POLICY UNCERTAINTY surrounding the property sector led some market players to take profits on Ayala Land, Inc. (ALI) stocks last week.

ALI was the third most actively traded stock with a total of 24.119 million shares worth P1.113 billion having exchanged hands on the trading floor during the three-day trading week from Dec. 23 to 27, data from the Philippine Stock Exchange showed.

On a week-on-week basis, its share price was lower by 1.09% to P45.5 on Friday from its Dec. 20’s closing price of P46 apiece. Year to date, however, ALI is up 10.17%.

“I think this recent decline not just of ALI, but also for the property sector, is geared towards profit-taking since this sector had a stellar performance, beating all other indices including the PSEi (Philippine Stock Exchange index),” Philstocks Financial, Inc. Client Engagement Officer and Research Associate Piper Chaucer E. Tan said in an e-mail.

Mr. Tan added that the decline may also be attributed to uncertainty over the government policy for Philippine Offshore Gaming Operators (POGO) and the Corporate Income Tax and Incentives Rationalization Act (CITIRA), which “may slow down” the expansion of the information technology-business process outsourcing (IT-BPO) sector in terms of office space take-up.

However, he noted ALI’s resilience as shown in the stock’s double-digit, year-to-date growth, with some investors taking positions towards next year.

In a separate e-mail, Unicapital Securities, Inc. Technical Analyst Cristopher Adrian T. San Pedro said the “lingering political uncertainties” on the crackdown of POGOs may be affecting the investors’ sentiment to become “bearish” on property stocks including ALI as these developers are “heavily exposed” to Chinese tenants.

“[The] news on the Sagada development could also be an underlying factor on ALI…,” Mr. San Pedro added.

In a statement last Dec. 23, ALI denied newspaper reports it is developing a tourism project in Sagada, Mountain Province.

Meanwhile, the Philippine Amusement and Gaming Corp. (PAGCOR) stopped issuing new licenses to POGOs starting in August due to national security and economic concerns.

PAGCOR Chairperson and Chief Executive Officer Andrea D. Domingo said the suspension would also prevent the country from being the “catch basin” of fleeing operators after the ban on online gaming in Cambodia.

Moreover, the Finance department has ordered the Bureau of Internal Revenue to close down online gaming operators that have failed to pay taxes.

The House ways and means committee earlier approved a bill that seeks to impose a 5% tax on offshore gaming companies which will replace a 2% gross revenue tax on PAGCOR licensees. The bill also increases the tax on foreign POGO employees’ salaries and allowances to 25% from 15%.

Albay Rep. Jose Ma. Clemente S. Salceda, chairman of the House ways and means committee, told reporters before the holidays that the reform on taxing POGO operations was one of the committee’s priorities.

Meanwhile, CITIRA, which aims to gradually reduce corporate income tax to 20% by 2029 from the current 30% and remove fiscal incentives deemed redundant, is still pending at the Senate.

Despite these uncertainties, Philstocks’ Mr. Tan said ALI’s growth trajectory is still “sustainable” in 2020 and even the next 10 years as it continues to expand in regions outside Metro Manila, noting the strong demand for ALI properties across market segments as shown by its “strong double-digit” earnings growth.

For the nine month period, ALI reported an 11.75% rise in attributable profit to P23.210 billion.

”We expect ALI to hit P40 billion in net income for 2020 to be driven by steady revenues from malls, offices, hotels, and real estate projects,” said Unicapital Securities’ Mr. San Pedro.

Moving forward, Mr. San Pedro expects ALI’s stock support and resistance levels in the short term to range between P44 and P50, respectively.

“I expect the stock to become a potential trend reversal candidate and retest P50 and P54 resistance levels this first quarter of 2020, if it stays above P45,” Mr. San Pedro added.

For Philstocks’ Mr. Tan: “The primary and secondary support is seen at P42 and P40. Consequently, the primary and secondary resistance is at P48.50 and P50, respectively.”

“Based on the historical performance of the sector indices, all sectors posted gains at the start of the year. We think that ALI will also start 2020 strong in its first trading week given this support and resistance ranges,” he added. — Marissa Mae M. Ramos