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Edited Transcript of RLC.PS earnings conference call or presentation 10-May-19 6:30am GMT

Q1 2019 Robinsons Land Corp Earnings Call

Pasig Jul 11, 2019 (Thomson StreetEvents) -- Edited Transcript of Robinsons Land Corp earnings conference call or presentation Friday, May 10, 2019 at 6:30:00am 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 Yeo

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Jeffrey Lucero

* Jelline E. Gaza

JP Morgan Chase & Co, Research Division - Analyst

* Rafael Alfonso Javier

BofA Merrill Lynch, Research Division - Analyst

* Wilson W. Ng

Morgan Stanley, Research Division - VP

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Presentation

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Operator [1]

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Welcome to RLC's First Quarter CY 2019 Quarterly Call. Joining us today from RLC are Mr. Frederick Go, President; and rest of the RLC Investor Relations team. At the end of the presentation, there will be a question-and-answer session.

Thank you. Please go ahead.

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Unidentified Company Representative, [2]

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

We continue to strengthen our business portfolio and expand our product offerings that are anchored on the main drivers of the Philippines economy. As of March 2019, our malls division consisting of 51 lifestyle centers nationwide continues to capture domestic consumption and provides us with strong cash flow and recurring income year-on-year.

Our office portfolio comprising of 20 office developments continues to capitalize on the growing demand for office space from the IP VPN industry and traditional companies alike.

Our residential business now spans across 72 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 a booming tourism industry. Lastly, we continue to build communities within our 18 mixed-used developments.

RLC continues to receive strong cash flow 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 the warehouse business accounted for 71% of revenues, 84% of EBITDA, 77% of EBIT and 70% of net income. The balance was from the performance of the development portfolio consisting of the 4 residential brand.

Moving on to the financial performance highlights. Growth momentum was sustained in the first quarter with a 19% spike in net income to PHP 1.84 billion. This is on the back of double-digit growth in EBITDA of 12% to PHP 3.75 billion and EBIT at 14% to PHP 2.58 billion coupled by higher interest income mainly coming from cash and cash equivalents and other deposits as well as lower interest expense from lower loan balance versus same period last year.

Revenues jumped by 7% to PHP 6.78 billion and all business units registered top line growth with the exception of the residential business. The malls division posted a 9% increase in revenues to PHP 3.14 billion from stable growth of existing malls as well as contribution of new malls. Revenues from the office buildings division accelerated the fastest at 30% to PHP 1.12 billion owing to a combination of rental escalations, higher renewal rate and contribution of new offices. The hotels business grew its revenue by 10% to PHP 522 million due to the strong performance of majority of the existing hotels and contribution of new hotels. Revenues of the industrial and integrated developments division or IIDD rose by 7% to PHP 30 million, mainly arising from the lease revenues from the Sucat warehouse. Lastly, the timing of revenue recognition from property sales cost a 7% drag in revenues of the residential division, which ended at PHP 1.97 billion.

In terms of revenue contribution, the malls division continues to have the lion's share at 46%, followed by the residential division at 29%, the office buildings division at 17% and the hotels and resorts division at 8%.

Moving on to the individual business units, starting with the malls division. We beefed up our malls portfolio in 2018 with the renovation, expansion and new locations of malls. As scheduled, there were no new mall openings in the first quarter of this year, but we are gearing up to open one new mall and one expansion mall in the coming months. In addition, we are currently constructing 3 new malls and 2 mall expansion that will come online next year.

As of March 2019, 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 area, which is an 8% increase versus the same period last year at 1.4 million square meters. System-wide occupancy rate remains healthy at 95% and we have over 9,000 retail partners in our malls nationwide.

For the first quarter of 2019, revenues increased by 9% to PHP 3.14 billion despite weak contribution from box office receipts. Revenue growth was underpinned by a stable same-mall rental revenue growth of 7%, contribution of the 3 malls and 2 expansions we opened in 2017 and contribution of the 4 new malls we opened in 2018, mainly Robinsons Place Ormoc, Robinsons Place Pavia, Robinsons Place Tuguegarao and Robinsons Place Valencia.

Operating expense grew at a slower pace than revenues, which resulted to EBITDA increasing by 11% to PHP 2.08 billion and EBIT by 16% to PHP 1.20 billion.

