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Edited Transcript of RLC.PS earnings conference call or presentation 9-Aug-19 7:00am GMT

Q2 2019 Robinsons Land Corp Earnings Call

Pasig Aug 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Robinsons Land Corp earnings conference call or presentation Friday, August 9, 2019 at 7:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Frederick D. Go

Robinsons Land Corporation - President, CEO & Director

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Conference Call Participants

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* Carl Sy

Deutsche Bank AG, Research Division - Research Analyst

* German de la Paz

Abacus Securities Corporation, Research Division - Junior Investment Analyst

* Jason T. Escartin

PAPA Securities Corporation, Research Division - Equity Investment Analyst

* Jeffrey Lucero

RCBC Securities, Inc., Research Division - Research Analyst

* Jelline E. Gaza

JP Morgan Chase & Co, Research Division - Analyst

* Rafael Alfonso Javier

BofA Merrill Lynch, Research Division - Analyst

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Presentation

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Operator [1]

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Welcome to RLC Second Quarter of Calendar Year 2019 Quarterly call. Joining us today from RLC are Mr. Frederick Go, President, and the rest of the RLC Investor Relations team. At the end of the presentation, there will be a question-and-answer session. Thank you.

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Unidentified Company Representative, [2]

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Good afternoon. Thank you for joining Robinsons Land Corporation's earnings call. During this presentation, we will report to you our unaudited financial results for the first half of 2019 ending June and update you on each of our business units, our growth plans and future strategy.

We continue to strengthen our business portfolio and expand our product offerings that are anchored in the main drivers of the Philippine economy. As of June 2019, our malls division, consisting of 51 lifestyle centers nationwide, continuous to capture domestic consumption and provides us with strong cash flow and recurring income year-on-year. Our office portfolio, composing of 20 office developments, continues to capitalize on the growing demand for office space from the IT-BPM industry and traditional companies alike. Our Residential business now spans across 75 residential condominium projects and 38 housing subdivisions, coming off of historical high levels of presales and project launches in 2018. With 19 hotel properties, our Hotels and Resorts Division is poised for growth with the booming tourism industry. Lastly, we continue to build communities within our 19 mixed-use developments.

RLC continues to receive strong cash flows driven by its diversified business model, consisting of the investment portfolio and the development portfolio. The investment portfolio consisting of the malls, offices, hotels and warehousing business accounted for 67% of revenues, 82% of EBITDA, 73% of EBIT and 67% of net income. The balance was from the performance of the development portfolio, consisting of the (inaudible) and the property sales arm of the Industrial and Integrated Developments Division or IID.

Our financial position remains solid with total assets at PHP 180.6 billion and shareholder's equity at PHP 95.5 billion as of June 2019. Earnings per share posted at PHP 0.77 per share, while net debt to equity ratio significantly improved to 34%.

Moving on to the financial performance highlights. Net income surged by 20% to PHP 4 billion in the first half of 2019. This is on the back of double-digit growth in revenues, EBITDA and EBIT. Revenues at PHP 14.79 billion was up by 13%, with the malls division taking up the lion's share, accounting for 44% of total revenues, followed by the Residential Division at 31%, the Office Buildings Division at 16%, the Hotels and Resorts Division at 7% and IID at 2%. All of our business units registered top line growth.

The malls division delivered a solid 11% increase in revenues to PHP 6.45 billion from stable growth of existing malls, contribution of new malls and a strong pickup in cinema ticket sales. Revenues from the Office Buildings Division continued to soar by 29% to PHP 2.32 billion, owing to a combination of rental escalation and higher renewal rates in existing offices as well as the contribution of new offices. The hotels business generated PHP 1.08 billion in revenues, which was 11% higher than the previous year, due to the strong performance of some of the existing hotels as well as the contribution of new hotels. The Residential Division posted a 5% spike in revenues at PHP 4.68 billion, reversing the decline recorded in the first quarter after the recognition of revenues from completed projects. Lastly, under IID, we have sold yet again a parcel of land to our third JV company, which resulted to a partial upfront recognition of revenues amounting to PHP 217 million, plus lease revenues from the Sucat warehouse of about PHP 52 million.

EBITDA increased by 15% to PHP 8.02 billion, while EBIT rose by 17% to PHP 5.66 billion. Our first half results show the continued strength of our malls, offices and hotels, the strong momentum of our Residential business and the accretive contribution of IID.

