Robinsons Land Corporation (RLC) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon. Welcome to our First Quarter Analyst Briefing for 2024. Joining us today is Mr. Lance Gokongwei, Chairman, President and CEO of Robinsons Land Corporation; Mr. Faraday Go, Executive Vice President and General Manager of Malls division, Mr. Kerwin Tan, company's Chief Executive Officer; and the rest of the IR team. Today, we will be sharing with you insights into our strategic progress, financial highlights and key achievements that have tripped our performance for the first quarter of the year. Presenting with us today is Mr. Kerwin Tan and Mr. Ramon Rivero, Head of Corporate Strategy and Sustainability. After the presentation, we will open the briefing for the Q&A session. Thank you, Mr. Kerwin, you may start.

Good afternoon. We are pleased to present RLC's unaudited financial results for the first quarter ended March 31, 2024, including company financials, business segment highlights, updates on ESG activities, future plans and strategies. Additionally, the Board had just approved a cash dividend distribution of PHP 0.65 per share. This marks the highest dividend payout in the company's history. RLC has delivered an outstanding growth in the first quarter of 2024 with net income attributable to equity holders of the parent company, reaching an impressive PHP 4.07 billion. This was driven by the contributions from all divisions, bolstered by a onetime gain on the classification of our investment in GoTyme. To elaborate further, our ownership in GoTyme was diluted from 20% to 19%, prompting the need to reclassify the asset from investment in associate to a financial asset at its current market value, which closely aligns with the original cost of the investment. As a result, the reclassification effectively reversed the previously recorded share in net losses of GoTyme ultimately resulting in a gain on the reclassification. Even when this gain is set aside, our net income still showed a remarkable 21% year-over-year. Furthermore, the consolidated EBITDA reached an all-time high of PHP 6.15 billion for the first quarter. Our diverse business segments have shown commendable top line performance. The mall segment experienced a 14% increase, while our office business delivered steady results with a 3% increase. The residential business enjoyed a significant surge with a 20% increase in realized revenue. Notably, our hospitality segment, skyrocketed by 54%, and our Destination estate segment impressively doubled with a 112% increase in revenues. These exceptional results underscore RLC's unwavering commitment to excellence and strategic expansion. RLC's diverse and robust asset portfolio as of the end of the first quarter 2024 is comprised of 54 operational lifestyle centers, 131 residential developments, 32 office developments, 29 mixed-use developments, 26 hotels, 10 Work.able centers and 10 industrial facilities. Turning now to the financial performance highlights. RLC maintains a robust financial position with total assets of PHP 241.5 million, including approximately PHP 7.7 billion in cash and cash equivalents. Shareholders' equity is reported at PHP 145.4 billion, reflecting a solid capital base and financial stability. The total outstanding debt as of March 2024 is at PHP 54.6 billion, translating to a 34% net debt-to-equity ratio, which highlights prudent financial management. Earnings per share has reached PHP 0.84, a 58% increase from the same period last year. Moreover, the net book value per share stands at PHP [indiscernible] per share, suggesting that the company's intrinsic value surpasses its current market valuation. Overall, RLC strong financial standing, durable capital structure and notable earnings growth demonstrate resilience and exemplify sound management practices, enhancing shareholder confidence and market position. For the first quarter ended March 31, 2024, RLC saw a notable 19% increase in consolidated revenues, reaching PHP 11.03 billion, driven by strong performances across all divisions. This surge led to a 22% growth in overall EBITDA, which amounted to PHP 6.15 billion and a 28% rise in EBIT to PHP 4.78 billion. Net income for the quarter stood at PHP 4.41 billion, marking a significant 48% improvement over the previous year. This substantial rise in net income was supported by a onetime gain from our reclassification of our investment in GoTyme alongside continued robust performance across our divisions. Excluding the impact of this reclassification, net income still showed an impressive increase of 21%, fueled by the consistent and enhanced operational performance of all our divisions. This highlights RLC's ability to deliver sustained growth and profitability through strategic innovation and effective management. In the first quarter of 2024, all of our businesses demonstrated substantial growth, notably from the investment portfolio, which accounted for 72% of our consolidated revenues, while the residential division also experienced strong growth, further enhanced by the significant contribution from our equity share in our joint ventures. I will now turn over the presentation to Mr. Ramon Rivero, who will report the operational highlights of our business units.

