May 18, 2015

Robinsons Land Corp (RLC) reports 25% earnings growth in 1HFY15

In its disclosure to the Exchange, Robinsons Land Corp (RLC) said its net income grew 25% YoY to P2.8b in 1Q15 on a 14% revenue growth. The main earnings driver was the faster EBITDA growth (+17% YoY) on higher leasing income contribution (+36% YoY) from its office leasing business as the two new BPO office buildings were finally leased out. The hotels business also posted a 12% hike in revenues and 24% growth in EBITDA with the opening of new hotels that raised the company's number of hotel rooms by 21%.

The mall business was relatively steady, with revenues rising by 12% and EBITDA by 10%. This came on an 8% same-mall sales growth (implying a faster growth in 2QFY15) as the new malls ramped up operations while the flagship malls that underwent a rebalancing of tenants went into full operations. On the other hand, the residential business registered a 14% growth in realized revenues mostly on higher progress completion. Reservation sales fell 3% YoY, going against the overall industry trend, due to lack of new project launches.

Our take: Notwithstanding the strong earnings growth, RLC's 1HFY15 came just within expectations and came off a low base. Nonetheless, the results accounted for 45% of full-
year consensus forecast. Earnings may gain some ground in 2HFY15 if plans to launch about P3b-3.6b worth of new projects from RLC's own brands will push through. The chances for the launch of Westin branded suites and residences worth about P6b in the second half of its fiscal year are getting slim.

The company indicated that these new projects are likely to be launched on its next fiscal year or behind market expectations. Barring again any execution delays, this will coincide with the planned 11% expansion in mall space, 13% increase in office leasable space, and the 19% increase in hotel rooms in FY16 (Oct 2015-Sep 2016). – WealthSec