Next is the office buildings division. The office buildings division continues to show prowess with revenues accelerating by 30% to PHP 1.12 billion. This notable increase was mainly driven by a combination of rental escalation and higher renewal rates within existing offices, as well as the successful leasing activities in new buildings, mainly Cyber Sigma, Exxa Tower, Zeta Tower and Cyberscape Gamma. EBITDA was up by 26% to PHP 893 million, while EBIT rose by 29% to PHP 693 million.

Coming off from the successful completion of 3 new offices in 2018, there was no new completion during the first quarter of 2019 as planned. In the coming months, we are targeting to open brand new offices in 3 different sites.

As of March 2019, we have 20 operational developments located in key cities and other urban areas. Versus same period last year, net leasable space has grown by 29% to 523,000 square meters from 405,000 square meters last year. Total leased space was 96% and we remain to be the dominant landlord in the Ortigas CBD and a major office space provider in the IP VPN industry.

As an update on the offices we have completed in 2018, Exxa Tower is now 97% leased out from 92% last December. With regard to the Zeta Tower, we are pleased to share that the 34,500 square meter [of leasable] building is now 96% leased out from 19% last December. Exxa and Zeta Towers are PEZA-registered office developments located within Bridgetown West, our township development along C-5 road in Quezon City. Lastly, our 45,000 square meter office development in Ortigas CBD called Cyberscape Gamma is now 99% leased out from 57% last December.

Moving onto the Hotels and Resorts division, revenues grew by 10% to PHP 522 million in the first quarter due to the strong performance of majority of existing hotels, most notably Crowne Plaza, Summit Galleria Cebu, Summit Magnolia and Go Hotels Davao, as well as the contribution of new hotels mainly Summit Tacloban and Go Hotels Iligan. EBITDA improved and posted a 5% increase to PHP 165 million despite the drag from pre-operating expenses from new and upcoming hotels mainly Dusit Thani Mactan Cebu Resort and Westin Hotel, as well as the drag from higher overhead expenses incurred from the organization, build up. On the other hand, EBIT declined by 10% to PHP 94 million as a result of additional depreciation from new hotels opened in the second half of last year.

As of March of 2019, we have 19 hotel properties with 2,811 rooms across all brand segments. Number of keys increased by 10% to 2,552 rooms versus same period last year. In addition, we have 5 franchise hotels under our Go Hotels brand with 953 rooms. System-wide occupancy rate across all our 19 hotel properties was 62%.

In time for the summer season, we have soft opened our 3rd international branded hotel, Dusit Thani Mactan Cebu Resort last March 29. This is our 5 star luxury resort located on the northwestern tip of Mactan Island, in the Barangay Punta Engaño in Cebu. It has 271 well-appointed rooms, 6 event venues, including a 1,235 square meter ballroom, a sky garden with views of the sea, fitness center, a spa, an indoor kid's zone and a dive center. It also boasts of a 100-meter long infinity pool facing the western part of Mactan, which has become a favorite spot of hotel guests. In the coming months, we plan to open 4 more hotels under the Summit and Go Hotels brand.

Moving on to the residential division. Despite of no new launches in the first quarter of this year, net presales level was sustained at PHP 3.76 billion, with a 2% increase versus same period last year. The Robinsons Residences brand continues to account for the majority of the sales at 52%.

We continue to see a spillover from 2017 and 2018 of strong demand from -- for residential properties from local and foreign buyers alike. As such, we plan to push forward depending on market conditions and product readiness at least PHP 12 billion of residential project launches this year under RLC, and a couple of projects under our joint ventures. As an update, we're pleased to announce that we launched last April, the second phase of Sapphire Bloc and the third tower of Galleria Residences Cebu. As mentioned earlier, realized revenues was down by 7% to PHP 1.97 billion, due to the timing of recognition of revenues. EBITDA and EBIT, however, were flattish at PHP 605 million and PHP 590 million respectively on the account of lower cost of sales as we have recognized revenues from projects with relatively higher gross profit margins. Our unrealized sales and reservations as of March 2019 was approximately PHP 24.6 billion. And our inventory is down to about PHP 11 billion.

