Robinsons Land Corporation (RLC) Earnings Call Transcript & Summary

The 2023 Annual Shareholders Meeting of Robinsons Land Corporation will now begin. Ladies and gentlemen, the Philippine national anthem.

Good morning, ladies and gentlemen. Thank you for joining this meeting. May I request the Corporate Secretary to please certify the sending of notices to the shareholders and to the existence of our quorum for this meeting.

Mr. Chair, I hereby certify that notice of this meeting has been sent to the shareholders of record as of April 4, 2023 via following methods. First, by publication in the Manila Standard and Business for 2 consecutive days in both online and in print formats; second, by posting on the website at the corporation; and lastly, by disclosure to the Philippine Stock Exchange. Thus, the shareholders have been notified of this meeting in compliance with applicable rules and regulations. I hereby certify that there are present in this meeting, via remote communication or by proxy. Shareholders entitled to vote representing 86.24% of the corporation's total outstanding shares and that this meeting is therefore competent to transact the business provided for in the agenda. A quorum is present, Mr. Chairman.

There being a quorum, the Annual Meeting of the Shareholders of Robinsons Land Corporation is hereby call to order. May I request the corporate secretary to share with us the rules and procedures for this meeting.

The rules and procedures are set forth in the definitive information statement and in the explanation of agenda items integrated into the notice of this meeting. All tabulation results for this meeting are subject to the validation by SyCip Gorres Velayo & Company, and the final results will be reflected in the minutes of today's meeting. For the information of the shareholders who are with us now during this broadcast, the corporation has requested shareholders to send their questions or comments by e-mail. Questions which we received by May 4, 2023 has been committed and selected questions will be answered later on. The corporation will reply to the questions and comments not taken up during this meeting through e-mail.

Let us now proceed to the next item on the agenda, the approval of the minutes of the 2022 Annual Meeting of the Shareholders. May I call on the Corporate Secretary to present the results of voting for this agenda item.

Mr. Chairman, copies of the minutes have been distributed to the shareholders by providing the link to the said minutes in the information statement and by showing a QR code on the screen prior to the meeting. The minutes have been approved and submitted by votes representing 86.24% of the total outstanding shares of the corporation.

Thank you. The minutes are hereby approved as presented. Moving on to the next item on the agenda. May I now call on Mr. Frederick Go, President and Chief Executive Officer of the corporation, to present his report together with the audited financial statements for the year ended December 31, 2022. Mr. President?

