Vista Land & Lifescapes, Inc. (VLL)

Company Profile:

Vista Land & Lifescapes, Inc. (VLL) was incorporated on February 28, 2007 as an investment holding company. VLL and its subsidiaries harness more than 30 years of professional expertise in residential real estate development. The Company's projects include master-planned developments and stand-alone residential subdivisions which offer lots and/or housing units to customers in the low-cost (which includes socialized housing), affordable, middle-income and high-end market segments.

VLL operates through five distinct business units:

Brittany caters to the high-end market segment in Mega Manila, offering luxury houses in master-planned communities, priced at P9 million and above.

Crown Asia caters to the middle market housing segment in Mega Manila, primarily offering houses priced between P3.5 million to P9 million.

Camella Homes services the low-cost housing segment and affordable housing segment, priced up to P3.5 million.

Communities Philippines offers residential properties outside the Mega Manila area in the low-cost, affordable and middle market segments.

Vista Residences, Inc. caters to the development and selling of residential high-rise condominium projects across the Philippines.

Income and Operations

VLL reported a net income increase of 24% from P3.528 billion in 2011 to P4.375 billion in 2012. All its property segments' revenues increased, except for Crown Asia which decreased by 8%. Its gross margin increased to 53.96% from 51.08% in 2011, indicative that its brands could command higher pricing without hurting sales volume.

Stocks Valuation

VLL stocks are currently trading at P10x PE. If you purchased the stock by the end of 2011, your investment have already grown by 188%.

 What's to Like?

Vista Land simply dominates the housing segment in the country. Its well-established "Camella" brand and its emerging presence in the region are the company's present and future. VLL have also continued to find a way to increase its gross margin, possibly from managing its expenses. It posted lower provision for income tax reduced by their deferred payments.  

Why Get Cautious?

Unlike other listed property companies, VLL does not have a recurring rental income on their portfolio. The vertical segment of their company is also lagging behind other developers. This becomes a major concern especially when consumers tend to move in the city. It also makes them more susceptible to economic downturns similar to the property melt down they have experienced in the 90's.

Buffett Recommends...

Vista Land and Lifescapes prides itself of sound financial management backed by the family of businessman and Senator Manny Villar. While their leadership in their field and high reputation are good intangibles, I believe there are other companies that provide higher returns for our intelligent investors.