Thank you, Mr. Kerwin Tan, and good afternoon to everyone in the call. Sustained consumer spending and higher occupancy rates drove a 14% increase in mall revenues to PHP 4.45 billion, representing 41% of consolidated revenues. This growth translated into a 19% rise in EBITDA to PHP 2.73 billion and enhanced by lower depreciation a year-on-year increase in EBIT to PHP 1.91 billion. Robinson's malls continues to assert itself as the second largest mall operator in the country, highlighted by its 54 lifestyle centers spanning 1.62 million square meters of leasable space that's 93% leased out with over 8,400 retailers. Robinson's offices delivered stable top line results with revenue growth of 3% to PHP 1.9 billion, accounting for 17% of consolidated revenues. This stable performance is primarily driven to the strength of its portfolio, comprising of 32 high-quality assets that span across 793,000 square meters of prime leasable space. EBITDA for this segment reached PHP 1.5 billion with EBIT closing at PHP 1.2 billion. The addition of GBF Center 1 located in Bridgetowne Pasig City has expanded our office segment with an additional 52,000 square meters of leasable space. With strong contributions across all brand segments. Robinsons hotels and resource for RHR exceeded previous year's revenues by 54% to PHP 1.35 billion. EBITDA and EBIT, which closed at PHP 402 million and PHP 202 million, respectively, have both significantly grown by 140% and 770% year-on-year, respectively. To date, RHR is continuously expanding its portfolio, spanning across its 4 brand segments, which consists of 26 hotel properties with 4,243 room [indiscernible] across its multi-branded portfolio. The decrease in net sales take-up can be attributed to the strategic decision to raise reservation fees in order to better reflect the premium positioning of our brand and attract high-end buyers. This adjustment, along with operational restructuring efforts implemented during the period has indirectly impacted our sales figures. To optimize synergies and maximize cost efficiencies, we have merged RLC Residences and Robinsons Homes under the brand of RLC Residences. We are confident that this strategic move will drive growth and success in the long term. On the other hand, realized revenues are up by 20% to PHP 2.8 billion year-on-year. Both EBITDA and EBIT grew by 44% and 45%, respectively. Both are driven by higher full equity sales and increased contributions from joint ventures. In the first quarter of the year, industrial leasing revenues surged by 40% due to the full year contribution of the new facility in Calamba, with EBITDA and EBIT increasing to PHP 174 million and PHP 134 million, respectively. The RLX Sierra 2, our newly completed warehouse in Taytay, Rizal, added 17,000 square meters of leasable space to our portfolio. Robinsons destination states, PHP 252 million of revenues from the sale of parcels of land to joint venture entities were recorded in the first quarter. EBITDA and EBIT landed at PHP 149 million and PHP 148 million, respectively. For the first quarter of 2024, RLC spent PHP 3.75 billion in capital expenditures. For the development of malls, offices, hotels, warehouse facilities, acquisition of land and construction of its residential projects for our local operations. To support our expansive growth plan, our Land Bank now covers over 850 hectares with estimated value of about PHP 178 billion as of March 2024, of which approximately PHP 85.5 billion or 48% is attributable to the Land Bank value of our destination states. The next 2 slides are our ESG initiatives and updates for the first quarter. Now I move on to the future plans. We look ahead to the opening of our premier up sky lifestyle center in Bridgetowne Destination Estate. This year, Robinsons malls will unveil Opus Mall to the public and will complete the new mall in Pagadian, Zamboanga del Sur, Mindanao. In 2025, we will be adding 23,000 square meters of gross leasable area, all expansion to our existing malls in Dumaguete, Bacolod and Cavite. For offices, we have completed this year GBF Tower 1, while Iloilo 3 will be in the second half of the year, which would increase office leasable space by 11% to 825,000 square meters. And in 2025, we will be completing GBF Center 2, which will expand our office portfolio to almost 900,000 square meters of gross leasable space. For the logistics, we have completed RLC Sierra 2, 2 new warehouses are expected to be completed this year, namely RLX Calamba2C and RLX San Fernando 2, equivalent to 294,000 square meters of leasable space by the end of 2024. In 2025, we will complete our 13th logistics space in Montclair, bringing our total gross leasable space to 315,000 square meters. And lastly, Robinsons Hotels and Resorts is expected to complete NUSTAR Hotel, our [indiscernible] in the ultra-luxury segment. This will be located in NUSTAR Integrated Resort Cebu. With this, our room keys shall grow by 5% to 4,466 rooms this year. The Board of RLC has approved the distribution of over PHP 3.15 billion in regular cash dividends, equivalent to PHP 0.65 per outstanding common share. This marks the highest declared cash dividend per share in the company's history. Record date is on May 31, 2024, and entitled shareholders will receive their dividends on June 21, 2024. This ends our presentation. Thank you very much.

