November 11, 2014

MEG posts 13% YoY growth in 9M14 core net income

In a press statement, Megaworld Corp (MEG) announced 9M14 net income P19.03b, up 192% YoY. However, exclusive of the P11.62b in non-recurring gain from the acquisition and sale of a subsidiary and associate, the recurring net income is at P7.41b or 13.7% higher YoY and at pace with the 1H14 earnings growth. Total group revenues (inclusive of the one-time gains and interest income) were up 57% YoY but just 13.3% higher on a recurring basis. What helped fuel the growth was the 20% jump in rental income to P5.2b which represents 17% of total recurring revenues.

Reservation sales also grew 11% which is at generally pace with most property developers (except for Ayala Land Inc which posted an 18% hike in sales take-up). This got an extra boost from the 43% growth in the reservation sales of Global-Estate Resorts Inc (GERI) which is now 80%-owned by MEG. Excluding GERI’s contribution (equivalent to 14% of total), MEG’s consolidated reservation sales grew by just 7.5% YoY.

Our take: MEG’s results came within expectations. However, we note of the tempered growth in MEG’s own reservation sales which weighed on overall growth. However, this should gather more given the growing collaboration with GERI thorugh the planned development of township estates on GERI’s land bank. We will review our numbers pending more details from the company’s investors’ briefing this afternoon – WealthSec