AYALA Land, Inc. (ALI) dipped last week after the rebalancing of the MSCI index and news of extended lockdowns, but analysts say the stock remains attractive to market players.

The property firm was the sixth most actively traded stock last week with a total of 41.17 million shares worth P1.38 billion traded from Aug. 31 to Sept. 3, data from the Philippine Stock Exchange showed.

Week on week, ALI shares inched down by 1.2% to P33.10 apiece on Friday from its Aug. 27 closing price of P33.50. Compared with the first trading day of the year, the stock’s price fell by 21.2%.

“ALI’s share price movement this week was mostly attributable to the MSCI rebalancing which took effect last Sept. 1,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in an e-mail interview.

ALI was among other blue-chip stocks dragged by the rebalancing, which prompted the “outflow of passive funds and an inevitable downturn in share prices,” she said.

“Nonetheless, this meant that the downturn was not born out of fundamental reasons,” Ms. Agravio added.

The Morgan Stanley Capital International (MSCI) Index is designed to measure the performance of the large and mid-cap segments of a local market. The index is reviewed quarterly — in February, May, August, and November — to reflect change in the underlying equity markets in a timely manner, while limiting undue index turnover.

Some fund managers track the MSCI index composition to realign their portfolios. The MSCI Philippines Index is composed of 17 constituents, covering 85% of the country’s equity universe.

As of Sept. 3, ALI has an index weight of 10.49%, second only to SM Prime Holdings, Inc.’s 13.66%.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in a separate e-mail interview that anticipating the MSCI rebalancing “allows smaller shareholders to take in profits made (if any) on one stock, and pick up to make new gains on another.”

For Mr. Arce, ALI’s share price was negatively impacted by the modified enhanced community quarantine implemented by the Duterte administration until Sept. 7.

“Also, in view of the continuing effects of the [coronavirus disease 2019] pandemic and mobility restrictions on business operations, ALI has to spend P1.45 billion, representing the proceeds from the acquisition of Teleperformance Cebu by AREIT, before Oct. 7 as part of its reinvestment plan under its AREIT initial public offering,” Mr. Arce added.

AREIT, Inc., the real estate investment trust (REIT) firm of ALI, bought Teleperformance Cebu on Sept. 15, 2020 from ALO Prime Realty Corp. for P1.45 billion.

According to its reinvestment plan as of Aug. 31, ALI has to disburse the amount to AREIT until Oct. 6.

ALI’s attributable net income to its shareholders rose by 33.7% year on year to P6.04 billion in the six months to June.

Mr. Arce expects ALI to grow significantly over the next three years.

“ALI’s forecast earnings and revenue growth of 44.2% and 23.3% per year, respectively, are seen to surpass the market’s earnings and revenue growth at 21.9% and 12.2% per year, respectively,” he said.

“ALI has always had quality earnings. But the pandemic and the movement curbs that came along with it, cut the company’s net profit margins to 9.9% from 17.7% last year,” he added.

Mr. Arce sees the property firm to net P14.6 billion this year and P23.3 billion in 2022.

“ALI is still a stable company and an attractive stock that provides strong growth potential,” Ms. Agravio said.

It “is highly likely” to post a strong growth this year, considering the previous year’s significant low base, she said.

“ALI will likely continue trading between the range of its support and resistance at P32.00 and P35.20, respectively,” Ms. Agravio added.

Mr. Arce sees the stock to range between P33.05 and P32.35 for its support level, with resistance level at P34.35 to P35.20. — Ana Olivia A. Tirona