting. A lot are renting right now. And they will realize that buying would be the way to go, wealth preservation. And that's how we will advertise our product that way.

I'll answer her second question, actually. Are we sure that we capture the same demand in Metro Manila as we did in VisMin. And again, just to answer the question specifically, I mean, of course, you can never sure, right? It's -- that's why it's a business. You take calculated risk. So when we go into a market, you go through a checklist of questions. And when you want to put yourself in a position to succeed, and these checklist of questions will tell you what chances? Have you given your -- have you maximized giving yourself the strongest, you put your some of the strongest position to succeed. So questions like is the property we're looking at along or fronting a major highway in the artery? Check. Is it a major population center? Check. Is it right beside significant institutions like education, commercial, health care, religious? Check. Is -- have we done due diligence on the property? Is it big enough? If they're all checks, then it's a matter of, okay, we know housing is an ever greening industry, meaning that people will want to buy houses. You build it for the right market segment, you price it properly. And when people are fearful, it creates opportunities. It creates openings to say that, okay, they're fearful right now, then there might be opportunities where we can come in at very competitive prices and position ourselves to be the first out of the gate when sentiment hurts. That's really the answer to position ourselves for what we feel will eventually be a turnaround.

And I guess to end, Milano, this is a good question to end. How ROCE is the horizon for CLI? What keeps you up at night? So yes, it's a good way to end. As we reflect during this Holy Week, I encourage us other reflect, to be thankful. So I would say the horizon is bright, but it needs a lot of hard work to maintain the brightness. It needs a lot of hard work and calculated, well-balanced decisions to keep that horizon bright. And what keeps us up at night, really, as a excom, we ask a really ask ourselves, are our customers happy? Now I mean because the financing strength is there, as Grant has reported. The external factors are in a way not directly impacting us negatively. So it's really as a brand, are we -- I don't -- but I will remind ourselves, that we are not yet there. We still have a lot of room. And I think that attitude keeps us up at night, but it keeps us up at night in a healthy way because it will make us a better company, make our homeowners happier and better. So that's our short answer to it. It's bright, but there's a lot of work to do. Our people behind the camera are smiling. I think that's a correct attitude to have. And so we want to thank you for keeping -- tuning in to our annual briefing. We thank the whole CLI organization for producing this strong results and gives us a platform for an even rosier 2025, and it will depend on a lot of our hard work. So to my CLI team, thank you very much, a lot more work to do and to our analysts, to our media tuning in, please promote CLI, please promote that there are good opportunities out there. It's clearly in the VisMin region, but we also expect sentiment to improve on the back of our fundamentally strong demographics, on the back of our young working population, so let's continue to believe in that. And I hope our results will make you believe that there is a lot of good news in real estate in the Philippines. So with that, we'd like to end our briefing. Thank you very much.

Thanks, everyone. Catch you in the next one.

Bye.

Thank you.