A pleasant day to the distinguished members of our Board and fellow shareholders. 2022 was a record year for Robinsons Land Corporation as we exceeded pre-pandemic earnings and posted our highest net income year. With the global pandemic behind us, I am pleased to report RLC's financial and operational performance for calendar year 2022, our sustainability initiatives and growth plans. We successfully ended 2022 with a strong portfolio consisting of 86 residential buildings, 53 lifestyle centers, 40 housing subdivisions, 31 offices, 25 hotels, 28 mixed-use developments, 8 workable centers and 7 industrial facilities. Revenues and profit reached their highest levels in the company's history. RLC generated consolidated revenues of PHP 45.5 billion, up 25%. This is attributable to the significant recovery of our investment portfolio, improved revenue recognition of residential sales and the continued success of the Chengdu Ban Bian Jie project in China. EBITDA rose 29% to PHP 19.35 billion, pushing overall EBIT up by 45% to PHP 14.11 billion. Net income attributable to parent registered at PHP 9.75 billion, 21% higher than last year, and 12% better than 2019. Our investment portfolio accounted for 51% of revenues, 70% of EBITDA, 60% of EBIT and 50% of net income. The balance came from our development portfolio. Our company sustained a solid and healthy financial position with total assets of PHP 223 billion. This includes cash of PHP 8.28 billion and shareholders' equity of PHP 135 billion, which is net of PHP 2.5 billion in treasury shares from RLC's share buyback program. Total debt is PHP 51.16 billion for a net gearing ratio of 0.33x as of December 2022, one of the lowest among property industries listed in the market. Earnings per share registered at PHP 1.91, 23% better than 2021 and 14% better than 2019. Book value meanwhile is at PHP 25.59 per share, higher than the current market share price. Moving on, financial and operational highlights of each of our business units. As business conditions improve in most of 2022, Robinsons Malls increased total revenues by 58% to PHP 13.03 billion to account for 29% of the company's consolidated revenues. Rental revenues dropped 74% following the lifting of tenant concessions, resurgence of foot traffic in stores and improved consumer spending during the holiday season. EBITDA escalated by 70% to PHP 6.59 billion, while EBIT balloon by 1,484% to PHP 3.02 billion year-on-year. Robinsons Malls has steadily grown its presence in the country despite knocking down Robinsons Forum for every development of a much bigger retail commercial space. In the first half, we added another 21,000 square meters of GLA with the expansion of Robinsons Place Antipolo. In the fourth quarter, we opened Robinsons Gapan in Nueva Ecija, our second largest Mall in the province, with 31,000 square meters of GLA. Robinsons Malls ended the year with a system-wide lease rate of 91% on 1.6 million square meters of GLA. With the global opening of economy, Robinsons Hotels and Resorts or RHR, grew revenues by 94% to PHP 2.33 billion in 2022. Higher average room rates increased F&B sales and the resurgence of MICE events position the business for a strong recovery. Notwithstanding pre-operating expenses from new hotel developments, EBITDA climbed 13% to PHP 277 million, while depreciation and pre-operating expenses from new hotels drive EBIT to a loss of PHP 225 million. To further establish RLC largest hotel developer and operator in the Philippines with the biggest portfolio of hospitality developments, RHR completed 4 new hotels. Go Hotels Plus Naga, Go Hotels Plus Tuguegarao, Summit Hotel Naga and Fili Hotel in Nu Star, Cebu. Fili Hotel is the Philippines' first homegrown authentic 5-star luxury hotel and the most exciting hotel project in the country, located in the world-class Nu Star resort, Fili brings together the finest hotel offerings with modern Filipino elements, featuring stunning views of the sea, mountain and city skylines. Fili writes itself in a signature brand of Filipino hospitality, expressed in genuine care and efficient service. RHR ended 2022 with over 3,800 keys across 25 company-owned hotel and leisure properties. We also have 4 Go Hotels with 800 rooms under franchise agreements. Meanwhile, Robinsons Offices sustained its growth on the back of rental escalations and stable occupancy rates. Revenues climbed by [ 90% ] versus last year to close to PHP 7.07 billion, while EBITDA improved by 10% to PHP 6.2 billion. EBIT increased by 11% to PHP 5.27 billion on lower depreciation. Robinsons Office has completed Cybergate Galleria Cebu, Cybergate Iloilo 2 and Cybergate Bacolod 2. The addition of these 3 new office developments brings RLC's office portfolio to 741,000 square meters of gross leasable space on a 90% system-wide lease percentage. Our company, likewise strengthened its presence in the growing flexible workspace segment with the opening of 2 new build-to-suit workable centers in Cyber Omega and Giga Tower. Robinsons offices now has a total of 8 workable sites with a total of around 2,100 seats. Robinsons Logistics and Industrial facilities, or RLX, continues to make strides in its pursuit of becoming a market leader in the