Undaunted

Net income of PhP1.7 billion in 2020

In 2020, net income was essentially unchanged (-2%), at PhP1.7 billion, or 92 percent of our FY-estimate of PhP1.9 billion. Despite this, SLI remains robust in comparison to its industry counterparts. We retain our ‘Buy’ recommendation on SLI, with a 17 percent upside to our fair value of PhP2.88/sh. We anticipate a revival in the industry as a whole, which bodes well for SLI, which serves a specialized housing market.

COVID’s negative impact

2020 revenue is expected to be down 12% to PhP6.9 billion. Government-imposed limitations in reaction to the pandemic have led in a slowdown of operations, lowering reservation sales and ultimately in an 8% drop in RE sales. Retail activities were also impacted since the bulk of stores were shuttered. During the Enhanced Community Quarantine, rental payments were also waived (ECQ).

SLI

Recommendation: BUY

Company: Sta. Lucia Land, Inc.
Target Price: 2.88
Shares Outstanding: 8,196
Market Cap (Php M): 20,163
Free float (%): 17
YTD Performance (%): +21

Company Background

SLI through its subsidiaries, develops real estate. The Company’s projects include residential condominium units and office buildings development within Metro Manila.

Among the fastest growing businesses

SLI was named one of the top high-growth companies in the Philippines by the Financial Times. SLI was rated 288th out of 500 firms in a list compiled in collaboration with Nikkei Asia. The poll comprises businesses with an annual revenue of $100,000 in 2016 and $1 million in 2019.

Property prices are rising again

Property prices in commercial areas outside of the capital, in particular, might help fuel post-pandemic development in the Philippine market, and SLI stands to gain from this, as well as the overall rise in property prices. Similarly, the completion of major infrastructure projects outside of the capital could enhance property values, particularly in crucial cities like Pampanga, Laguna, Cebu, and even Davao.

Ascending from the ashes

As vaccination rates rise, this will help mobility throughout the country, including mall foot traffic. The government now permits dine-in for establishments with a 10% capacity. As soon as we achieve herd immunity, the broader economy, including the real estate sector, should benefit (both residential and malls).

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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