Moving on to the individual business units, starting with the malls division. For the first half, revenues increased by 11% to PHP 6.45 billion. Revenue growth was underpinned by a stable same mall rental revenue growth of 7%, contribution of the 4 new malls we opened in 2018, mainly Robinsons Place Ormoc, Robinsons Place Pavia, Robinsons Place Tuguegarao and Robinsons Place Valencia, and pick up in cinema ticket sales which grew 10% year-on-year.

Operating expenses grew at a slightly slower pace than revenues, which resulted to EBITDA increasing by 12% to PHP 4.24 billion and EBIT by 17% to PHP 2.47 billion. To date, we have 51 malls located as far north as Ilocos in Luzon and as far south as South Cotabato in Mindanao, cementing RLC as one of the largest mall developers in the Philippines. Our mall footprint spans across 1.5 million square meters of leasable space, which is a 7% increase versus same period last year.

System-wide occupancy rate remains healthy at 95%, and we have over 9,000 retail partners in our malls nationwide. As scheduled, there were no new mall openings in the first half of the year. However, we are pleased to share that we have successfully opened last July our 52nd mall named Robinsons Galleria South located in San Pedro, Laguna. It is our third Galleria-branded lifestyle center in the country, which aims to cater to communities within the Calabarzon area. We are also gearing up to open the expansion of our Magnolia Mall in the coming months as well as the first phase of the expansion of our Robinsons Starmills mall. In addition, we are currently constructing 2 new malls and 2 mall expansions that will come online next year.

Next is the Office Buildings Division. Growth momentum was sustained, with a 29% hike in revenues to PHP 2.32 billion in the first half. This notable increase was mainly driven by a combination of rental escalations and higher renewal rates in existing offices as well as the successful leasing activities in new buildings, namely Cyber Sigma in Taguig and then Zeta Towers in Quezon City and Cyberspace Gamma in Pasig City.

EBITDA was up by 23% to PHP 1.93 billion, while EBIT rose by 25% to PHP 1.63 billion. As of June, we have 20 operational office developments located in key cities and other urban areas. Versus same period last year, net leasable space has grown by 18% to 523,000 square meters, total leased space was 98%, and we remain to be the dominant landlord in the Ortigas CBD and a major office space provider to the IT-BPM industry and traditional locators alike.

Moving on to the Hotels and Resorts Division. Revenues grew by 11% to PHP 1.08 billion, on the account of the strong performance of Summit Magnolia, Summit Galleria Cebu, our Go Hotels branches in Palawan, Bacolod and Davao, and the contribution of new hotels namely, Summit Tacloban, Go Hotels Iligan and Dusit Thani Mactan Cebu Resort.

EBITDA, on the other hand, was down by 6% to PHP 301 million, mainly due to the preoperating expenses incurred for our Dusit hotel and the upcoming Westin Hotel. In addition, as mentioned in the previous calls, we are actively building organizational capabilities within our hotels business with the strengthening of our key management team. As such, overhead expenses this year were higher than last year, further dragging the hotel's EBIT. Also, out of the 272 rooms of Dusit, we have only opened 130 rooms.

EBIT ended at PHP 150 million, which is 29% lower than last year due to the additional depreciation from new hotels opened in the second half of last year. As of June 2019, we have 19 hotel properties with 2,941 rooms across all brand segments. Number of keys increased by 10% versus same period last year. And in addition, we have 5 transient hotels under our Go Hotels brand with 963 rooms. System-wide occupancy rate across all our 19 hotel properties was 64%.

Last March, we have opened Dusit Thani Mactan Cebu Resort, our 5-star luxury resort, located on the northwestern tip of Mactan Island in the Barangay Punta Engaño in Cebu. In the coming months, we plan to open 2 more hotels under the Summit brand.

Next is the Residential Division. We are pleased to share that, last April, under our Residences brand, we have successfully launched Phase 2 of The Sapphire Bloc in Ortigas CBD and the third tower of Galleria Residences Cebu. In addition, last June, under our Communities brand, we have soft-launched our first residential development in Bridgetowne East called Cirrus. Total estimated market value of these 3 projects is PHP 12.7 billion.

