Funding requirements weigh FLI down

As of the end of first half of 2020, Filinvest Land, Inc. (FLI) has debts becoming due in the current period of 9.3 Billion Pesos while cash is only at 3.9 Billion Pesos.

As with everyone else, FLI‘s revenue is down for the first half of 2020. FLI’s revenue from real estate sales went down by 46% but rental revenues held up. Mall rentals may have been significantly affected by COVID-19 pandemic restrictions but office leasing remained strong. FLI earned around 3 Billion Pesos in the first half of 2020 from office rentals. The office rentals is expected to be the main cash generator for FLI in these times. In the first half of 2020 FLI generated cash from operations of 0.9 Billion Pesos only.

Although FLI has an inventory of real estate units for sale of around 65.8 Billion Pesos of 1H 2020, we can not expect for sales of real estate units to be buoyant during these times. Judging of the first half results of FLI, real estate sales have come to a standstill.

Thus, FLI’s main cash generator for now will be the office leasing revenues. But as what we have seen in the first half office, leasing cash will not be significant enough to fund debts due. Cash from leasing can fund FLI’s day to day operations but other significant outflows cannot. In the near term 9.3 Billion Pesos will be coming due.

FLI has currently registered with the Securities and Exchange Commission (SEC) its issuance of fixed-rate bonds up to 9 Billion Pesos. The bond issuance can answer the debts due in the coming months but how about the capital expenditures of its on going developments? With sales slowing, funding has been a critical point for FLI.

Disclaimer: This is an independent analysis for discussion purposes with the aim of giving stock traders and investors an independent perspective.  Accuretti Systems Inc. in the course of day to day trading may have own, or is considering buying or disposing, the shares of the companies mentioned in this commentary.

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