Analysts’ Briefing 1H14 · 01.09.2018 · • Cost of sales at 40% vs. 60% for others; efficiency • P80m cash needed to fund sales cost+OPEX • P30m from existing receivables

Analysts’ Briefing 1H14

2

Outline

Who we are

1H14 results

Guidance

3

Who we are

Largest mass housing developer

in the Philippines

4

Baguio

Angeles

Cavite

IloiloCebu

Davao

Metro Manila

●

●●

●●

●

●● Bulacan

By the numbers

28,000 units sold and delivered since 2004

23 years experience in mass housing

₱22bn in housing loan takeouts

30 projects completed

5

Founders

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Luis N. Yu, Jr.

Chairman Emeritus & FounderMariano D. Martinez, Jr.

Chairman

Januario Jesus G. B. Atencio III

President and CEO

Successful follow-on offer

Conducted a successful follow-on offering last May

at P6.50 …

… raised P5.6 billion in new capital

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Cornerstone investors

8

TPG CAPITAL

USA

KHAZANA NASIONALMALAYSIA

$50 Billion Private Equity Fund

$30 Billion Sovereign Wealth Fund

”

“

Our mission

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To create a more inclusive Philippine

society by using mass housing as the

vehicle to provide greater value for ourbuyers, sellers, employees, suppliers and

shareholders, and in the process, transform

people’s lives for the better

10

Horizontal Residential Subdivisions

Deca Homes

• Typical floor area: 35 sqm to 60 sqm

• Typical lot area: 35 sqm to 120 sqm

• Located at the outskirts of major metropolitan areas

• Unit price range: Php 450k to Php1.25m

Brands

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Medium-Rise Residential Buildings

Urban Deca Homes

• Typical floor area: 25 sqm

• Location: Central areas of highly urban locations

• 4 to 5-storey low-rise walk-up or 8 to 12-storey with lifts

• Unit price range: Php 800k to Php 1.25m

Brands

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Micro Living Units

Urban Deca Towers

• Typical floor area: Approx. 13 sqm

• Location: Highest density urban areas of Metro Manila

• Makati: 30-storey, 1,600 units, EDSA: 40-storey, 1,000 units

• Target unit price range: Php 875k (~US$20k)1

Brands

13

High Value Amenities

Current landbank

335 hectares…

… 89,850 units in

potential sales…

… equivalent to

₱87bn in gross sales.

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Location Hectares

Iloilo* 150

Davao* 75

Rizal 31

Metro Manila* 41

Cebu 17

Bulacan* 13

Cavite 8

Total 335

*with new acquisitions

Recent landbank acquisitions

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250 + 85 = 335 has. of landbank

Location Type Area (Has.) Target Units

Vitas, Tondo, Manila Vertical 8 12,000

Vitarich, Marilao Bulacan Horizontal 13 6,240

Davao City Horizontal 29 1,905

Pavia, Iloilo Horizontal 30 1,920

Mahogany, Imus, Cavite Vertical 1 650

Hampton, Imus, Cavite Vertical 4 2,730

Total 85 25,445

Project launches FY14

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Project TypeTarget/Actual Launch Date

LocationLandbank

(ha.)Units

DH Marseilles Horizontal April Cavite 4.0 426

Urban DH Tisa MRB July Cebu 8.5 2,800

Urban Tower Shaw High Rise August NCR 0.1 1,000

DH Pavia 3 Horizontal August Iloilo 40 2,724

DH Guadalupe Horizontal October Cebu 3.2 393

DHRR Prime Horizontal December Davao 3.2 217

DHRR Com. Phase 11 Horizontal December Davao 1.7 109

Total 60.7 7,669

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Project launches FY15

Project TypeTarget Launch

DateLocation

Landbank(ha.)

Units

DH Tanza Horizontal January Cavite 4 585

DH Catalunan Grande Horizontal January Davao 11.7 720

DH Lorenzo Horizontal January Davao 25 3,125

Urban DH Muntinlupa MRB April NCR 1.8 3,240

Urban DH Quirino MRB June Davao 0.6 540

DH San Mateo Horizontal October Rizal 31.2 3,600

DH Baywalk Talisay 3 Horizontal December Cebu 5 600

Urban Tower Yakal High Rise December NCR 0.1 1,600

Total 79.4 14,010

Our core principle

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”

“A truly effective mass housingprogram must be grounded onunderstanding how a typical Filipino

middle-class family lives, and how they

earn and spend their money today

Mass housing backlog

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Open market surplus of 0.47m units