Driven by these launches and strong demand from local and foreign buyers alike, our net presales posted a significant 30% increase in the first half to a record high of PHP 9.65 billion. We are gearing up to launch a few more residential projects in the coming months, including the high-end residential projects under our JVs with Shang Properties, Inc. and Hong Kong Land. With Shang Properties, Inc., we target to launch

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[Aurelia residences] in Bonifacio Global City. And with Hong Kong Land, we target to launch Velaris residences, which will be located in Bridgetowne East. Project launches shall depend on market conditions and product readiness.

Realized revenues, on the other hand, was up by 5% to PHP 4.68 billion, reversing the decline recorded in the first quarter, mainly due to revenues realized from completed projects. EBITDA and EBIT both increased by 8% to PHP 1.42 billion and PHP 1.39 billion, respectively. Our unrealized sales and reservations as of June 2019 was approximately PHP 29.5 billion and our inventory is about PHP 18 billion.

The next 2 slides show the projects we launched in the first half. As mentioned earlier, under the Residences brand, we launched The Sapphire Bloc East located in Pasig City and the third tower of Galleria Residences Cebu in Cebu City. Under the Communities brand, we launched Cirrus. Cirrus is our first residential project within our township development in Quezon City called Bridgetowne East.

Moving on to our last business unit, the Industrial and Integrated Developments Division or IID. Revenues more than tripled to PHP 259 million, arising from the partial recognition of the revenue from the sale of land to RLC DMCI Property Ventures, Inc. or RD PDI amounting to PHP 217 million and lease revenues from our Sucat warehouse amounting to PHP 52 million. RLC DMCI Property Ventures, Inc. is a 50-50 joint venture company that we formed with DMCI Project Developers, Inc. to develop, construct, manage and sell a multi-tower residential condominium project in Las Piñas City. Similar to our JV transactions with Shang Properties, Inc. and Hong Kong Land, we were able to create 2 sources of revenues: one from the sale of land to the JV company, resulting to land sale profit; and two, from condo sales, which will be recognized once project development commences. EBITDA ended at PHP 129 billion, while EBIT posted at 129 -- PHP 121 million for the first half.

After the successful turnover of our first warehouse facility, we are now constructing our second warehouse facility in Calamba, Laguna. It is about 35,000 meters in gross leasable area, and we plan to complete the construction in the second half of the year.

The next slide shows our capital expenditure and land bank. We have spent PHP 9.38 billion of our CapEx budget for our Philippine operations. About 70% was spent on the investment portfolio for the construction and development of malls, offices, hotels and warehouse properties. And the balance was spent on the development of our build-and-sell properties, new investments and land acquisition. On the other hand, land bank area in the Philippines now totals 766 hectares, including land under our joint venture agreements, with total estimated market value of PHP 44.5 billion, about 45% of which pertains to land in Metro Manila, owing to higher property prices in CBDs and key cities. RLC's currently finalizing ongoing negotiations on the acquisition of various properties, and we continue to scout for land bank opportunities nationwide.

With regard to our project in Chengdu, China, we are happy to announce that we have sold 100% of the condominium units and we expect to recognize project earnings for Phase 1 this year. We have accelerated the completion of the project and we have started the construction of Phase 2. With this, we plan to apply the license to sell for Phase 2 in the second half.

Moving on to our future plans and strategies for each business unit. For the malls division this year, we plan to increase GLA by 4% to end 2019 at 1.67 million square meters by opening Robinsons Galleria South located in Laguna and by completing the expansion of Robinsons Magnolia and the first phase of Robinsons Starmills expansion. As mentioned, we have already opened Robinsons Galleria South. In 2020, we plan to further increase GLA by 4% to 1.64 million square meters by opening malls in La Union and Gapan and by expanding Robinsons Place Dumaguete and Robinsons Place Antipolo.

For our Office Buildings Division, we target to complete 3 new office developments this year, which will increase NLA by (inaudible) 588,000 square meters. These new offices are Cybergate Magnolia, Giga Tower and our second office development in Luisita, Tarlac. By next year, we plan to further grow NLA by 14% to 672,000 square meters with the completion of a new office in Galleria Cebu as well as completing our third office in Luisita, Omega in Ortigas, Pasig City, and Delta Tower Two in Davao.

