Altus Property Ventures [APVI 18.00 0.55%] recorded a Q3/21 profit of P14.6 million, up 210% from Q3/20 profit of P47.1 million, and up 20% from Q2/21 profit of P12.1 million. APVI attributes its rebound in profitability to “increased footfall” and the number of operating tenants in its Robinsons Place Ilocos (North Wing) mall, as compared to the COVID-spoiled results of Q3 of last year.
APVI also cites the growing momentum of consumer confidence, the drop in COVID cases, and the vaccine roll-out as additional factors in this recovery. APVI also noted that it has had success improving its bottom-line, with Q3 profitability propped up by a 57% reduction in the cost of rental services, and a 22% drop in general and administrative expenses. The earnings report also notes that the CREATE Law, which reduced corporate income taxes, caused APVI’s net income to double.
MB BOTTOM-LINE
The “laser-focus” of APVI in chipping away at bottom-line costs is a little misleading, considering the two main bottom-line impacts this quarter were the CREATE Law (which APVI had no influence over) and the reduction in the cost of rental services, which APVI notes is “mainly” due to an adjustment in its accounting treatment of the depreciation of its buildings. While this accounting adjustment can be defended as bringing APVI’s treatment of its buildings to be more in-line with its peers, it’s probably not a great idea to extrapolate too much out of this outcome.
Yes, the benefits of a lower effective corporate income tax will benefit APVI into the future, and the accounting adjustment will appear to benefit APVI until next year when “apples to apples” comparisons can be made between quarters, but just remember that these buffs are not coming from anything special that the APVI management team is doing. For reference, APVI’s pre-COVID 2019 Q3 included P31.5 million in revenue and P17.6 million in net income. This quarter, APVI put up P27.5 million in revenue and P14.6 million in net revenue. Even with all the CREATE Law tailwinds and accounting adjustments, APVI is still training pre-COVID revenue and profitability by 13% and 47%, respectively.
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