HOUSE’s cash dips even after issuance of 3.7 Billion preferred 8990B

8990 Holdings (HOUSE) released on 24 June 2021 its 2020 audited financial results and its first quarter 2021 financial results.

At the end of the first quarter of 2021 HOUSE had a cash balance of only 321 Million Pesos. That is significant drop from the 1.2 Billion Pesos it held as of the end of 2020.

It can be recalled that HOUSE issued 3.7 Billion of preferred shares in the first quarter of 2021. The preferred shares now trading as 8990B at par yields 5.50% per annum.

Despite the proceeds of the preferred shares offering, HOUSE’s cash still dips to just 321 Million Pesos. First quarter 2021 financial result shows that HOUSE burned 2.6 Billion Pesos on operating activities. HOUSE burned cash on operating activities at the back of a strong net income in the quarter.

Even though it was burning cash on operating activities, HOUSE still lent 168 Million Pesos to its related parties. Due from related parties stood at 1.4 Billion Pesos at the end of the first quarter.

With just 321 Million of cash at the end of first quarter, HOUSE is facing 11.9 Billion of loans payable in the near term.

Despite such outlook, HOUSE’s 8990P (6.0263% p.a.) and 8990B (5.5% p.a.) are trading at premiums.

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