CRISP’s ‘AA+’ rating on CPG is based on the following rating factors:

Strong market presence

CPG has established a strong market presence as it maintains an international sales platform with 1,013 sales agents in 10 offices in 9 countries and 56 affiliate offices worldwide.

CPG ranked 1st in the most number of condominium units and 2nd in the most number of condominium units and house and lot that were sold internationally, as of the third quarter of calendar year 2013.

With almost 3 decades of experience in property development, CPG has completed 22 projects with 6,760 housing units in 582,000 square meters of floor area. CPG built the first luxury condominium in Fort Bonifacio Global City and was the first to feature a fully fitted and furnished apartments that established a quality benchmark in condo living that has been adopted by other leading property developers in the country.

CPG is the only property developer in the country that uses international brands to enhance its prestige and value of its projects. Through co-branding arrangements, CPG carries international brand names like Versace, Trump, and Armani with its property development projects.

CPG’s business strategy that focuses on the premium end of each of the luxury, middle income and affordable market segments respectively, is a crucial step in the need for property developers to diversify and protect themselves from a potential market shift.

CPG is the country’s largest independent property management company with 46 buildings totaling 2.4 million square meters in its portfolio that includes the international headquarters of the Asian Development Bank, Makati Medical Center, and Globe Telecom Plaza.

Healthy financial position

Healthy balance sheetCPG’s balance sheet reflects a healthy financial position with a current ratio of 2.0x and a quick ratio of 1.1x on total current liabilities of P8.2 billion.  CPG’s long-term solvency is strong at 48.6% debt-to-equity ratio on a total long-term debt of P4.5 billion.

 CPG’s total assets as of December 31, 2013 has increased by 41.0% to P26.16 billion compared to P18.56 billion in 2012, due to the following:

  • Cash and cash equivalents increased by P537.0 million from P901.8 million as of December 31, 2012 to P1.4 billion as of December 31, 2013, primarily due to receipt of proceeds from subscription transactions and utilization of credit facilities.
  • CPG’s cash flow from operations also improved given the collection of turnover balances from completed projects.
  • Receivables increased by 34.1% from P6.78 billion as of December 31, 2012 to P9.09 billion as of December 31, 2013 due to the increased revenues recognized during the period.
  • Real estate inventories increased by 77.8% from P3.95 billion the year before to P7.03 billion as of December 31, 2013, due to project development and transfer of cost of land for one Acqua building previously classified as land held for future development.
  • Investment properties posted an increase of 112.5% to P4.08 billion as of December 31, 2013, compared to P1.92 billion as of December 31, 2012 primarily due to completion of Century City Lifestyle Center.

CPG expects that by the end of 2016, eighteen projects, totaling 1.1M sq. meters and 11,037 units will be completed that would result in a stronger liquidity position with cash collections from these projects.

On the other hand, CPG’s total liabilities as of December 31, 2013 increased to P14.7 billion compared to P10.3 billion as of December 31, 2012, due to the following:

  • Accounts and other payables increased by 61.4% from P2.8 billion in fiscal year 2012 to P4 billion by end of fiscal year 2013 due to accruals recorded at the end of the year.
  • Short-term and long-term debt increased by 65.0% from P3.66 billion to P6 billion during the same period as CPG tapped various credit facilities that included the sold portion of the CPG’s installment contracts receivables with recourse, syndicated loans, and bi-lateral term loans.
  • Pension liabilities increased by 54.5% from P92.4 million as a result of actuarial valuation at the end of the last fiscal year.

CPG’s total stockholder’s equity net increased by 38.8% to P11.4 billion as of December 31, 2013 from P8.24 billion as of December 31, 2012 due to issuance of new shares and the net income recorded for the year ended December 31, 2013.

Sound profitabilityOver the last three years, CPG registered sound profitability margins with 43% average gross margins, 26.9% average EBITDA and 18.2% average net income margin.  During the first quarter of 2014, CPG maintained its profitability levels.

Compared to CPG’s 2012 performance, revenue from real estate sales increased by 8.4% from P8.58 billion in 2012 to P9.3 billion in 2013.  The increase was due to increased sales as CPG completed its projects in Century City and Azure Residences.  CPG also started recognizing real estate revenue from its Commonwealth projects.

CPG’s revenues from property management fees and other services increased by 14.5% to P254.4 million in 2013 from P222.2 million the year before.  This increase was due to additional buildings under management and fee rate escalations for some of the projects under management ranging from 5% to 10%.  CPG picked up 4 more buildings under management as of December 31, 2013 which increased its total number of properties under management to 55.

Additionally, CPG’s interest and other income increased by 55.0% to P1.25 billion during the 2013 fiscal year due primarily to non-cash accretion of unamortized discounts reflecting increased revenue from real estate sales, and forfeited collections.

  • Excellent land banking strategy to sustain growth. Through direct purchase, joint venture and leasehold arrangements, CPG holds over 200 hectares of land, with about 5 million square meters of developable floor area that is expected to sustain its property development activities in the next 5 years. CPG’s land bank for future development consists of properties in Batangas, Novaliches and Pampanga.

Outlook:  StableCRISP believes that CPG’s landbanking strategy would adequately support its current market share and help the company to further diversify its property development portfolio as a protection against potential market shifts.  CRISP also believes that CPG’s overseas Filipino market will continue to support its product offering and will not be affected significantly by economic shifts in their host countries.