CLI yields 4.18% as cash dwindles and debts balloon

Cebu Landmasters (CLI) ended the year with a cash balance of 0.8 Billion Pesos down from last year’s 0.92 Billion. Cash is dwindling because operating activities and capital expenditures are eating cash coming in from revenues and net borrowings.

As of the end of the year CLI booked 6 Billion as current receivables an increase of 0.8 Billion from last year. 5.5 Billion of those receivables are equity of real estate sales. Allowance for impairment of those receivables is negligible as they are fully secured with the units acquired. End of 2019 receivables from buyer’s equity amounted to 5.4 Billion Pesos.

Real estate inventories increased by 4 Billion Pesos to 13.4 Billion and investment properties increased by 1.2 Billion Pesos to 10.1 Billion Pesos. That is for a total of 5.2 Billion Pesos. The 5.2 Billion Pesos plus the 4.2 Billion real estate transferred to cost of sales totals to an expenditure on real estate development of 9.4 Billion Pesos.

But debts are rising. Long-term interest-bearing loans and borrowings increased by 6.2 Billion to 20.4 Billion Pesos. Short-term borrowings increased by 0.8 Billion Pesos to 3.4 Billion Pesos. While trade and other payables increased by 1.6 Billion to 7.3 Billion Pesos.

CLI has been funding capital expenditure for completion of real estate development with borrowings. Is the debt-funded development translating into cash collections of real estate sales or are they just increasing the receivables? So far receivables have been increasing. Non-current contract assets doubled to 10.2 Billion Pesos at the end of 2020 from 5.1 Billion Pesos in 2019.

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