Dmci Holdings Inc. · PSE:DMC

Dmci — 9M 2017 Earnings Presentation

39 slides from Dmci's earnings presentation, Nov 8, 2017

  1. Slide 1: Analyst Briefing: 9M 2017 Earnings Call

    ANALYST BRIEFING 9M 2017 Earnings Call Wednesday, 08 November 2017 2:00pm DMCI Annex

  2. Slide 2: Agenda

    Agenda • DMCI Holdings Inc.: Net Income (segment breakdown) • Business Segment 9M 2017 Results: Coal & On-Grid Power (Semirara) Real Estate Development (DMCI Homes) Construction (DMCI) Nickel (DMCI Mining) Off-Grid Power (DMCI Power) Water Concession (Maynilad) • Parent Balance Sheet as of 30 Septem

  3. Slide 3: Holdings' Net Income Breakdown

    Holdings’ Net Income Breakdown • YTD Core Net Income rose 24% and Reported Net Income was up +19% as of 9M17 • Restatement of DMCI Homes’ earnings show +59% increase YTD from same period last year followed by solid YoY growth from: Semirara (+21%) and DMCI Construction (+16%) (In Million Php) 9M 201

  4. Slide 4: Real Estate Development

    * DMCI Homes restated using Percentage of Completion method Real Estate Development • Transition to percentage of completion method (PoC) in 2Q 2017 in anticipation of 2018 change in (industry-wide) accounting standards. • Core Net Income up +59% YTD in 9M17 9M 2016 (In Million Php) 9M 2017 Restated

  5. Slide 5: Real Estate Development

    Real Estate Development • Sales value of DMCI Homes units sold increased by +49% YTD compared to 9M 2016 • Unit pricing also increased by +13% due to the launch of higher end products which have also seen very strong demand Php (in millions) 9M 2017 9M 2016 % Change Units PHP 28,371 19,039 +49% Park

  6. Slide 6: 2017 Launch Calendar

    2017 Launch Calendar • DMCI Homes will launch a combination of mid and high rise buildings in 2017 with total sales value of P40bn No. of Bldgs. Month Project / Type PRISMA RESIDENCES 3 HRB January Pasig City (42F) MULBERRY PLACE 8 MRB March Taguig City (6F) THE ORABELLA 1 HRB May Quezon City (47F)

  7. Slide 7: Construction

    Construction • Current backlog stands at PHP 27 BN due to PHP 14.4 Billion in contracts signed as of 9M 2017 • Infrastructure book should see sustained growth due to government-led push for more highways and bridges Newly Booked Product Line Contract Dec ‘16 June ’17 % of Total Awarded Revenue Build

  8. Slide 8: Construction

    Construction • Core Net Income for DMCI Holdings up +16% in the 9M 2017 due to timely progression of building projects and infrastructure variation orders, accounting for higher revenue take-up. (In Million Php) 9M 2017 9M 2016 % Construction Revenues 9,052 7,782 16% COS and Operating Expenses (Cash

  9. Slide 9: Potential Contracts and Amounts

    Potential Contracts and Amounts • Company remains bullish on Infrastructure: expecting PHP +30 Billion in projects to be bid in 2H 2017 • Total potential bids (3-5 years) approximately PHP 217 Billion Prospective Infrastructure Projects (3-5 Years) Rail 21% Roads, Bridges & Tunnels Interchanges Flyo

  10. Slide 10: Nickel Mining

    Nickel Mining • Change in regulatory environment sees metal-mining subsidiary back on track to implement long-term strategy of incorporating nickel processing • Our nickel mines hold meaningful reserves with significant market share in shipments; cash costs ca. 21 USD per ton • Shipment of existing

  11. Slide 11: Nickel Mining

    Nickel Mining • Ongoing suspension and closure of Berong Nickel Corp. (BNC) and Zamabales Diversified (ZDMC) kept production at standstill in 9M 2017 as shipment volume (WMT) increased by only 6% • Profitability in 9M 2017, offset weak nickel prices (-47.5%) Quarter on Quarter 3Q 2017 3Q 2016 % Ship