[Operator Instructions] Let's use first go first to the Q&A. Here's the first question from Russ Toribio of [indiscernible]. Are there still revenues coming from China projects? The answer there, Russ, is none ready. Another one from Russ. What is the current average of cost of debt? Mr. Kerwin?

I'll answer the questions in the chat box. The cost of debt is at 5.56%. [indiscernible] maturity is at 3 years. And the split between fixed and floating rate is at 20% distant floating, all the rest are fixed.

[Operator Instructions] Again, for the Q&A question from [indiscernible] on BDO. Thank you for the briefing. Were there any residential projects launched in the first quarter? Do you have any target launch value for 2024? [indiscernible]

There are no launches in Q1 of 2024. Our earliest launch was actually in April. In terms of target launch value, we have a pipeline of launches. However, it will be depend on market foundation when the actual execution will happen.

Let's go now to Ms. [indiscernible], you may start to ask a question.

Good afternoon, the first question I have is on the residential segment. Can you elaborate on the nature of the change in reservation fees that you have reflected? And also any data on the unsold inventory as of the end of the quarter?

In terms of the increase in reservation fees, initially, it's somewhere between 50,000 to 80,000 depending on the unit type. And then on the inventory level, we are at 27.6 billion.

Okay. And sorry, just to clarify, the 50,000 to 80,000 came from what number? And can you also give us an idea about the length of the buyers' equity payment as compared to before the change?

The previous reservation fees are between 25,000 to 50,000. And then the length of the equity period is still the same, depending on the status of the project or the construction period. No change in the length of the period.

Okay. Understand. And my second set of questions is regarding the office segment. Does the 84% occupancy level or lease outlay? And does that already include GBF and specific to GBF, what's the current leasing level?

June, the 84% does include GBF 1. Without GBF 1 from 87% end of 2020, we are now at 88%, so an improvement of 1%.

Okay. The next question is from RJ Aguirre. RJ?

Yes, some of my questions related to the question earlier about the reservation. What's your current back out rate? Or is there any write-offs that Robinsons Land has done in the last 6 months? That's my first one.

We report numbers on a net basis.

But in terms of the actual reservation sales and in terms of the write-offs or whatever the back out rates, what percentage currently is the rate? I remember before, like 3% to 5%, is that increasing or decreasing? Just give us some color.

It's still the same, but note that we are reporting numbers on a net basis right.

I understand. But in terms of the ones that you have already discussed in the last couple of years, I just want to know if there are increasing [indiscernible] on the already net sales, presales or reservation sales as you disclosed?

From what we see, the rates are approximately the same.

Okay. Fine. On the launches in fourth quarter and Q1, how does that compared to the previous 6 months? This is still on residential?

The last launch we had was in September 2023 and then no launches after that. So the new launch we introduced was actually in April.

So September 2023 and then April is the last one.

April 2024 is the newest launch that we have.

This includes the JVs?

That's for core projects.

Meaning RJ, no GBM.

Okay. Yes. Understood. In terms of pricing, have you implemented price increases for the existing projects?

We usually do the price increases on a regular basis. So that would be across all our projects.

Okay. Is there a target for presales this year, given that it's done year-on-year at least?