Detailed analysis

Net income declined by more than -40% year-on-year (y/y) to P1.1 billion in 4Q 2020 as FLI’s strong office segment was unable to offset the significantly muted real estate sales.

Nonetheless, it seems FLI’s recovery is on track despite the challenges posed by the protracted community quarantines across the country. FLI reported a +50% q/q increase in residential revenues to P3.17 billion in 4Q20. On top of that, a strong recovery was seen in mall revenues, up by +66% q/q, as Metro Manila and other cities moved to the less restrictive GCQ. Mall foot traffic also doubled in 4Q20 compared to the prior quarter.

On a y/y basis, rental revenues spiked 47% to P2.74 billion in 4Q 2020. This, however, was not enough to offset the -35% drop in real estate sales to P3.2 billion during the same period. Note that historically, FLI’s residential segment accounted for an average of 70% of the firm’s total revenues. In 2020, this dropped to just 56%.

For this year, FLI will be focusing on the completion of its key office building projects, the development of Phase 1 of the Filinvest Innovation Park in New Clark City, and the continued rollout of its lower density Aspire and Future urban MRBs and housing residential developments across the country.

Recommendation

We are maintaining our BUY recommendation for FLI with a Target Price of PHP 1.46/share.

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