  12. Slide 12: Nickel Mining

    Nickel Mining • Change in regulatory environment sees metal-mining subsidiary back on track to implement long-term strategy of incorporating nickel processing • Our nickel mines hold meaningful reserves with significant market share in shipments; cash costs ca. 21 USD per ton • Shipment of existing

  13. Slide 13: Off-Grid Power

    Off-Grid Power Operational Indicators 9M ‘17 9M ’16 % Sales Volume, GwH* 181.43 181.76 -0.18% Masbate 73.73 70.82 4.11% Palawan 69.32 69.96 -0.91% Mindoro 38.38 40.98 -6.34% Sultan Kudarat 0.10 1.67 -94.01% Average Selling Price (ASP), Php/kWh Masbate 12.83 11.19 14.66% Palawan 9.97 7.95 25.41% Mind

  14. Slide 14: Off-Grid Power

    Off-Grid Power • Expiry of Masbate’s ITH led to slight (-5%) dip in 9M 2017 earnings – • However, increase in income tax was offset, somewhat, by 18% increase in power revenues due higher sales volumes & higher ASP’s (In Million Php) 9M 2017 9M 2016 % Power Revenues 2,049 1,738 18% COS and Operating

  15. Slide 15: Water Concession (Maynilad)

    *Figures presented are taken from MAYNILAD HOLDINGS (not Maynilad stand-alone) Water Concession (Maynilad*) • Revenues in 9M 2017 grew 2% to PHP 15.57 Billion driven primarily by inflation rate adjustment and change in customer base. • Newly rebased rates (awarded to Maynilad in arbitration) remain

  16. Slide 16: Holdings' Balance Sheet

    Holdings’ Balance Sheet • Parent Company net cash positive with PHP 7.9 BN (In Million Php) 30 Sept. ‘17 31 Dec. ‘16 % Cash & Cash Equivalents* 7,896 5,054 56% Receivables 2,036 2,228 -9% Investments in subsidiaries, associates and joint ventures 15,450 15,450 0% Other assets 108 107 1% Total assets

  17. Slide 17: 2017 CAPEX Breakdown

    2017 CAPEX Breakdown • Total 2017 CAPEX FY Estimate: PHP 29.25 Billion Semirara 25% Semirara Maynilad 34% Real Estate Construction Off-Grid Power Nickel Mining Nickel Mining 0% Maynilad Off-Grid Power Real Estate 3% Construction 36% 2% 7 November 2017 18

  18. Slide 18: DMCI Holdings Key Takeaways + Outlook

    DMCI Holdings Key Takeaways + Outlook • Consolidated core earnings grew by +24% driven primarily by restatement of Homes’ earnings (+59%) DMCI Holdings: • Solid growth in 9M 2017 (YoY) shown by: Semirara (+21%) & Construction (+16%). • DMC’s dividend payout ratio for the year will be at least 25%, i

  19. Slide 19: Disclaimer

    Disclaimer The information contained in this document is strictly confidential. Neither DMCI Holdings, Inc. (DMCI), nor its advisors make any representation regarding, and assumes no responsibility or liability for, the accuracy or completeness of, or any errors or omissions in any information conta

  20. Slide 20: DMC Relative to Peers

    DMC Relative to Peers DMCI is cheap on a relative and absolute basis in terms of 2017 P/E While earnings growth is the best among peers, with upside risk Ratio to consensus earnings… Conglomerates: 2017 Consensus P/E Conglomerates: Consenus 2016-2018 EPS Growth 30.0x 15.0% 26.3x 13.6% 25.0x 12.1% 12

