Despite the pandemic, profits increased by 25% in the first quarter of 2021.

Good beginning

Parental net income increased by 25% to PhP713.8M, while consolidated net income increased by 12% to PhP752M. The attributable income is already comparable to 35% of our FY2B objective. We are raising our target price to PhP7.45/sh in order to reflect this year’s results.

Strong top line

Revenue increased by 11% to PhP2.3 billion. Higher real estate sales throughout the era contributed to this. Real estate growth was driven by development progress and strong sales from its projects around the nation. Similarly, CLI benefitted from a tax expenditure resulting from the recent adoption of the CREATE legislation, which resulted in PhP255M in tax adjustments in the previous year.

CLI

Recommendation: BUY

Company: Cebu Landmasters
Target Price: 7.45
Shares Outstanding: 1,555
Market Cap (Php M): 10,618
Free float (%): 24
YTD Performance (%): +35

Company Background

CLI is one of the leading property developers in the Vis-Min region with direct exposures to residential, commercial, hospitality, and mixed –used development.

Booking sales at the top

Reservation sales increased 17 percent to PhP3.3 billion as real estate demand remained strong throughout the time. CLI is still benefiting from a specialized market. Of the overall purchasers, 58 percent are employed locally, 30 percent are OFWs, and the remaining 12 percent are company owners.

Financial stability

CLI’s asset base has grown by 4% to PhP52 billion. Debt-to-equity ratios were solid at 2.18x, compared to 2.22x in the same quarter previous year. The net debt-to-equity ratio was 1.49x, which is still considered conservative

CLI authorized a 122 percent stock dividend, corresponding to 1.9 billion shares of ordinary stock, which will be distributed from its unconstrained retained profits.

Projects will continue launching this year

CLI introduced five residential projects in 1Q2021, totaling PhP8.9 billion, consisting of three residential projects (PhP4.9 billion) and two recurring income projects (PhP4B).

Estimation

CLI is selling at 6x PE based on 2021E EPS at PhP6.87, which is lower than the peer average of 13x. We anticipate the Company will trade at greater values in the future, owing to its prolonged market leadership and ROE, as well as its strong profit margins, which we believe CLI can retain. Given its established track record, CLI’s planned reclamation, which would treble its landbank, provides it with strong growth potential.

Material in this article is obtained from sources we believe to be reliable, but its reliability or precision cannot be guaranteed. This is for the sole purpose of providing details and does not provide an offer from us to buy or sell securities mentioned in this document.

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