By Ana Olivia A. Tirona, Researcher
AYALA LAND, Inc. (ALI) attracted investors last week following its offer of P10-billion bonds and commercial property infusion in its real estate investment trust unit.
A total of 55.38 million ALI shares were traded last week worth P1.97 billion, making it the third most actively traded stock from March 15 to 19, data from the Philippine Stock Exchange showed.
The property firm of the Ayala group finished at P34.50 apiece on Friday, 6.8% lower than its P37-per-share finish last March 12. Since the start of the year, the stock has dropped by 17.9%.
Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in an e-mail interview that ALI’s P10-billion bond sale and its P15.5-billion commercial property infusion in the Ayala group’s real estate investment trust firm contributed to the stock’s movement last week.
Meanwhile, Diversified Securities, Inc. Equity Trader Aniceto K. Pangan said in a text message the stock’s movement last week was due to the rapid increase of coronavirus disease 2019 (COVID-19) cases last week, allowing investors to buy ALI at a lower price.
Last March 12, the Securities and Exchange Commission received ALI’s plan to sell P10 billion worth of fixed-rate bonds due in 2025 to pay for early redemption of its P8-billion fixed-rate papers due in 2025 issued in 2014 and also fund its projects in Laguna and Cavite under its unit Alveo Land, Inc. and in Quezon City under Avida Land Corp.
Separately, ALI approved last week a P15.46 billion worth of commercial property infusion into AREIT, Inc. under a property-for-share swap where the former will subscribe to 483.25 million primary common shares in the latter at P32.00 apiece.
This will increase AREIT’s leasing portfolio to 549,000 square meters (sq.m.) from 344,000 sq.m. and its deposited property value to P52 billion from P37 billion.
AREIT also greenlighted to hike its authorized capital stock to P29.50 billion from P11.74 billion.
Both deals will be subject for regulatory approval as well as AREIT shareholders at their annual meeting on April 23.
“Based on current prices, ALI has particularly high valuation levels. With a 2020 price-to-earnings (P/E) ratio at 48.93 times the estimated earnings, the company operates at rather significant levels of earnings multiples,” Mr. Arce said.
The price-to-earnings ratio is used by investors to find a listed company’s valuation by relating its current share price to its per-share earnings. It shows how much investors are willing to pay per peso of earnings.
Severely impacted by the lockdown restrictions amid the pandemic, ALI’s attributable net income shrank by 73.7% to P8.73 billion last year from P33.19 billion previously.
Despite this, Mr. Arce said that ALI continues to be fundamentally strong.
“Ayala Land has acknowledged COVID-19 as a prominent risk which affected its business in 2020 with spillover effects to 2021. The lessons from the pandemic would enable it to improve business continuity plans moving forward,” he said.
He sees ALI’s bottom line to rebound to P23.151 billion this year and P30.529 billion in 2022 as the economy slowly recovers.
For his part, Mr. Pangan said the market sentiment in the real estate industry is down with the increase in COVID-19 infection rate as it results into tighter restrictions that cause economic slowdown.
“Basically, net income will be a challenge again this year depending on how the virus could be contained and how the economic activity will normalize,” he said.
This week, Mr. Pangan expects ALI’s immediate support level to be at P33 and immediate resistance at P36.75.
“ALI may still outperform in the weeks or months ahead,” Mr. Arce said, placing the stock’s support level between P32 and P30, while resistance between P37 and P38.