industrial and logistics sector. Industrial leasing revenues accelerated by 57% to PHP 555 million driven by the full year contribution of new industrial facilities. EBITDA surged by 48% to end at PHP 479 million and EBIT rose by 41% to end at PHP 351 million. For our destination estates, we continue to make significant strides in our 3 destination estates. We are pleased to report that Bridgetowne is the host for the world's biggest obstacles facility. It features 25 various obstacles on a 6,000 square meter space. In addition, we have completed the interchange exit in Montclair near Clark Freeport Zone, fully leased out the retail spaces in Sierra Valley and launched several residential projects. We recognized revenues of PHP 646 million from a portion of deferred gain on sale of land to joint venture entities. EBITDA and EBIT settled at PHP 392 million and PHP 388 million, respectively. RLC residentials and Robinsons Homes had an outstanding year as net sales take-up from organic projects more than doubled in the fourth quarter, while full year net presales improved by 57%. Meanwhile, net presales of joint venture projects Aurelia, Velaris and Sonora for the full year grew 58% to PHP 8.99 billion. The company's residential brands post their combined realized revenues of PHP 9.1 billion to grow by 44%. This remarkable performance is attributable to increased payment collections from -- home unit buyers, timely completion of residential projects and significant contributions from joint venture equity earnings. EBITDA stored by 54% to PHP 3.51 billion, while EBIT escalated by 60% to PHP 3.41 billion. In 2022, we launched 5 new residential projects, namely AmiSa Private Residences Tower D in Cebu; Sierra Valley Gardens 3 in Rizal, Woodsville Crest - Pine in Paranaque, Sync N Tower in Pasig, and Springdale Baliwag in Bulacan. With the strong performance in 2022 RLC continues to make significant strides with its JV projects registering healthy sales take-up across all 3 projects. Just a little over 3 years from launch date, Aurelia is already 72% sold; Velaris at 65% and Sonora at 45%. RLC recognized revenues of PHP 12.78 billion from Phase 2 of its Chengdu Ban Bian Jie in China, exceeding revenues recognized from Phase 1 in 2021 by 17%. Furthermore, the company received $25 million in dividends following the repatriation of 99.78% of our invested capital. Our company spent a total of PHP 25.86 billion in capital expenditures for the development of malls, offices, hotels and industrial facilities, construction of residential projects, land acquisitions and for new investments of its domestic operations. In response to the increasing role of technology on consumer lifestyles, we also focused on scaling our digital capabilities. Mall Dash multi-store online platform launched in 2021 is slated to introduce its mobile application by the first half of this year. In addition, Robinsons Malls continues to improve RMalls+ app to create seamless online to off-line customer journeys. In pursuit of improving customer experience, RLC Residences is also working on the development of myRLC home super app, the first all-in-one mobile application for residential communities. Slated for its official launch in the middle of 2023, the platform seeks to deliver convenience and seamless service to property buyers from purchase to move-in. We also launched RHR mobile app to create better end-to-end guest/hotel experiences. Our robust financial results allowed us to invest in creating more value for all our stakeholders. As a result, we are integrating our ESG programs further and faster to help shape a better future. RLC continues to be the market leader in solar energy usage. It ended the year with rooftop solar panel installations in 28 Robinsons Malls with a total capacity of about 31 megawatts. This translates to 28 million-kilo hours of clean energy, over 20,000 metric tons of carbon dioxide avoided and more than 337,000 trees planted. In addition, all Robinsons Malls are designed with a system for wastewater conservation and recovery. 29 of our malls have rainwater collection systems and 15 malls use recycled water for nonpotable uses. Aside from this, Robinsons Malls and Offices have installed water-efficient toilet fixtures to reduce water consumption. The company also continues to invest in sustainable developments that adhere to international dream building standards. As a testament to this, Robinsons Giga Tower in the Bridgetowne Destination estate, received an LEED Gold certification. While Robinsons Cyberscape Gamma in Ortigas Center became the Philippines first edge certified REIT building. RLC also spearheads other community recycling efforts, including the weekend recycling market, bottles the soil program and the minimized waste, maximize space decluttering program. We also strive to give back to the communities where we operate in. Through our Robinsons Land Foundation, we have reached out to over 33,000 people in the Calamity stricken communities of Ormoc, Tacloban and Cebu among many others. We, likewise, continue to assist several public schools through our Brigada Eskwela program. Moreover, we have a long-standing commitment to good corporate governance and stewardship. We