  21. Slide 21: Holdings' Net Income Breakdown

    Holdings’ Net Income Breakdown • Core Net Income rose 18% in 3Q 2017 • Restatement of DMCI Homes’ earnings show +37% increased followed by solid YoY growth from: Semirara (+13%) and Maynilad (+8%) (In Million Php) 3Q 2017 3Q 2016 Change % % of Core Restated* Semirara 2,026 1,795 231 13% 50% Real Est

  22. Slide 22: Real Estate Development

    * DMCI Homes restated using Percentage of Completion method Real Estate Development • Transition to percentage of completion method (PoC) in 2Q 2017 in anticipation of 2018 change in (industry-wide) accounting standards. • +60% increase in revenues (YoY) and +37% increase in Core Net Income (In Mill

  23. Slide 23: Real Estate Development

    * DMCI Homes restated using Percentage of Completion method Real Estate Development • Quarterly breakdown of 1H 2017 and 1H 2016 (restated) (In Million Php) 1Q 2017 2Q 2017 1Q 2016 2Q 2016 Restated* Restated* Restated* Real Estate Revenues 4,793 4,564 4,431 2,516 COS & Operating Expenses (Cash) (3,4

  24. Slide 24: Semirara Consolidated

    Semirara Consolidated (In Million Php) 3Q 2017 3Q 2016 % Revenues 12,082 9,208 31% COS & Operating Expenses (Cash) (6,092) (4,942) 23% EBITDA 5,990 4,266 40% Depreciation & Amortization (1,760) (743) 137% Interest Expense (174) (178) -2% Interest Income 20 15 33% Other Income (Expense) 37 (7) -629%

  25. Slide 25: Real Estate Development

    Real Estate Development • Sales value of DMCI Homes units sold increased by +21% in 3Q compared to 3Q 2016 • Unit pricing also increased by +11% due to the launch of higher end products which have also seen very strong demand Php (in millions) 3Q 2017 3Q 2016 % Change Units PHP 8,254 6,822 +21% Park

  26. Slide 26: Real Estate Development

    Real Estate Development • Sales & Reservations jumped by +65% in 2016 while default rates continued to decline • Launches also increased by 270% due to continued high demand for DMCI Homes Sales & Reservations (in BNs of PHP) Default Rate 40.0 15% 31.2 12% 30.0 9% 10% 17.3 18.5 19.0 18.8 20.0 6% 5%

  27. Slide 27: Construction

    Construction • Construction Revenues up +38% in the 3Q 2017 due to timely progression of building projects and infrastructure variation orders, accounting for higher revenue take-up. (In Million Php) 3Q 2017 3Q 2016 % Construction Revenues 3,176 2,295 38% COS and Operating Expenses (Cash) (2,567) (1

  28. Slide 28: Nickel Mining

    Nickel Mining • Change in regulatory environment sees metal-mining subsidiary back on track to implement long-term strategy of incorporating nickel processing • Our nickel mines hold meaningful reserves with significant market share in shipments; cash costs ca. 23 USD per ton • Shipment of existing

  29. Slide 29: Off-Grid Power

    Off-Grid Power • Expiry of Masbate’s ITH led to slight (-5%) dip in 1H 2017 earnings – • However, increase in income tax was offset, somewhat, by 20% increase in power revenues due higher sales volumes & higher ASP’s (In Million Php) 3Q 2017 3Q 2016 % Power Revenues 675 597 13% COS and Operating Exp

  30. Slide 30: Water Concession (Maynilad)

    *Figures presented are taken from MAYNILAD HOLDINGS (not Maynilad stand-alone) Water Concession (Maynilad*) • Revenues in 3Q 2017 grew 5% to PHP 5.33 Billion driven primarily by inflation rate adjustment and change in customer base. • Newly rebased rates (awarded to Maynilad in arbitration) remain u