Aggregate mass housing backlog of 3.1m units

Year Socialized Economic Low Cost Mid High End

2001 (49,860) (92,317) (7,727) 19,082 15,513

2002 (47,675) (85,977) (7,148) 20,469 16,578

2003 (42,941) (85,755) (5,035) 23,916 19,189

2004 (40,401) (43,403) (7,715) 20,983 17,016

2005 (37,042) (73,828) (3,067) 27,836 22,182

2006 (47,394) (122,436) (7,225) 32,545 26,133

2007 (81,312) (331,425) (96,772) 18,790 20,317

2008 (156,797) (620,893) (201,667) 13,162 21,776

2009 (119,077) (413,970) (124,053) 14,562 18,483

2010 50,104 64,237 21,508 29,866 22,448

2011 (90,886) (156,310) (23,259) 29,192 24,376

Total (663,281) (1,962,077) (462,160) 250,403 224,011

Deeply Aspirational

Seek Value for Money

Optimistic of their future

Our market

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Young, college educated

Stable jobs, other income

₱25,000 monthly income

Renters, not asset owners

Little or no savings

Our growth strategy

Expand New Projects in

Existing Branches

Expand New Projects in

New Branches

Increase Landbank by another 250

Hectares

Continuous Improvement

in Management of Key Areas

Explore Securitization

and other Housing Finance Modes

Strong platform for

future growth

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Business

Model

Fast Pre-Cast

Construction

Proactive Credit and Collection Platform

Affordable amortization

Our business model

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Our business model

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8990’s in-house Pre Cast technology constructs housing units in an average of 8-10 days

Tremendous economies of scale that results in lower materials

cost, higher quality of panels and greater site efficiency

Fast Pre-Cast

Construction

Our business model

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2% down payment8.5% interest rates,

25-years termMigrates to HDMF within 4 years

₱12B CTS Receivables Portfolio of which ₱4B has been delivered to

HDMF, ₱2B has been cleared, ₱1B has been taken-out

Accessible In-House Financing

Receivables to cash

In ₱M Converted to Cash Receivables

Receivables by end 2013 10,011

Less: Sale to CTBC 1,000

HDMF Take-outs 4,000

Securitization 800

Full Payments 165

Projected 2013 receivables converted to cash in 2014

5,965 5,965

Net receivables 4,046

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Funding capacity

26

In ₱M Projected Amounts

Receivables converted to cash 5,965

Credit lines 5,000

10,965

Less: Capital expenditures + Land Purchase 5,140

Net interest 372

Operating expenses 1,400

Total Expenditures 6,912

Net Cash Estimate 4,053

Business model

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Comprehensive platform of organization, software, systems,

policies and procedures.

Collection efficiency remainsone of the HIGHEST in the

industry

Proactive Credit and Collection Platform

Collection efficiency

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94.6% 92.6% 93.2% 93.8%96.8%

2009 2010 2011 2012 2013

Average of 94% in the past 5 years

2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 Target

189883

2,283 2,2673,040 2,560 2,241

4,181

5,738

7,900

• Income grew from P189.0m in 2004 to ₱5.7bn in 2013.

• 2014, total revenues are expected to reach ₱8.0 bn.

• We have grown by 30 times by the end of 2013.