have adopted an anti-bribery and anti-corruption policy to uphold appropriate ethical and responsible business conduct. Moreover, RLC has truly combined with the registration process of the anti-money laundry council pursuant to the anti-money laundering app. RLC received a Golden Arrow Award from the ASEAN Corporate Governance Scorecard organization. This is another affirmation that RLC is at the forefront of promoting transparency, accountability and ethical business practices. On the screen are some photos of our ESG efforts. After almost 3 years of navigating a global health crisis, RLC forges ahead with confidence and optimism. In 2023, we will continue to invest in our diversified portfolio, expanding the breadth of our products and introducing customer-driven innovations to deliver sustainable value in an ever-changing environment. Robinsons Malls poised to enhance its portfolio and elevate the shopping experience with the completion of Opus Mall in Bridgetowne. Opus is a metropolitan high-end lifestyle center that will house a wide selection of international retail brands. Upon completion, the Opus Mall will increase total GLA by 3% and to 1.66 million square meters. Robinsons offices on the other hand, will complete GBF tower in 2023. This state-of-the-art Grade A office building will cater to both traditional and multinational corporations in addition to BPO companies. Spanning across 52,000 square meters of GLA, GBF Tower 1 will feature world-class engineering and architectural designs and sustainable green building components. With the resurgence of international travel and tourism, Robinsons Hotels and Resorts is expected to accelerate growth across its well-diversified brands. The company will cater to the anticipated surge in demand with the launch of Westin Manila Sonata Place Hotel, RLC's fourth international branded hotel and the opening of remaining rooms in Go Hotels Plus Tuguegarao and Fili Hotel at Nu Star. These will increase by room by 18% to over 4,200 keys. Meanwhile, RLX aims to become the fastest-growing logistics facility provider in the country with the addition of warehouses in Calamba, Laguna and Cainta, Rizal. We will also continue to make substantial progress in the development of our landmark destination estates. The 30-hectare Bridgetowne in Pasig and Quezon City, the 18-hectare Sierra Valley in Cainta and the 200-hectare Montclair in Pampanga. These faster planned integrated developments will espouse the live, work, play, inspire lifestyle. As we have completed the deployment of proceeds from the IPO of RL Commercial REIT, Inc., we earmarked approximately PHP 20 billion for CapEx in 2023, which we funded to internally generated cash from operations as well as borrowings. Before we end, we are honored to share that RLC received several recognitions, including -- Best Developer of the Year Award and 9 other accolades at the 10th PropertyGuru Philippine Awards. This is a testament to the collective teamwork of our people at RLC and our unfaltering commitment to deliver a high level of value and service to the industry. Finally, we are happy to announce that the Board has approved a regular cash dividend of PHP 2.6 billion, equivalent to USD 0.52 per share. This is up 4% versus last year on a per share basis. This translates to a payout ratio of 27%, exceeding the minimum ratio of 20% of the recurring income of the preceding year for our dividend policy. As we take on the road ahead from a position of strength, we would like to express our deepest gratitude to our Board for their ongoing guidance and encouragement. We are also grateful to our shareholders, business partners, patrons, customers and the communities we serve for their continued trust and support. Moreover, we would like to thank our employees for their invaluable contribution to the results and progress we have achieved. RLC looks forward to the journey ahead. We will remain steadfast in our commitment to create shared success for all our stakeholders. [Foreign Language]

Thank you. May I call on the Corporate Secretary to present the results of the voting for the approval of the audited financial statements for the preceding fiscal year.

Mr. Chairman, we are pleased to report that shareholders representing 86.17% of the total outstanding shares of the corporation have approved the audited financial statements of the corporation for the preceding fiscal year as presented. The report as presented is hereby also duly noted.

The report of the President is duly noted, and the audited financial statements for the preceding fiscal year are hereby approved as presented. We now proceed to the election of the members of the Board of Directors. May I request the corporate secretary to read the names of the incumbent members of the Board of Directors.

Mr. Chairman, the incumbent members of the Board of director are: Mr. James Lo Go, Mr. Lance Y. Gokongwei, Mr. Frederick D. Go, Ms. Robina Gokongwei-Pe, Mr. Patrick Henry C. Go, Mr. Johnson Robert G. Go. Jr, And the independent directors are: Mr. Roberto F. De Ocampo, Mr. Omar Byron T. Mier and Mr. Bienvenido S. Bautista.

Thank you. May we now have the list of nominees for election to the Board of Directors and the voting results.