March 10, 2014

VLL posts 15% growth in 2013 net income

Vista Land and Lifescapes Inc (VLL) yesterday announced 2013 net income of P5.06b, up 15.4 % YoY, tracking the company’s guidance and consensus forecast. This came on a 22.6% growth in revenues.

Real estate sales alone grew 21.6% on strength of its Communities Phils brand (catering to areas outside Mega Manila) and Vista Residences (providing vertical residential housing) which both posted a 59% growth in real estate sales. Crown Asia, VLL’s mid-income housing arm in Mega Manila posted a 22% hike in revenues. These brands made up for the flat growth in Camella Homes (low-cost and affordable housing) and 32% decline in Brittany (high-end housing) sales.

This year’s net income included P16m in HTM investment income and a P54m forex loss vs the P31m forex gain and P84m in gains on sale of an associate last year. Taking out these items, core income growth would have been higher at 19.4% this year to P5.1b.

However, net income growth was also aided by the 61% growth in income from forfeiture of payments made by buyers who did not proceed with their home acquisition. Miscellaneous income from buyer payment forfeiture is equivalent to 11% of VLL’s overall net income in 2013 from just 8% in 2012. Excluding this item, VLL’s 2013 net income would have been 11% lower at P4.51b (+11.5% YoY).

Our take: The 22% growth in real estate sales is noteworthy and reflects the company’s more aggressive stance in addressing the pent-up demand outside Metro Manila. This is made possible by VLL’s wide geographical presence given its extensive land bank across the country. However, we view with concern the rising contribution of income from forfeiture of buyer down payment to overall earnings.

The amount have been relatively flat over the past three years (~P340m-390m/year) but suddenly ballooned to P555m last year. We will write more on VLL’s results pending this afternoon’s briefing for investors. – WealthSec