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Thursday, June 5, 2014

8990 Holdings, Inc.: The Case of the Disappearing Past Due Installment Contract Receivables

In a previous blog post titled "Has the Philippine Real Estate Bubble Already Burst?", we wrote on a little known factoid buried deep within the bowels of the financial statements of 8990 Holdings, Inc. (otherwise known through its stock ticker "HOUSE"), that HOUSE's level of Installment Contract Receivables (ICRs) that are over 90 days past due jumped 500% in the nine months from December 31, 2012 to September 30, 2013.

8990 Holdings Inc.
Installment Contract Receivables, Past Due but Not Impaired
In Php





Audited Unaudited

December 31, 2012 September 30, 2013 % Change
Less than 30 days 76,438,532 102,996,723 34.74%
31 - 60 days 31,128,884 30,426,033 -2.26%
61 -90 days 26,930,290 10,163,708 -62.26%
Over 90 days 39,365,086 236,008,574 499.54%
Total 173,862,792 379,595,038 118.33%

These figures were taken from HOUSE's interim financial statements as of September 30, 2013 which contained audited figures for December 31, 2012 and interim figures for the nine months since then.  The document can be found here and also on the website of the Philippine Stock Exchange.  The Annual Report can be found here and here.

Today, those figures are very much gone or reduced.  The level of past due ICRs were reduced by almost 80% for the very same figures that were audited as of December 31, 2012.  

8990 Holdings Inc.
Installment Contract Receivables, Past Due but Not Impaired
In Php











Interim Report Annual Report


Audited Audited


December 31, 2012 December 31, 2012 Variance % Variance
Less than 30 days 76,438,532 18,426,966 -58,011,566 -75.89%
31 - 60 days 31,128,884 5,049,846 -26,079,038 -83.78%
61 -90 days 26,930,290 5,910,360 -21,019,930 -78.05%
Over 90 days 39,365,086 6,357,158 -33,007,928 -83.85%
Total 173,862,792 35,744,330 -138,118,462 -79.44%

Despite an almost 40% jump in sales, the level of past due ICRs were even lower at year end 2013 than they were at year end 2012.


8990 Holdings Inc.
Installment Contract Receivables, Past Due but Not Impaired
In Php






Interim Report Annual Report

Audited Unaudited Audited Audited

December 31, 2012 September 30, 2013 December 31, 2012 December 31, 2013
Less than 30 days 76,438,532 102,996,723 18,426,966 3,824,739
31 - 60 days 31,128,884 30,426,033 5,049,846 2,403,551
61 -90 days 26,930,290 10,163,708 5,910,360 2,177,276
Over 90 days 39,365,086 236,008,574 6,357,158 15,993,266
Total 173,862,792 379,595,038 35,744,330 24,398,832

HOUSE dependence on ICRs to fuel sales has only increased since December 31, 2012.


8990 Holdings Inc.
Installment Contract Receivables/Sales
In Php














Audited Unaudited Audited Audited

December 31, 2012 September 30, 2013 December 31, 2012 December 31, 2013
Installment Contract Receivables 4,672,109,197 8,165,199,990 4,672,109,197 9,777,920,990
Sales 2,888,596,423 4,367,429,533 3,830,644,048 5,356,098,815
Days Sales 437 505 329 493


So has the risk to its stockholders.


8990 Holdings Inc.
Installment Contract Receivables/Stockholders Equity
In Php






Audited Unaudited Audited Audited

December 31, 2012 September 30, 2013 December 31, 2012 December 31, 2013
Installment Contract Receivables 4,672,109,197 8,165,199,990 4,672,109,197 9,777,920,990
Stockholders Equity 3,948,015,021 6,049,131,256 3,948,015,021 6,595,847,184
Installment Contract Receivables/Stockholders Equity 118.34% 134.98% 118.34% 148.24%

8990 Holdings Inc.
Real Estate/Stockholders Equity
In Php






Audited Unaudited Audited Audited

December 31, 2012 September 30, 2013 December 31, 2012 December 31, 2013
Real Estate Inventories 2,040,532,596 2,081,143,259 2,040,532,596 2,243,559,834
Land held for Future Development 1,010,474,241 3,605,811,050 1,010,474,241 3,784,727,576
Investment Properties 142,365,067 140,860,631 142,365,067 141,928,584
Total Real Estate 3,193,371,904 5,827,814,940 3,193,371,904 6,170,215,994





Stockholders Equity 3,948,015,021 6,049,131,256 3,948,015,021 6,595,847,184
Real Estate/Stockholders Equity 80.89% 96.34% 80.89% 93.55%

8990 Holdings Inc.
ICRs & Real Estate/Stockholders Equity
In Php






Audited Unaudited Audited Audited

December 31, 2012 September 30, 2013 December 31, 2012 December 31, 2013
Installment Contract Receivables 4,672,109,197 8,165,199,990 4,672,109,197 9,777,920,990
Real Estate 3,193,371,904 5,827,814,940 3,193,371,904 6,170,215,994
Total 7,865,481,101 13,993,014,930 7,865,481,101 15,948,136,984





10% Losss 786,548,110 1,399,301,493 786,548,110 1,594,813,698
Stockholder's Equity* 3,948,015,021 6,049,131,256 3,948,015,021 6,595,847,184
Impact of 10% Loss 19.92% 23.13% 19.92% 24.18%

* Excludes Proceeds from Follow-on Offering

Impairment Losses

Based on its Annual Report, the company has now made provisions for impairment losses of Php 2,795,106 as of December 31, 2013, whereas they recognized none in the years before.  This is a step in the right direction.

Meanwhile, what happened to all those past due ICRs?


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