PSE Points to Ponder

No doubt the COVID-19 pandemic has wreaked havoc on the real estate industry. The pandemic has put to test the strength of the finances and operating capabilities of the real estate companies. Pandemic distinguishes the strongest from the rest. The biggest real estate company, SM Prime Holdings, Inc. ( SMPH ) is seen to weather the storm. SMPH has a fortress balance sheet. It can generate at least 60 Billion Pesos of revenue and cash flows without spending capital as they have an inventory of built units of 12,000. This was have discussed earlier. Meanwhile ALI ‘s best and the brightest are hustling to crystallize the values of ALI’s assets. They have just raised 13.6 Billion from the AREIT public offering. In Rockwell Land Corporation ( ROCK ) we saw vulnerability. As of end of June 30, 2020 (1H 2020) ROCK had a cash balance of only 3.1 Billion Pesos after borrowing 4 Billion Pesos. ROCK is facing debt repayment in the next 12-month period of 7.1 Billion Pesos. And t...

Just January of this year (2020) SMPH hit a high of 43.35, now it is at 29. It is down some 33%. It shed almost a third of its high. The COVID-19 pandemic exposes the qualities of every company listed in the stock exchange. The pandemic highlighted SMPH as a money printing machine. With the economy mostly shuttered, SMPH was still able to generate 10.4 Billion Pesos of net income and 9.4 Billion Pesos of cash flows from operations. Although, it is facing a 43.8 Billion Pesos of current debts payable within the next 12 months. There is no doubt that SMPH will be able to refinance the same given its still strong cash flow generation despite all the pandemic restrictions. To illustrate its financial strength, SMPH can generate revenue and cash flows of at least 60 Billion Pesos in the succeeding periods without even spending a single peso for capital expenditures to conserve cash. At the end of June 2020 it has available inventory units of 12,000 units that could easily translate t...