{"id":323051,"date":"2023-05-05T01:44:24","date_gmt":"2023-05-04T17:44:24","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323051"},"modified":"2023-09-21T00:50:05","modified_gmt":"2023-09-20T16:50:05","slug":"stock-in-focus-cebu-landmasters-inc-cli-5-may-2023-by-ap-securities-2","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-cebu-landmasters-inc-cli-5-may-2023-by-ap-securities-2\/","title":{"rendered":"Stock in Focus: Cebu Landmasters Inc. (CLI) – 5 May 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>CLI<\/td><\/tr>
Company Name<\/strong><\/td>Cebu Landmasters Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>5 May 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 3.66<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We advise a HOLD for now until the CLI’s cost outlook improves.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

CLI\u2019s earnings for the quarter came in below expectations at only 24.1% of the consensus estimate (P3.7-Billion). Note that prior to the pandemic, Q1 earnings averaged at around 29 to 30% of full year results. We attribute the underperformance to the company\u2019s rising costs amidst the inflationary and high interest rate environment.<\/p>\n\n\n\n

The topline grew YoY by 33%, in-line with the expansion of real estate sales which accounted for almost the entirety of CLI\u2019s revenue stream (98.6%). A big driver behind the inflow of realized revenue was the high-end Premier Masters brand, which saw its contribution climb to 34% from the 24% seen in FY22. In the long run, we note that growth in this segment\u2019s sales allocation could boost CLI\u2019s capacity to grow margins, given the higher price points of these projects.<\/p>\n\n\n\n

Demand-wise however, much of the pipeline for now will continue to stem from the economic Casa Mira brand, as this currently accounts for 52% of reservation sales (up from 32%), while Premier Masters comes in second at 33%. This further underpins CLI\u2019s strategy of leveraging the housing backlog in the PH in order to sell its portfolio of affordable residential developments. In terms of growth, reservation sales expanded by 16% (versus the 10% seen in FY22), which indicates that buyer interest remains strong. We note however that cancellation rates continue to increase, now at 5.53% (previously at 4.96%), albeit on improving delinquency rates. Still, a continued uptrend here can pose future headwinds to revenue growth.<\/p>\n\n\n\n

On the cost side of things however, is where earnings performance starts to slip. Cost of sales relative to revenues notably rose to 55.3%, 140bps greater than a year ago as a result of higher capitalized interest and costlier inputs. As such, gross margins posted a 100bp decline, while operating margins were more or less flat. QoQ-wise however, the disparity in operating margin performance is more noticeable at -2.8ppts relative to 4Q22.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>