Moving onto our fifth division, the Industrial and Integrated Development division or IIDD. Revenue for IIDD rose by 7% to PHP 30 million mainly arising from the lease revenues from the Sucat warehouse. Operating expenses grew at a slower pace. And so EBITDA grew by 16% to PHP 9 million. On the other hand, EBIT dropped by 32% to PHP 5 million due to the depreciation expense from the second warehouse.

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 square meters in gross leasable area and we plan to complete the construction in the second half of this year.

The next slide shows our capital expenditure and land bank. We have spent PHP 3.64 billion of our CapEx budget for our Philippines operations. About half was spent on the investment portfolio for the construction and development of malls, offices, hotels and warehouse properties and the other half was spent for the development of build and sell properties, new investments and land acquisition.

On the other hand, land bank area in the Philippines now totals 762 hectares with total estimated market value of about PHP 45.6 billion, 47% of which pertains to land in Metro Manila owing to higher property prices in CBDs and key cities. RLC is currently finalizing ongoing negotiations on the acquisition of various properties, and we continue to scout for land bank opportunities nationwide.

Our project in Chengdu, China, has seen significant progress. Pre-selling has commenced for the residential high-rise apartments of Phase 1. We are happy to announce as well 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 of 2019. Lastly, we are targeting to repatriate funds from Phase 1 and Phase 2 in 2021 and in 2023 respectively.

Moving on to our future plans and strategies for each business unit. For the malls division this year, we plan to increase GLA by 5% to end 2019 at 1.68 million square meters by opening Robinsons Place Galleria South located in Laguna and by completing the expansion of Robinsons Place Magnolia. In 2020, we plan to further increase GLA by 6% to 1.68 million square meters by opening 3 new malls in La Union, Gapan, Balanga and expansion of Robinsons Place Antipolo and Robinsons Place Starmills in Pampanga.

For our office buildings division, we target to complete 3 new office developments this year, which will increase NLA by 14% to 596,000 square meters. These new offices are Cybergate Magnolia, Delta Tower Two and Giga Tower. By next year, we plan to further grow NLA by 12% to 669,000 square meters, with the completion of offices in Galleria Cebu and Starmills Pampanga, as well as Omega in Ortigas, Pasig City.

For our hotels and resorts division, we plan to open 5 new hotels in 2019, which will boost hotel room count by 23% to 3,371 rooms. As mentioned earlier, we have soft opened Dusit Thani Mactan Cebu Resort last March 29. In the following months, we plan to open 2 Go Hotels in Naga and in Tuguegarao, and 2 Summit Hotels in Naga and in Greenhills. For 2020, we plan to open Westin Hotel and Summit General Santos, which together will boost hotel room count by 12% to 3,770 rooms.

This year, for IIDD, we target to complete and turn over our second warehouse facility in Calamba, Laguna, which will double GLA to 68,000 square meters. For 2020, we plan to further expand the warehouse portfolio by adding another 25,000 square meters to end at 93,000 square meters. This is with the completion of the second phases of the Sucat and Calamba warehouses.

For our Residential division, with the successful launch of 5 new projects in 2018, we are gearing up to launch at least PHP 12 billion worth of new projects in 2019 under RLC. In addition, we are also looking to launch this year residential projects under our joint ventures.

In summary, we recorded strong earnings results in the first quarter of 2019, with a 19% increase in net income. Second, our source of recurring income and steady cash flows, our investment portfolio continues to post a stable growth. Third, we have successfully soft opened our third international branded hotel Dusit Thani Mactan Cebu Resort, expanding our hospitality business. Fourth, we plan to launch approximately or at least PHP 12 billion of residential projects under RLC and additional residential projects under our joint ventures. And lastly, with our CapEx spending of PHP 3.64 billion in the first quarter, 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) We have our first question from the line of Jason Yeo from Goldman Sachs.

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Jason Yeo, Goldman Sachs Group Inc., Research Division - Equity Analyst [2]

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I've got 2 questions. First question, what are you views on REITs? Is it something you would be keen to do? And the second question, can you talk about your growth plan for the IID division? And have you been able to secure suitable land bank for townships? Is this a segment where you think CapEx and growth will accelerate in the near term or are they more medium to longer plan?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [3]

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First, on the REITs, yes, we are very interested to do it if the government promotes the regulation that will make it conducive. Right now, I believe we're still waiting for some regulatory clarifications from the Department of Finance and the SEC. On your second question about our IID department, we have previously announced that we have secured several township projects already. Obviously, Bridgestone is the first one. The second one would be our Sierra Valley development, which we also secured some time ago. And the third one would be our Montclair project in -- for a Pampanga property we secured about a year ago. So I think we have secured a number of properties for the IID project, IID division to rollout, but nonetheless, we continue to search for more properties nationwide for integrated developments.

