8990 Holdings [HOUSE 9.37 ?0.4%; 0% avgVol] [link] put out a press release ahead of its AGM to say that FY23 net income was down 10% to P6.9 billion despite a 5% uptick in gross revenues to P22.7 billion. HOUSE said that its revenues were up due to the “strong market reception” to their low-income housing projects, which HOUSE evidenced by revealing a surge in Pag-Ibig housing loan takeouts from P5.96 billion in FY22 to more than double that figure in FY23. HOUSE attributed the drop in net income to “increased finance costs and higher income tax expenses”.MB BOTTOM-LINE: The Pag-Ibig Fund is fantastic for low-income developers, as it provides borrowers with a streamlined application process and gives developers the full purchase price up-front and none of the collection headache that would ordinarily come with in-house financing. In a high interest rate environment, having access to a huge pool of cash (like the Pag-Ibig proceeds from completed sales) makes it cheaper and easier to keep the development ball rolling. It also allows the developer to focus its time and effort on its core competency, which in HOUSE’s case is the sale and delivery of units. While I’m a huge believer in the resiliency and long-term potential of the low-income housing market, HOUSE has been a frustrating stock to watch. It had a great recovery from the COVID crash of 2020 through to Q2/22 when it peaked at around ?14.00/share, but it was a steep fall from those heights in H2/22 and the stock has consistently lost ground in a “sideways and down” pattern since that time.