Establishing a Solid Track Record

Growth trajectory

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1H14 results

Financial highlights

Sales in Number of Units Unit Sales Breakdown in 2014

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2,421

4,187

5,738

3,5373,812

2011 2012 2013 1H13 1H14

MRB11%

Low Cost Housing89%

2.34

3.83

5.35

3.1

4.1

2011 2012 2013 1H13 1H14

PHP billion

Total Revenue Revenue Breakdown

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90% 85%

7%

11%

0.6% 2%

1.3% 1%

1H13 1H14

Subdivision MRB Timeshare Azalea


Gross Profit

1.01

2.38

3.38

1.95

2.5

2011 2012 2013 1H13 1H14

PHP billion

Net Income Before Tax

33

0.44

1.75

2.44

1.55

1.96

2011 2012 2013 1st Sem 1st Sem

PHP billion

2013 2014


Gross and Net Income Margins

60%63% 64% 61%

39%44%

40%44%

2011 2012 2013 1H14

GROSS NET

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Equity Total Asset

1.26

3.94

6.595.46

13.68

2011 2012 2013 1st Sem 1st Sem

PHP billion

2013 2014

5.83

8.84

17.61

12

22.9

2011 2012 2013 1st Sem 1st Sem

PHP billion

2013 2014

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Debt to Equity

3.60

1.24

1.67

1.20

0.68

2011 2012 2013 1H13 1H14

Return On Equity

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34.62%

43.17%

33.11%

27.69%

13.22%

2011 2012 2013 1H13 1H14


Interest Coverage Ratio Current Ratio

0.3x

10.88x

7.83x

10.90x

12.68x

2011 2012 2013 1st Sem 1st Sem

2013 2014

1.09x

1.48x

0.60x

1.11x

1.43x

2011 2012 2013 1st Sem2013

1st Sem2014

37

Strong balance sheet

Total Outstanding Debt Average Funding Cost

Strong balance sheet

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4.6 4.9

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6.5

9.3

2011 2012 2013 1H13 1H14

PHP billion

7

6.2 6.2

4.67

0

1

2

3

4

5

6

7

8

2011 2012 2013 2014

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Financial Highlights (Php M)

1H13 1H14 Growth Rate

Total Revenue 3,137 4,096 31%

Gross Income 1,950 2,513 29%

Income Before Tax 1,553 1,956 26%

Net Income After Tax 1,512 1,808 20%

Gross Income Margin 62% 61%

EBIT Margin 50% 48%

Strong 1H14 Performance

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(Php M) 1H13 1H14 Growth Rate

Marketing and Selling 172 263 53%

Documentation 155 164 6%

Taxes and Licenses 33 63 61%

Salaries and Employee Benefits 33 53 20%

Management and Professional Fees 5 33 544%

Security, Messengerial and Janitorial 14 26 88%

Transportation and travel 10 17 71%

Rent 5 12 133%

Communication, Light and water 15 26 72%

Major Operating Expenses

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Financial Highlights (Php M)

1H13 1H14 Growth Rate

Total Assets 12,004 22,942 91%

Total Liabilities 6,544 9,261 42%

Total Equity 5,460 13,680 151%

Total Retained Earnings 1,603 3,750 134%

Interest Coverage Ratio 10.9 12.7

Current Ratio 1.1 1.4

Return on Equity 22.9 13.2

Strong 1H14 Performance

Balance sheet

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In ₱M 1H13 1H14 Growth Rate

Total Assets 12,004 22,942 91%

Current Assets 3,464 4,946 43%

Trade Receivables 10,036 12,294 23%

Total Liabilities 6,544 9,261 42%

Current Liabilities 3,118 3,465 11%

Loan Payable 4,905 6,798 39%

Stockholder’s Equity 6,596 13,680 107%

Updates – 1H14

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In ₱M 1Q14 2Q14 1H14 1H13 Growth Rate

Total Revenue 1,915 2,181 4,096 3,137 31%

Gross Profit 1,189 1,324 2,513 1,950 29%

Gross Margin (%) 62 61 61 62

Net Income 936 872 1,808 1,512 20%

Net Margin (%) 49 40 44 48

Updates – 1H14

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1Q14 2Q14

Units Rev/Unit Units Rev/Unit

Deca Homes 1,776 944,429 1,610 1,161,491

Urban Deca Homes 196 1,059,981 230 1,095,786

Total 1,972 1,840

Guidance

Guidance – 2014

Revenue: ₱7.6bn - ₱8.0bn

Net Income: ₱3.6bn - ₱4.0bn

2014 vs 2013 income growth: 60% - 80%

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• Provides recurring income base; comparable to

rental yield for 25 years

• About P800 million interest income for 2014, at 8% to 11.5% interest rate

• 96% collection efficiency > 85% occupancy rate for mall space

47

Managing Receivables

• CTS pool provides commercial banks access to

mass markets

• $HOUSE is preferred intermediary to grow

client base of commercial banks

• Pag-ibig is mandated to loan P50.0bn

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Managing Receivables

Manageable Receivables

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(Pm) 2014

Target Sales 8,300

Cost of Sales + OPEX 4,150

Funding / Week 80

Cash from Receivables 30

Take - outs 50

• Cost of sales at 40% vs. 60% for

others; efficiency

• P80m cash needed to fund sales

cost+OPEX

• P30m from existing receivables

• P50m take-outs from Pag-ibig or

comm’l banks = 55 units or 11

accounts per week per branch.

Documents

Analysts’ Briefing 1H14 · 01.09.2018 · • Cost of sales at 40% vs. 60% for others; efficiency • P80m cash needed to fund sales cost+OPEX • P30m from existing receivables