For our Hotels and Resorts Division, we plan to open 4 new hotels this year, which will boost hotel room count by 19% to 3,248 rooms. As mentioned earlier, we have opened Dusit Thani Mactan Cebu Resort last March. In the following months, we plan to open Summit Hotel Naga and Summit Greenhills. For 2020, we plan to open 4 more hotels, namely the Westin Hotel, Summit General Santos, Go Hotels Naga and Go Hotels Tuguegarao, which together will boost hotel room count by 19% to 3,867 rooms.

This year for IID, we target to complete and turn over our second warehouse facility in Calamba, Laguna and another warehouse facility within our Sierra Valley township located in Cainta, which will more than double our warehouse GLA to 77,000 square meters. For 2020, we plan to breach the 100,000 square meter mark by expanding our existing warehouses in Sucat and in Calamba, Laguna.

For our Residential Division, with the successful launch of 3 projects in the first half, we are gearing up to launch a few more projects in the coming months, including the residential projects under our joint ventures, depending on market conditions and product readiness.

In summary, we recorded strong earning results with a 20% increase in net income in the first half. Second, our source of recurring income and steady cash flows, our investment portfolio, continues to post a stable growth. In addition, our development portfolio continues to contribute to total revenue. Third, our net sales take-up posted yet again another record of PHP 9.7 billion, buoyed by successful project launches and strong demand. And lastly, with our CapEx spending of PHP 9.38 billion in the first half, we continue to expand and strengthen our business portfolio through ongoing construction and development, land acquisition and various investments.

This ends our presentation. We now open the line for your questions. Thank you very much.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Jeffrey Lucero of RCBC.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [2]

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Where are we at the booking of Chengdu? This -- I think you mentioned before that the start should have been in the second quarter of 2019, but it looks like it will be moved further. Where are we in terms of the percentage of completion? And are you keeping your guidance before that close to 100% will be booked this year?

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Unidentified Company Representative, [3]

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Jeff, regarding your first question, we are targeting or we are hoping to book revenues from Phase 1 for the condominium units in the second half of this year.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [4]

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Okay. And are we keeping the before target of close to full booking on the sales take-up this year?

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Unidentified Company Representative, [5]

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Yes, we are.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [6]

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And may I ask, where we are at the percentage of completion right now?

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Unidentified Company Representative, [7]

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It is close to 80%.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [8]

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Close to 8% (sic) [80%.] Okay. And then on Altus San Nicolas, can you provide more details on the spinoff? What's the rationale? Or what's the push for this decision? I understand it was just a mall in Ilocos. If you could provide some details on what assets will you fold into this. And if you could talk about the possibility of this being a REIT vehicle, if it's something you're looking at.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [9]

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Yes. On the Altus San Nicholas, we can only give you what we have already disclosed officially. So it will serve as a vehicle for possible future real estate ventures and opportunities. This will give us the flexibility in acquiring real estate on an opportunistic basis should circumstances warrant such acquisition. I think the most important thing here is it gives us now flexibility to do things outside of Robinsons Land. There are many possible investments that some shareholders of Robinsons Land may not like, so this gives us another vehicle that will allow us to pursue such opportunities. It gives us opportunity to pursue new real estate businesses that Robinsons Land may choose not to pursue.

And I think you asked specifically on the REIT. Well, it's not specific, but of course, current REIT laws require independent fund managers and independent property managers. So Altus San Nicolas, after being spun off, falls under this criteria. It's no longer a Robinsons Land company, so it will qualify as an independent fund manager or an independent property manager. So I hope that answers your question.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [10]

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Yes. Just to follow-up on that. I think before, in the last briefing, you mentioned that at the current minimum public ownership rules, there's very small interest to list a REIT. So if ever this Altus San Nicolas could possibly be a REIT vehicle, okay, does that sound off a change in tone? Are you kind of more willing to do this REIT listing even if the current minimum public ownership?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [11]

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No, there is no change in the tone. We continue to watch the industry and its developments very closely, but there is no change in our direction so far.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [12]

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A few more questions. May we ask for the percentage of presales to Chinese as of first half?

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Unidentified Company Representative, [13]

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It's about 39% of the total presales for the first half.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [14]

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Is that 29% or 30%?

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Unidentified Company Representative, [15]

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3-9, 39%.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [16]

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39%. Lastly, may I kindly ask for the specific occupancy rate of Dusit Thani currently? We understand it has opened -- yes.

