Residential and mall segments WED 03 JUNE 2020

weakened while office segment

stayed resilient

Most companies report weaker profits

Ayala Land, Inc.
Four out of the six property developers under our coverage list have reported 1Q20
HOLD
earnings so far and the four companiesreported a combined 12.3% y/y decline in profits PHP36.10
for the period. Only RLC reported higher 1Q20 profits, but this was largely a result of
change in revenue booking policy this year (which led to a one time increase in residential Filinvest Land Inc.
BUY
revenue booking in 1Q20). Compared to our estimates, SMPH and RLC performed in line
PHP1.14
with expectations while ALI and FLI performed below expected.
Megaworld Corporation
Exhibit 1. Earnings of property developers BUY
YTD % of estimates PHP3.20
1Q19 1Q20 % growth
in Php Mil COL Consensus
Robinsons Land Corporation
ALI 7,322 4,321 -41.0% 21.5% 12.7%
BUY
SMPH 8,786 8,300 -5.5% 33.3% 26.3% PH17.57
FLI 1,794 1,349 -24.8% 30.2% 22.6%
RLC 1,832 3,340 82.3% 36.2% 40.8% SM Prime Holdings, Inc.
Total 19,734 17,310 -12.3% HOLD
Source: COL estimates, ALI, SMPH, FLI, RLC PHP29.00

Vista Land & Lifescapes

BUY
Residential segment declines on lower construction PHP4.27
completion

The residential and office for sale segment was mixed in 1Q20, although combined revenues
fell 14.1%. ALI and FLI recorded lower revenues as the enhanced community quarantine
(ECQ) put on hold all selling and construction activities starting March 15. This resulted in
lower units booked and lower construction completion for existing projects. Meanwhile,
SMPH still managed to grow its residential segment by 22.8% as higher completion in the
early part of 1Q20 was able to offset the negative impact of ECQ on revenue bookings. In
the case of RLC, the company had a lumpy booking of residential revenues as a result of a
change in their revenue booking policy as discussed earlier. Effective this year, RLC will start
booking revenues when buyers’ equity reaches 10% (down from 15% previously).
Exhibit 2. Residential and office for sale revenues

Richard Lañeda, CFA

Senior Research Manager
richard.laneda@colfinancial.com

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of
the COL Financial website as these may be subject to tampering or unauthorized alterations.
 PROPERTY SECTOR I RESIDENTIALAND MALL SEGMENTS WEAKENED WHILE OFFICE SEGMENT
STAYED RESILIENT

WED 03 JUNE 2020

Exhibit 2. Residential and office for sale revenues

in Php Mil 1Q19 1Q20 y/y growth

ALI 25,442 14,730 -42.1%
SMPH 9,282 11,400 22.8%
FLI 5,111 3,094 -39.5%
RLC 1,969 6,700 240.3%
Total 41,804 35,924 -14.1%
Source: COL estimates, ALI, SMPH, FLI, RLC

Combined take-up sales of ALI, SMPH, RLC, and FLI declined 4.9% y/y as the growth in
sales registered by SMPH and RLC was not enough of offset the decline in sales of ALI
and FLI. Although SMPH and RLC still managed to report higher take-up sales, we do not
expect this to be sustainable in the following quarters given the extended ECQ and the
expected change in consumer behavior.

Mall revenues decline on lower operating capacity

Combined mall revenue of ALI, SMPH, FLI, and RLC declined 19.1% in 1Q20 as the ECQ
called for closure of malls starting March 15. Only essential stores were allowed to remain
open during this period (supermarkets, drug stores, banks, and restaurants offering take-
out and deliveries). Rents of non operating tenants were waived during this period, and
in the case of SMPH, rents of even those that were operational were waived. For FLI, their
mall in Tagaytay was also negatively affected by the Taal Volcano eruption in January.

Exhibit 3. Mall revenues

in Php Mil 1Q19 1Q20 y/y growth

ALI 5,097 4,649 -8.8%
SMPH 14,985 11,300 -24.6%
FLI 490 367 -25.1%
RLC 3,135 2,870 -8.5%
Total 23,707 19,186 -19.1%

Source: COL estimates, ALI, SMPH, FLI, RLC

COL Financial Group, Inc. 2

 PROPERTY SECTOR I RESIDENTIALAND MALL SEGMENTS WEAKENED WHILE OFFICE SEGMENT
STAYED RESILIENT

WED 03 JUNE 2020

Office segment shows resiliencydespite the crisis

The office leasing segment of property companies is the only bright spot during this
health crisis as landlords continue to generate revenues from their office leasing
portfolios. Althoughtenants operated at a lower capacity, no rents were waived by the
office landlords. Even offshore gaming operators, which were not allowed to operate
during the enhanced community quarantine, were not given rent holidays. As such, the
combined office revenues of ALI, RLC, and FLI grew 18.2% y/y because of higher gross
leasable area.

Exhibit 4. Office revenues

in Php Mil 1Q19 1Q20 y/y growth

ALI 2,151 2,474 15.0%
FLI 1,228 1,418 15.5%
RLC 1,124 1,430 27.2%
Total 4,503 5,322 18.2%
Source: COL estimates, ALI, FLI, RLC

COL Financial Group, Inc. 3

 PROPERTY SECTOR I RESIDENTIALAND MALL SEGMENTS WEAKENED WHILE OFFICE SEGMENT
STAYED RESILIENT

WED 03 JUNE 2020

IMPORTANT RATING DEFINITIONS

BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the
next six to 12 months.

HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might
be poor or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the
next six to twelve months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

IMPORTANT DISCLAIMER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may
be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are
subject to change without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of
a security. COL Financial and/or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies
mentioned in this report and may trade them in ways different from those discussed in this report.

COL RESEARCH TEAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

JOHN MARTIN LUCIANO, CFA FRANCES ROLFA NICOLAS JUSTIN RICHMOND CHENG
SENIOR RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN

RESEARCH ANALYST RESEARCH ANALYST
adrian.yu@colfinancial.com kerwin.chan@colfinancial.com

COL FINANCIAL GROUP, INC.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
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WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 4