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Jason Yeo, Goldman Sachs Group Inc., Research Division - Equity Analyst [4]

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Can I just follow-up? Do you expect to launch any projects in these township parts?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [5]

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Yes, in the Bridgetown development, for example, we have 2 projects that will be launched this year. The first one is the joint venture with Hong Kong Land. We are building a high-end residential development in Bridgetown East. Second, our Robinsons Communities brand is launching a development there that we're calling Cirrus, also this year and most of those are in the Bridgetown East side right. On the Bridgetown West side, we already have 3 operational office buildings. We are currently constructing a fourth building, a shopping center, a hotel. And within the year, we will be adding 2 more office buildings within Bridgetown West. For Sierra Valley, the Robinsons Communities brand also intends to launch a residential project there soon. And IID has already started the construction of some small facilities there for future lease. Whereas for Montclair, we're still in the planning stage.

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Operator [6]

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We have our next question from the line of Jeffrey Lucero from RCBC Securities.

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Jeffrey Lucero, [7]

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Just a follow-up on the earlier question. So you're not seeing -- you won't at least read the current (inaudible) requirement, is that correct?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [8]

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Maybe I should ask what puts so much different news out there. What is your understanding from the MPO?

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Jeffrey Lucero, [9]

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Yes, currently, it's -- the first 2 years, the requirement is up 40% and then by the third year, it's up 67%. But the SEC is, of course, trying to put it down to 33%. So at 67%, you're not willing to (inaudible).

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [10]

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Yes, I should answer that my level of interest would be very, very low at 67%.

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Jeffrey Lucero, [11]

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Very low. Okay. And on the Chengdu side, can you give us some update on how much percentage of completion is over at [year-end]? And if you could give a ballpark estimate of how much of the total breakup you expect to book for 2019?

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Unidentified Company Representative, [12]

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As far as the percentage of completion is concerned, it's about 70% completed.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [13]

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And we hope to book all the sales from Phase 1 of the condominium units within the fiscal year. I think tentatively, we're looking at booking it in the second half of this year, so probably in the third quarter.

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Jeffrey Lucero, [14]

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Probably in third quarter. Okay. And then on the local percentage of completion, you mentioned that it's just a timing target -- [recognition] of timing problem, but is there a problem in the construction, say in demand forward or just yearly timing of the construction phase?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [15]

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Yes, it's not a problem. It's just a timing issue. It's not a problem.

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Jeffrey Lucero, [16]

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Okay. And lastly, 7% same-mall rental growth. But if you strip out Galleria, how this particularly look like?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [17]

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I think we don't have the answer to the question now.

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Operator [18]

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We have our next question from the line of Carl Sy from Deutsche Regis Partners.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [19]

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I'd like to ask first about from -- on the resident -- on the domestic residential side. How much of your sales in the first quarter were to foreigners?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [20]

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Very -- well, maybe a delta number.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [21]

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In terms of percentage is 30% of the total that we launched in the first quarter. 30% of sales, okay. 30%. And again on the domestic side, I'd like to ask that if you have the [take off] of Westin Residences and what's your current price per square meter?

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Unidentified Company Representative, [22]

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The takeoff of Westin is at 53%.

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

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53%. And what's the current price per square meter?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [24]

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Around 200.

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

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[So around 220%]. Okay. And for enterprise, as you mentioned earlier about the China project, so if I understand correctly, this portion of the first phase, so the high-rise component is PHP 9 billion in revenue and you expect to book the entire PHP 9 billion this year, did I -- is that correct?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [26]

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That's right.

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

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Okay. And with respect to the -- at least the -- can you give us a margin number or not yet?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [28]

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I think -- yes, maybe, maybe we -- there are so much accounting translation from China to the Philippines, so I think it's with regard to -- yes.