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Unidentified Company Representative, [17]

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Out of the 130 rooms that we have opened, the occupancy rate is approximately 70%.

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [18]

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Okay. Lastly, on the PHP 217 million land sale revenues, was there mention on how much this is on the net income level? Sorry, I didn't get it earlier if there was.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [19]

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Can you repeat your question? Sorry, there is something wrong with the volume. Can we request everybody to speak a little louder? Actually, we have a difficult time hearing the questions, operator, if you are there. Can your repeat your question, please?

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Jeffrey Lucero, RCBC Securities, Inc., Research Division - Research Analyst [20]

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On the PHP 217 million land sale revenues, was there a mention of how much this is in the net income level?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [21]

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It's PHP 92 million.

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Operator [22]

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Our next question is from the line of Carl Sy of Deutsche Regis Partners.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [23]

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First, let me clarify that the 39% presales to -- was that to Chinese or to foreigners?

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Unidentified Company Representative, [24]

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Chinese.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [25]

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To Chinese? And what was total to foreigners?

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Unidentified Company Representative, [26]

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Yes. Total foreigners was...

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [27]

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Sorry, is it exactly the same number or...

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Unidentified Company Representative, [28]

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No. 53%. 53%.

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Unidentified Company Representative, [29]

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Total -- 53%.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [30]

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Total sales to foreigners, 53%. Total sales to Chinese customers, 39%.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [31]

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Understand. And regarding the office division this time, can I ask for the preleasing level of the 2019 and the 2020 pipelines?

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Unidentified Company Representative, [32]

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Okay. Carl, to update you. Giga Tower is 85% completed; and then Magnolia is 100% -- sorry, Giga Tower is 85% leased out; Magnolia is 100% leased; Luisita 2, as it is a BTS, it's 100% leased out; Luisita 3 is also a build to suit, so it's also 100% leased out. And then just to update you, Zeta Tower is 98%, Exxa is 99% and Cybergate Delta Two, which will be completed next year, is already at 20% leased out.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [33]

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22%? (sic) [20%?] Okay. And then regarding the hotel business, so I want to clarify. So you did mention a number of preoperating expenses as well as overhead expenses. So I want to clarify, regarding the overhead expenses you are referring to, are these one-off items or this is a level that we should expect going forward? And the other, related to the hotel business again. If there is anything in maybe some of the -- if there are any -- because there's a big drop in EBIT and essentially margins as well. I wanted to ask if maybe there was a drop off in I guess RevPAR of Crowne Plaza, whether it was room rate or occupancy or any of the other major hotels.

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Unidentified Company Representative, [34]

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Okay. On your first question, Carl, about the preoperating expenses and overhead expenses, the preoperating expenses are one-off expenses, whereas the overhead expenses are not one-off. And then on your second question regarding the EBIT, you mentioned that there was contraction in EBIT. So the main reason for that is we recorded additional depreciation for the hotels that came online last year and this year as well, such as Summit Tacloban, Go Hotels Iligan and Dusit Thani Mactan Cebu Resort.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [35]

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Okay. So no drop off in Crowne Plaza performance or any of the other major hotels this quarter? No?

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Unidentified Company Representative, [36]

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It's quite flattish for the international-branded hotels.

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Operator [37]

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(Operator Instructions) We have German de la Paz III of Abacus Securities.

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German de la Paz, Abacus Securities Corporation, Research Division - Junior Investment Analyst [38]

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Just 2 questions for me. First is, out of your total office leasing portfolio, how much is exposed to POGOs? And second, how much in revenues are you expecting to book in 2H for the Phase 1 in Chengdu?

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Unidentified Company Representative, [39]

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For the first question, POGO accounts for about 3% of our total leased space.

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German de la Paz, Abacus Securities Corporation, Research Division - Junior Investment Analyst [40]

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Okay. But out of the office leasing portfolio only?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [41]

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No. That is the 3%. POGOs comprise 3% of our office leasing portfolio.

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German de la Paz, Abacus Securities Corporation, Research Division - Junior Investment Analyst [42]

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Okay. Okay. And then how much are you planning -- are you expecting to book in revenues for the Phase 1 in 2H in -- for Chengdu?

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Unidentified Company Representative, [43]

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For the revenues, it's about -- it's more than PHP 9 billion.

