Cash on Hand Analysis of the Philippines Real Estate Industry

08 Jan 2015 • by Natalie Aster

The Philippines real estate industry sees strong interest from foreign investors and developers. The market keeps on growing alongside with Philippines economy. The industry is still dominated by a few major players. But which of them can be considered as actual cash cows that generate a steady return of profits that exceed the outlay of cash required to acquire it? Our cash on hand analysis of industry sample that comprises 35 companies will look into the matter.

As of June 30, 2014 the industry accumulated total cash of 237.5 billion PHP while its debt amounted to 651.9 billion PHP.

As seen from the graph above only few companies demonstrated positive cash flow at the end of 2nd quarter of FY2014. Global-estate Resorts Inc. and Megaworld Corp can be considered as genuine cash cows, when SM Investments Corp, Ayala Land Inc, SM Prime Holdings Inc, and Filinvest Development Corp are kind of fake ones due to the fact that their debt exceeded cash flow dramatically.

Below is the packed bubbles chart with companies sized by their market capitalization. Grey color means that the company has a positive cash flow, orange stands for a negative one. To view the figures you can move your mouse over appropriate company bubbles.

Philippines real estate industry suffers a severe cash flow deficit of 414.5 billion PHP. However, it has companies with constant money influx. Megaworld Corp and Globa-estate Resorts Inc. seem to have an investment advantage as “self-funding” companies. They may also use their money to buy back shares on the market or pay dividends to shareholders.

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