  31. Slide 31: Semirara Consolidated

    Semirara Consolidated (In Million Php) 9M 2017 9M 2016 % Revenues 31,933 25,766 24% COS & Operating Expenses (Cash) (14,404) (13,313) 8% EBITDA 17,529 12,453 41% Depreciation & Amortization (4,486) (2,073) 116% Interest Expense (473) (422) 12% Interest Income 73 52 40% Other Income (Expense) (111) (

  32. Slide 32: Semirara Coal

    Semirara Coal (In Million Php) 3Q 2017 3Q 2016 % Coal Revenues 5,901 4,425 33% COS & Operating Expenses (cash) (3,391) (3,053) 11% EBITDA 2,510 1,372 83% Depreciation & Amortization (1,088) (232) 369% Interest Expense (81) (46) 76% Interest Income 10 7 43% Other Income (Expense) (25) (18) 39% Benefi

  33. Slide 33: Semirara Coal

    Semirara Coal (In Million Php) 9M 2017 9M 2016 % Coal Revenues 17,021 13,442 27% COS & Operating Expenses (cash) (8,491) (8,633) -2% EBITDA 8,530 4,809 77% Depreciation & Amortization (2,638) (774) 241% Interest Expense 210 (142) 48% Interest Income 39 23 70% Other Income (Expense) (162) (41) 295% B

  34. Slide 34: Semirara Power (SCPC & SLPGC)

    Semirara Power (SCPC & SLPGC) • Power revenues (all power plants) driven by higher volumes sold at higher prices (In Million Php) 3Q 2017 3Q 2016 % Power Revenues 6,181 4,783 29% COS & Operating Expenses (Cash) (2,701) (1,889) 43% EBITDA 3,480 2,894 20% Depreciation & Amortization (672) (511) 32% In

  35. Slide 35: Semirara Power (SCPC & SLPGC)

    Semirara Power (SCPC & SLPGC) • Power revenues (all power plants) driven by higher volumes sold at higher prices (In Million Php) 9M 2017 9M 2016 % Power Revenues 14,912 12,324 21% COS & Operating Expenses (Cash) (5,913) (4,680) 26% EBITDA 8,999 7,644 18% Depreciation & Amortization (1,848) (1,299)

  36. Slide 36: Semirara Power (SCPC)

    Semirara Power (SCPC) (In Million Php) 3Q 2017 3Q 2016 % Power Revenues 4.022 3,104 30% COS & Operating Expenses (2,046) (1,468) 39% EBITDA 1,976 1,636 21% Depreciation & Amortization (306) (278) 10% Interest Expense (17) (27) -37% Interest Income 2 2 0% Other Income (Expense) 18 11 64% Benefit (Pro

  37. Slide 37: Semirara Power (SCPC)

    Semirara Power (SCPC) (In Million Php) 9M 2017 9M 2016 % Power Revenues 9,386 7,626 23% COS & Operating Expenses (4,140) (3,848) 8% EBITDA 5,246 3,778 39% Depreciation & Amortization (893) (842) 6% Interest Expense (38) (68) -44% Interest Income 6 9 -33% Other Income (Expense) 7 35 -80% Benefit (Pro

  38. Slide 38: Semirara Power (SLPGC)

    Semirara Power (SLPGC) (In Million Php) 3Q 2017 3Q 2016 % Power Revenues 2,159 1,679 29% COS & Operating Expenses (cash) (655) (421) 56% EBITDA 1,504 1,258 20% Depreciation & Amortization (366) (233) 57% Interest Expense (76) (105) -28% Interest Income 8 6 33 Other Income (Expense) 44 – – Benefit (P

  39. Slide 39: Semirara Power (SLPGC)

    Semirara Power (SLPGC) (In Million Php) 9M 2017 9M 2016 % Power Revenues 5,526 4,698 18% COS & Operating Expenses (cash) (1,773) (832) 113% EBITDA 3,753 3,866 -3% Depreciation & Amortization (955) (457) 109% Interest Expense (225) (212) 6% Interest Income 28 20 40% Other Income (Expense) 44 1 4300%

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