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Operator [44]

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Next question is from Ping Javier of PEP Bank of America Merrill Lynch.

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Rafael Alfonso Javier, BofA Merrill Lynch, Research Division - Analyst [45]

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Just a follow-up on the previous caller's question. On that second half Chengdu recognition, maybe just to be more specific. Is there somewhat a push to at least meet or beat the 3Q profit level that you registered last year? Noting that there is a gain on sale there wherein you booked PHP 3.2 billion in net profit last year.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [46]

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I think it's purely coincidental. It's about more or less the same period in the fiscal year or of the calendar year.

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Rafael Alfonso Javier, BofA Merrill Lynch, Research Division - Analyst [47]

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So you can -- you think you can able to at least meet it, that same level?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [48]

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Yes. I would think so. On a full year basis, definitely. On a third quarter versus third quarter, with very high probability. But on a full year basis, definitely.

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Operator [49]

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Our next question is from Jason Escartin of Papa Securities.

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Jason T. Escartin, PAPA Securities Corporation, Research Division - Equity Investment Analyst [50]

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I just wanted to clarify a few things in the discussion. I have 4 questions. So the first question is for malls. There was mention of slower OpEx growth in the first half. Would you be able to elaborate more on this? And should we expect the improvement in EBIT margins year-on-year to be maintained for the remainder of the year? And for office, there was also mention of escalation as a driver of revenue. Was this out of the ordinary escalation levels? And same as before, what kind of expectation can you set for the second half or maybe even for 2020?

And for IID, third question. There was -- I'm not sure if I heard it right. This was a -- the sale to the joint venture was a partial recognition. How much more should we expect for the remainder of the year? And will that be the entire transaction value? And number -- lastly, a follow-up on Chengdu. Would you be able to give an indicative range for the EBIT margin impact of the PHP 9 billion recognition in the second half? That is all.

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Unidentified Company Representative, [51]

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Okay. Jason, on your first question regarding the malls, OpEx of the mall, in terms of the margins, it's relatively in line with last year. So we are hoping that the EBITDA margin this year would also be in line with last year. For the office, the escalation rate is actually a typical escalation rate compared to the previous years, which is about 5%.

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Unidentified Company Representative, [52]

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For IID, there is still unrealized revenues which we will realize in the future. It's about -- the total unrealized revenues is approximately -- for the sale of land, it's approximately PHP 5.4 billion.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [53]

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We'll decline to give guidance. We have to clarify a lot of things with our accountants in China and then our accountants here in the Philippines, so it's a bit complicated to compute the EBIT margin. I think we'd like to reserve until we get confirmation from all the tax authorities and all our accountants.

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Operator [54]

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Next question is from Jelline Gaza of JPMorgan.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [55]

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I have 2 question relating to the sales take-up. First is I'd like to clarify if the 39% sales to Chinese is as a percentage of total foreign sales or total foreign overall sales.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [56]

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It's total sales. It's total residential sales.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [57]

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Okay. Okay. I get that. I'd like to know more about the -- which specific projects have you seen a particularly high take-up from the mainland Chinese. And where are these projects located?

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Unidentified Company Representative, [58]

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It's in the Pasig area.

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Unidentified Company Representative, [59]

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The new launches, Jelline, particularly in Sapphire Bloc.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [60]

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Sapphire Bloc. Okay. And in relation to the new launches, how much of the 2Q '19 sales take-up came from the newly launched projects in the quarter?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [61]

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Well, it's substantial. I don't know if anybody here has the exact number.

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Unidentified Company Representative, [62]

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Of the PHP 9.7 billion, PHP 5.8 billion came from the second quarter.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [63]

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No. How much came from the new projects? It's substantial. The -- as we mentioned in previous calls, we were expecting the second quarter to spike or the second half to spike because of new launches. So it has spiked, and it is attributable to the new launches. So a very substantial portion of our recent sales are coming from new launches.

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Operator [64]

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(Operator Instructions) No question as of this time. Please continue.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [65]

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Okay. If there are no more questions, I would like to thank everybody again for your support and for joining us in this call. Until the next call. We wish everybody a good day. Thank you.

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Operator [66]

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Thank you. Ladies and gentlemen, that does conclude our conference for today, and thank you for participating. You may now all disconnect.