Megaworld sees 30% growth in net income for this year

High-end property developer Megaworld Corp. is looking at a 30-percent growth in net profit this year on higher sales from residential projects and rental revenues, according to Megaworld president Andrew Tan.

Last year, Megaworld reported a net income of P1.15 billion or an increase of 43 percent from the previous year. Revenues grew 19.3 percent to P5.32 billion while rental income rose 20.5 percent to P547.82 million from only P454.65 million in 2004.

Tan said revenues are expected to grow at least 25 percent this year, mainly coming from residential projects Fort Bonifacio-Bellagio, Forbeswood Parklane and McKinley Hill Village and The Residential Resort at Newport City at Villamor Air Base in Pasay City.

Bellagio and Forbeswood Parklane are part of the P15-billion Forbes Town Center at the Bonifacio Global City in Taguig.

The Residential Resort, meanwhile, is a low-density, 1.7-hectare community close to the Villamor golf course.

Megaworld executive director Kingson Sian said the company expects to complete the 10-story, 35,000- square meter first phase of 1880 Eastwood Avenue, the newest office development at the Eastwood City CyberPark by the end of the year.

Sian said Megaworld also expects to finish the first three towers of the six-tower Forbeswood Heights residential project at the Global City.

"From all indications , the real estate industry has entered an up cycle. Rental rates and property prices are on an uptrend. Real estate sales have grown rapidly in the last few months fueled by strong demand from both the local market and the overseas Filipino market. Property values have increased by a double-digit rate," Tan said.

"This positive sentiment, this excitement about real estate is a phenomenon that we have not seen in the last eight years. This may well signal the start of a real estate boom bigger than anything the market has seen before," Tan added.

To take advantage of the continued robust growth of the call center business, Tan said the company has set aside 80 percent of the proceeds from its planned international and local offering of shares for the construction of office space for BPO companies.

Tan said Megaworld intends to build around 400,000 square meters of BPO-ready office space over the next five years in three locations: Eastwood City, Mckinley Hill and Newport City.

"In terms of jobs, the office space that we intend to build in the next five years can accommodate some 176,000 call center employees. This is Megaworld’s commitment to the BPO sector, which is poised to make the Philippines the call center capital of the world," Tan said.

Continued build-up of a steady recurring income base and its various pipeline projects with major landowners are expected to help Megaworld Corp. catch up with its peers in the property sector, analysts said.

AB Capital Securities said concerns over Megaworld’s long-term stream of revenues have eased after the company successfully signed new joint ventures that will keep it busy in the next seven years.

"With Megaworld slowly integrating a steady recurring income portfolio and assuring revenue streams beyond 2010 , we don’t see any reason why Megaworld shouldn’t catch up with its rivals – Ayala Land and Robinsons Land" AB Capital said.

AB Capital said the company’s strategy of partnering with prominent landowners "frees the company from the heavy burden of capex for costly landbanking while assuring itself a more stable earnings stream for another five to seven years."

Megaworld has been expanding its recurring revenues from its hotel and leasable commercial space. As of last year, the company’s recurring income has increased to P543 million, 92 percent higher than the P282 million posted in 2002.