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Carl Sy, Deutsche Bank AG, Research Division - Research Analyst [29]

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Okay. With respect to your office division this time, you're going to complete roughly 70,000 square meter this year. How much of that has been pre-leased?

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

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[About 25,000] square meters.

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

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25,000 square meters already pre-leased. And then with -- on your mall businesses signed, the rent revision of Galleria is done, but when would the redevelopment of Magnolia be completed?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [32]

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Also this year. But later this year.

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Operator [33]

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We have our next question from the line of Jelline Gaza from JPMorgan.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [34]

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I have 2 questions. The first one relates to your planned residential launches both on the domestic and China side. I think you mentioned earlier that you're planning to launch a couple of projects under the JV agreements. I'm not sure if it's with Shangri-La or Hong Kong. Can you quantify that, as well as (inaudible). On the Chengdu, what's the value of the -- of your Phase 2? And assuming you get the LTS between -- by second half of this year, when do you expect to get the reservations of -- also in second half or maybe in 2020? And then my second question really is [sort of] when do you expect margins to normalize?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [35]

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Okay. On your first question for Shangri-La and Hong Kong Land, both intend to launch this year. I think both projects with respect to our partners, and these are also publicly listed companies and I think they're not disclosing anything about this. So we don't want to get them into any sort of trouble. But the safe answer I can tell you is that both Shangri-La and Hong Kong Land joint ventures, their launching will be this year in the second half of this year. However, because we have not firmed up the prices at the joint venture board level, I've to decline from giving you how much total sales value both projects will generate. But as soon as the boards of our joint venture companies approve the prices and their launch, we'll definitely share it with you.

Secondly, on Chengdu Phase 2, we are already currently constructing it, so we have to secure from the government, the license to sell. Our intention is to also get that license to sell in the second half of this year. So again because the government has not approved the selling price, we cannot give you the total sales value of all those units until the government has approved our selling price. But all of that is happening in the second half of this year for sure.

On your third question, hotels, when will it normalize? We continually open hotels. And in fact, this year, we are planning to open 5 hotels. So it's not going to be very normal, because it will always have a combination of old hotels, new hotels and to be opened hotels. So I think it's very hard to look at a fully normalized hotel operation. But if you're asking, when do we think the hotel margins will look better, and I think we have put together a very strong professional organization in our Robinsons hotels and resorts division. And I think we have a lot of confidence in them. But just like what we did with the residential division, it could probably take us a year or two before things look really good.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [36]

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Okay. Understand. Just to clarify on that last point, was there a management [eject] on the hotels division? And if so when did that happen? Or could you elaborate on that, please?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [37]

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About last year, sometime mid last year, we brought in a lot of new talent into the Robinsons hotels and resort organization. And with that, we went through an exercise like a normal branding exercise to take a look at all our hotel properties. And most of our properties now will be undergoing some form of refurbishment or some form of renovation to help some of our hotel properties. So I think when all that rebranding effort and renovation projects are all done then the hotel division should look very good. I mean, for one -- the one we're renovating now are our 2 largest hotel assets, the Crowne Plaza and the Holiday Inn. So it should be 24-months project to renovate those 2 properties. So I think when it's done, we will see a very marked improvement in our revenues and profit numbers.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [38]

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When do you expect these efforts to be completed at least for those 2 brands?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [39]

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I think 2 years.

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Jelline E. Gaza, JP Morgan Chase & Co, Research Division - Analyst [40]

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Two years from now, starting now, so sometime 2021, is that correct?

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

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Yes.

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Operator [42]

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We have our next question from the line of Wilson Ng from Morgan Stanley.

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Wilson W. Ng, Morgan Stanley, Research Division - VP [43]

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Just a few questions from me. Just to clarify a number earlier, I hope that for the presales pickup during the first quarter was 30% in foreigners. How much percentage was that China side?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [44]

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14%.

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Wilson W. Ng, Morgan Stanley, Research Division - VP [45]

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14%. And also in terms of your launch plan on the RLC side, (inaudible) target for the year, (inaudible) in 1Q. Can you give a sense of the (inaudible) how that's spread across 2Q, 3Q and 4Q?

