DMCI Holdings Inc. · PSE:DMC
DMCI — H1 2017 Earnings Presentation
26 slides from DMCI's earnings presentation, Aug 14, 2017
Slide 1: Analyst Briefing 1H 2017 Earnings Call
ANALYST BRIEFING 1H 2017 Earnings Call Monday, 14 August 2017 3:00pm DMCI Annex
Slide 2: Agenda
Agenda • DMCI Holdings Inc.: Net Income (segment breakdown) • Business Segment 1H 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 June 2
Slide 3: Holdings' Net Income Breakdown
Holdings’ Net Income Breakdown • Core Net Income rose 27% and Reported Net Income was up +19% in 1H 2017 • Restatement of DMCI Homes’ earnings show +78% increase YTD from same period last year followed by solid YoY growth from: Semirara (+24%) and DMCI Construction (+25%) (In Million Php) 1H 2017 1H
Slide 4: Real Estate Development
Real Estate Development • Transition to percentage of completion method (PoC) in 2Q 2017 in anticipation of 2018 change in (industry-wide) accounting standards. • +35% increase in revenues (YoY) driven by more launches in current period and higher rate of completion (In Million Php) 1H 2017 1H 2016
Slide 5: Real Estate Development
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) (3,483) (3,538) (3,331) (2,020) EBITDA 1,310 1,026 1,100 496 Deprec
Slide 6: Real Estate Development
Real Estate Development • Sales value of DMCI Homes units sold increased by +65% YTD compared to 1H 2016 • Unit pricing also increased by +14% due to the launch of higher end products which have also seen very strong demand Php (in millions) 1H 2017 1H 2016 % Change Units PHP 20,117 12,217 +65% Park
Slide 7: 2017 Launch Calendar
2017 Launch Calendar • DMCI Homes will launch a combination of mid and high rise buildings in 2017 No. of Bldgs. Month Project / Type 3 HRB Jan PRISMA RESIDENCES Pasig Blvd, Pasig City (42F) 8 MRB Mar MULBERRY PLACE Acacia Estates (6F) 1 HRB May THE ORABELLA 21ST Street, Quezon City (47F) 3 HRB Aug
Slide 8: Construction
Construction • Core Net Income up +25% in the 1H2017 due to timely progression of building projects and infrastructure variation orders, accounting for higher revenue take-up. (In Million Php) 1H 2017 1H 2016 % Construction Revenues 5,876 5,487 7% COS and Operating Expenses (Cash) (4,841) (4,554) 6%
Slide 9: Construction
Construction • Current backlog stands at PHP 27 BN due to PHP 11.7 Billion in contracts signed in 1H 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 Building
Slide 10: 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
Slide 11: 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
Slide 12: Nickel Mining
Nickel Mining • Ongoing suspension and closure of Berong Nickel Corp. (BNC) and Zamabales Diversified (ZDMC) kept production at standstill in 1H 2017 as shipment volume (WMT) dropped -71% • Decrease in volume, in 1H 2017, offset slightly by higher average selling price (+27%) Quarter on Quarter 1Q 2
Slide 13: 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) 1H 2017 1H 2016 % Power Revenues 1,374 1,141 20% COS and Operating
Slide 14: Off-Grid Power
Off-Grid Power Operational Indicators 1Q ’17 1H ‘17 1Q ‘16 1H ’16 % Sales Volume, GwH* 53.84 120.42 52.32 121.14 -0.6% Masbate 21.80 48.03 20.86 45.73 5.0% Palawan 21.64 47.42 20.47 46.53 1.9% Mindoro 10.40 24.97 10.99 28.88 -13.5% Sultan Kudarat 0.02 0.05 0.81 1.60 -96.8% Average Selling Price (ASP
Slide 15: Water Concession (Maynilad)
Water Concession (Maynilad*) • Revenues in 1H 2017 grew 1% to PHP 10.2 Billion driven primarily by inflation rate adjustment (+1.9%) and change in customer base. • Newly rebased rates (awarded to Maynilad in arbitration) remain unimplemented (In Million Php) 1H 2017 1H 2016 % Revenues 10,241 10,120
Slide 16: Holdings' Balance Sheet
Holdings’ Balance Sheet • Parent Company net cash positive with PHP 4.0 BN (In Million Php) 30 June ‘17 31 Dec. ‘16 % Cash & Cash Equivalents* 4,035 5,054 -20% Receivables** 2,481 2,228 11% Investments in subsidiaries, associates and joint ventures 15,450 15,450 0% Other assets 107 107 0% Total asse
Slide 17: 2017 Capex Breakdown
2017 Capex Breakdown • Total 2017 Capex Budget (FY forecast) is PHP 40.2 Billion Maynilad Semirara 30% Semirara 36% Real Estate Construction Nickel Mining Off-Grid Power 0% Nickel Mining Off-Grid Power Maynilad 3% Construction Real Estate 2% 29% 14 August 2017 18
Slide 18: DMCI Holdings Key Takeaways + Outlook
DMCI Holdings Key Takeaways + Outlook • Consolidated core earnings grew by +19% driven primarily by restatement of Homes’ earnings (+78%) DMCI Holdings: • Solid growth in 1H 2017 (YoY) shown by: Semirara (+24%) & Construction (+25%). • DMC’s dividend payout ratio for the year will be at least 25%, i
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
Slide 20: 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%
Slide 21: 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
Slide 22: Semirara Consolidated
Semirara Consolidated (In Million Php) 1H 2017 1H 2016 % Revenues 19,851 16,558 20% COS & Operating Expenses (Cash) (9,003) (8,371) 8% EBITDA 10,848 8,187 33% Depreciation & Amortization (2,035) (1,330) 53% Interest Expense (299) (244) 23% Interest Income 53 37 43% Other Income (Expense) (148) 2 NM
Slide 23: Semirara Coal
Semirara Coal (In Million Php) 1H 2017 1H 2016 % Coal Revenues 11,120 9,017 23% COS & Operating Expenses (cash) (5,100) (5,580) -9% EBITDA 6,020 3,437 75% Depreciation & Amortization (1550) (542) 186% Interest Expense (129) (96) 34% Interest Income 29 16 81% Other Income (Expense) (137) (23) 496% Be
Slide 24: Semirara Power (SCPC & SLPGC)
Semirara Power (SCPC & SLPGC) • Power revenues (all power plants) driven by higher volumes sold at higher prices (In Million Php) 1H 2017 1H 2016 % Power Revenues 8,731 7,541 16% COS & Operating Expenses (Cash) (3,903) (2,791) 40% EBITDA 4,828 4,750 2% Depreciation & Amortization (485) (788) -38% In
Slide 25: Semirara Power (SCPC)
Semirara Power (SCPC) (In Million Php) 1H 2017 1H 2016 % Power Revenues 5,364 4,522 19% COS & Operating Expenses (2,490) (2,380) 5% EBITDA 2,874 2,142 34% Depreciation & Amortization (191) (564) -66% Interest Expense (21) (41) -49% Interest Income 4 7 -43% Other Income (Expense) (11) 24 -146% Benefi
Slide 26: Semirara Power (SLPGC)
Semirara Power (SLPGC) (In Million Php) 1H 2017 1H 2016 % Power Revenues 3,367 3,019 12% COS & Operating Expenses (cash) (1,413) (411) 244% EBITDA 1,954 2,608 -25% Depreciation & Amortization (294) (224) 31% Interest Expense (149) (107) 39% Interest Income 20 14 43% Other Income (Expense) - 1 -100%