AYALA LAND, Inc. (ALI) dipped last week as investors took positions after its property-for-share swap deal with Ayala Corp. and Mermac, Inc.
Data from the Philippine Stock Exchange (PSE) showed a total of 31.66 million ALI shares worth P1.09 billion were traded from Jan. 24 to 28 making it the seventh most actively traded issues based on value turnover during the week.
The property giant finished at P34.20 apiece on Friday, inching down by 1.3% week on week. Year to date, the stock’s price fell by 1.4%.
“Evident in ALI’s price performance the past week is how investors were quick to take positions in ALI when news of the transaction between Ayala Corp. (AC), Mermac, Inc., and the company came out. This cements the market consensus that ALI is currently undervalued,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in an e-mail interview.
“While price performance was slightly mixed this week, this is more of a reflection of general market sentiment as a whole rather than something fundamental and specific to ALI,” Ms. Agravio added.
Last Jan. 21, ALI approved a property-for-share swap deal worth P17.40 billion with AC and its biggest shareholder Mermac.
Under this transaction, AC and Mermac will transfer five real estate assets to ALI in exchange for 311.58 million primary common shares valued at P55.80 apiece.
“Given a significant price difference, the P55.80 might be treated as price target for long-term investors and good opportunity to accumulate while price is undervalued,” I.B. Gimenez Securities, Inc. Research Head Joylin F. Telagen said in a separate e-mail interview.
ALI’s consolidated revenues increased by 8.8% year on year to P23.66 billion in the third quarter. This brought its nine-month top line to P70.88 billion, rising by 13.5%.
During the July-September period, its attributable net income went up by 37.8% to P2.55 billion. ALI’s nine-month attributable bottom line rose by 34.9% to P8.59 billion.
Ms. Agravio sees ALI’s net income growing by double-digits for the final three months of 2021 as well as for the full-year 2022 amid “sustained uptick” in its property development revenues.
“On conservative note, I think P3-billion [net income] is fair estimate for the [fourth quarter],” Ms. Telagen said.
She expects a double-digit growth for ALI’s bottom line this year or at least P13.8 billion despite “a lot of risk and challenges and global growth downgraded.”
“But given its fundamental good liquid stock, it’s one of the property stocks to buy and hold,” Ms. Telagen said. “Aside from that, property index historically performs better after the crisis.”
For Ms. Agravio, ALI is undervalued at this point. Levels between P34.00 to P35.00 are arguably good entry points based both on fundamentals and technical, she said.
“Fundamentals-wise, ALI is trading at a significant discount versus our fair value; technical-wise, it is trading at a lower range versus all its major moving average, therefore it is considered a bargain.”
Ms. Agravio placed ALI’s support levels at P34.00, while its resistance levels at P35.50 to P36.00.
For Ms. Telagen: “Support is at P31.00, breakdown to P29.00. While resistance at P38.00, breakout to P42.00. Trade cautiously.” — Abigail Marie P. Yraola
