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Stock comment: Ovialand plans to go public in 2022 to raise pesos 1.5 billion for nationwide expansion

Barkada market

September 7, 2021 | 8:27 a.m.

The company is a subsidiary of Malate Construction and Development Corp (MCDC), founded by Giovanni Olivares. Ovialand [OVIA? pre-IPO] is managed by Fatima Olivares-Vital, the daughter of Mr. Olivares, and is a low cost property developer traditionally active in Luzon but looking to expand its 45 hectare land bank through acquisitions in Luzon, Visayas and Mindanao.

The company is preparing for an IPO in mid-2022 (Q2 or Q3), and the 1.5 billion pesos raised will be used to further develop OVIA’s existing land bank, but also to expand this land bank to holdings in other regions of the country. They have completed 350 units out of a planned 550 units so far this year and expect their 45 acre land bank to represent about another 3,000 units.

MB BOTTOM-LINE

The company said its IPO would depend on “market conditions and everything,” so I’ll add the IPO to my schedule, but I’m not going to hold my breath. If our midsize and bulk housing developers like Cebu Landmaster [CLI 3.26 1.56%], 8990 stocks [HOUSE 7.40], and Sta. Lucia land [SLI 3.07 2.33%] It can be assumed that the demand for OVIA’s mass market residential product is currently very strong and will likely remain strong for the foreseeable future.

Assuming OVIA grows a conservative 10% each year from late 2021 onwards, that means the company could potentially blow its land bank in about 4.5 years (mid-2026), producing nearly 1,000 units a year by then. If OVIA has the construction capacity and the shovel-ready projects to be converted into salable units, I personally don’t see what “market conditions” might have to do with it. As CLI, HOUSE and SLI have shown, the pandemic has not affected the demand for this type of housing. If you build it, they’ll buy it. In such an environment, why should you play with the market and potential investors who might be happy to be part of your growth story?

Join the party selling some equity and selling like crazy in this massive wave of housing demand. If OVIA doesn’t go public next year, I don’t think it will be market conditions if macro conditions are what they are. But that’s just me I’m still excited to read your preliminary prospectus and hope to talk more about your potential IPO in the months ahead!

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