Megaworld will use the 65 Billion to further expand its base
A lot of commercial buildings, residential spaces, and office towers are being built each year. This is evidenced by the “Construction in Progress” banners we see daily when passing by the major business districts in the metro. It’s very obvious that the real estate industry is aiming to provide more homes and offices in the Philippines. And along with this booming real estate market, Megaworld plans to expand and increase its capital expenditure.
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Stock Smarts Qatar — February 5 – 10, 2019
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Stock Smarts Cebu — April 6 & 7, 2019
Investing Insights Japan – April 13, 2019
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Stock Smarts Iloilo – July 6 & 7, 2019
Stock Smarts Cagayan De Oro – July 20 & 21, 2019
Stock Smarts Hong Kong – August 11, 2019
Stock Smarts Taiwan – November 2, 2019
Real Estate will be good as long as the economy is strong!
How much more?
In 2018, Megaworld has set aside P60 Billion for their capital expenditure (CAPEX). This year, the leading real estate and business processing outsourcing (BPO) office developer in the country is increasing their CAPEX to P65 Billion, which is 8% higher than last year. It is indeed a Milestone for Megaworld considering that it superseded the allocated CAPEX of P230 Billion for 5 years starting 2015.
What to expect?
Megaworld will use 80% of their 2019 CAPEX to develop its properties across its existing 23 townships while the 20% will be utilized to acquire more lands and investments properties. This means more commercial buildings, rental offices, and residential properties. This year, the company will be focusing on building residential towers as the demand for residential properties increased tremendously within their townships in Cebu, Pampanga, Iloilo, and Bacolod. Other than residential properties, the company is also expected to finish 5 commercial projects that would add up to its shopping malls portfolio and 5 new office towers in BGC, Paranaque, and Pampanga.
The increase in the company’s capital expenditure means a higher revenue this year is expected. The company has already made a P11.29 billion income for eight months in 2018 and P41.76 billion as revenue. It will surely go up given its plans to build more establishments this year. Mr. Andrew Tan, the founder of Megaworld, said that they are aiming to reach P20 billion rental income by 2020 with 2.5 million SQM of rental spaces in total.
As of 2019, Megaworld has 23 townships across the country. It includes the developments in Eastwood City, a 25-hectar New Port City in Pasay, a 50-hectar McKinley Hill, a 34.5-hectar McKinley West, a 15.4-hectar Uptown Bonifacio, and more areas in Cebu, Iloilo, Boracay, Tagaytay, Pasig City, Cavite, Laguna, Davao City, and Las Pinas City. About 700 residential properties, 9 hotels, 17 malls, and 60 office towers are owned by the company. Aside from being a real estate developer, it also holds a share in Alliance Global Group, Inc., specializing in liquor and fast service restaurants. The company has enough landholdings that can sustain their expansion in the future, as what Canuto, the Senior Vice President of Megaworld, announced. It will not just expand within the metro but in the provinces as well.
What do the technicals say?
Megaworld continues its upward bullish stance, if you are a position trader, the stock is still moving in its uptrend no sell signal yet. You can hold on to your position as long as the trend that I posted below holds or you can use the 50, 100, or 200 day moving average as a signal for you to sell.
If you are a quick trader, the stock is experiencing a resistance at 5.5, if it shows more evidence that it would fail to breakout from that level, you may sell as well. MACD is already showing a change in direction.
I’ll keep you posted over the next few weeks where this is going.