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

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Yes. First part of your question, it's a minimum of PHP 12 billion. I think the way it's looking we're definitely going to surpass PHP 12 billion in launches. On the second part of your question, we have already launched 2 projects in 2Q so far, it's May -- it's now the 9th of May. And we've launched already 2 projects worth about PHP 6 billion. I think the next 2 projects we're hoping those to launch it within 2Q. If we miss 2Q, then it's probably 3Q. But we're still gunning for launching all 4 projects in 2Q.

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Wilson W. Ng, Morgan Stanley, Research Division - VP [47]

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Got it. And the next 2, is that also (inaudible)

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

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Roughly, yes.

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Wilson W. Ng, Morgan Stanley, Research Division - VP [49]

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Just a last question for me. In terms of sales pickup for the year, how much do you think is achievable for this year?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [50]

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We normally don't give guidance on property sales. We usually give a lot of guidance on our investment portfolio because it's easier and more predictable and more consistent. So, but for our property sales divisions, we usually don't give guidance. But I'm very optimistic about 2019 sales. I think it will be much better than 2018 sales. Is that okay with you?

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Wilson W. Ng, Morgan Stanley, Research Division - VP [51]

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Yes. Appreciate it.

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [52]

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Yes. And since you asked, I'm not going to say, but we don't have the final numbers yet. But since you're able to launch 2 projects in 2Q, our April numbers are actually very good.

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Operator [53]

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(Operator Instructions) We have our next question from the line of Ping Javier from PEP.

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Rafael Alfonso Javier, BofA Merrill Lynch, Research Division - Analyst [54]

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I just have 2 questions here. Number one is, do you think the growth that you achieved in the first quarter is attainable for the rest of the year considering you plan to launch or rather recognize the Chengdu Phase 1? Also considering there was a high base effect from the one-time gain on sale last 3Q? And the second question is how much -- how optimistic are you in -- on the Phase 2 project for Chengdu in getting or at least getting a sense on the selling price?

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Frederick D. Go, Robinsons Land Corporation - President, CEO & Director [55]

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Yes. Okay, I'll answer both your questions. On your first question, yes, we believe we look forward to very sustainable next 3 quarters of our revenue and profit growth for the company. And I'd like to correct it. It is not a one-time gain last year. That is part of our business model. We are in the business model selling land, so that's not a one-time gain. That is a recurring income for the company and we will more than make up for it with the China -- recognition of the China revenues and the China EBITDA.

On your second question on Chengdu Phase 2, on pricing, yes, we expect the pricing of Phase 2 to not be lower than the pricing approved for Phase 1. Obviously, we are trying to get a pricing increase too that is better than Phase 1, but since it's a government authority that will regulate that we cannot predict, that we can get, but we will definitely try to get a price better than Phase 1. But based on normal practice in China, it is expected that Phase 2 will not be below Phase 1.

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Operator [56]

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We have our next question from the line of German de la Paz from Abacus Securities.

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German de la Paz, Abacus Securities Corporation, Research Division - Junior Investment Analyst [57]

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I'm not sure if it was discussed. Let me ask for your same-office rental growth and may ask how much was the rental escalation? And also just to clarify the Phase 2 Chinese, is that 14% after the total residential sales in Q1?

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Unidentified Company Representative, [58]

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Regarding your first question, the same-mall rental revenue growth is 7%. And then…

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German de la Paz, Abacus Securities Corporation, Research Division - Junior Investment Analyst [59]

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Same-office trend?

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Unidentified Company Representative, [60]

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For offices, it would be at least 5% would be escalation rate.

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

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Same office is 14%, for this quarter right. For this quarter, it's 14%. Obviously, it has to do with timing of renewals of office leases. Sorry, what was your last question? You had a second question.

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German de la Paz, Abacus Securities Corporation, Research Division - Junior Investment Analyst [62]

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The Phase 2 Chinese upon residential.

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

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Yes, it's 14% of 100%. That's right.

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Operator [64]

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Thank you. (Operator Instructions) We do not show any questions at the moment. I would like to hand the conference back to our presenters today. Please go ahead.

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

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Thank you again, everyone, for joining us on this call on our first quarter of 2019. We look forward to talking to you again 3 months from today. Thank you for your support. Good afternoon, everyone.

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Operator [66]

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Thank you. That concludes our conference for today. Thank you for your participation. You may all disconnect your lines now. Thank you.