by Jenniffer B. Austria
[ manilastandardtoday.com ] January 18, 2009
First Philippine Holdings Corp. may reconsider listing its real estate unit Rockwell Land Corp. this year due to the recovery of the property sector.
First Philippine president Elipidio Ibañez said share prices of real estate companies had started to improve after a slump last year following the global finance crisis.
Real estate firms are trading at price-to-earnings ratio of 12 times, but Ibañez said the company might consider listing the real estate unit once it hit 15 times.
The P/E ratio is regarded as the easiest valuation tool in the market. It is computed by dividing the market price of a security from its earnings per share.
Ahigher ratio—usually at 20x and above—means the issue is being sold expensively, while a lower ratio—usually expessed in single digit—means the security is being sold at a cheaper price.
Ibañez, however, noted that it was still more economical for the company to tap the debt market to finance its real estate projects than going public.
Rockwell may also consider listing through the Real Estate Investment Trust Act.
The recently-enacted Reit law provides a framework for companies that own and operate income-producing real estate assets to list their shares in the stock market.
The law provides certain tax incentives to Reits to encourage investments. The Reit must be listed in a stock exchange, maintain its status and give out at least 90 percent of its distributable income to shareholders.
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