AYALA Land, Inc.’s (ALI) shares fell last week despite success in block share selling, attributed to investor profit taking and delays in Fed rate cuts.
According to the Philippine Stock Exchange, a total of 64.6 million worth of P1.89-billion ALI shares were exchanged on the market from May 20 to May 24, making it the second-most actively traded stock last week.
ALI closed at P28.85 on Friday, down by 1.9% from P29.40 per share a week ago. Year to date, the price dropped by 16.3%.
“The decline this week was brought about by softer market sentiments amid fresh worries of a delay in Fed rate cuts and profit taking in ALI after an 8% rally,” China Bank Securities Corp. Research Director Rastine Mackie D. Mercado said in an e-mail.
From May 13 to May 17, Ayala Land, Inc. saw a rally as the price per share surged from P27.75 on Monday to P29.40 on Friday’s close.
Following the rise in the share price of ALI, “foreign investors have persistently offloaded shares,” Globalinks Securities and Stocks, Inc. Senior Trader Mark V. Santarina said in a Viber message.
He added that investor sentiment was impacted by both the liquidity event and interest rate fluctuations.
On Tuesday, Federal Reserve policy makers signaled that rate cuts would be pushed back to several more months to ensure that inflation is back to the 2% target, a Reuters report said.
Since July, the Fed has kept the benchmark policy rate at 5.25%-5.5% as inflation was stronger than expected in the last three months.
Similarly, the Bangko Sentral ng Pilipinas monetary board has maintained key rates at 6.5% as inflation accelerated to 3.8% in April from 3.7% in March.
ALI’s decline in stock price overshadowed its rise in liquidity following a successful block share sale.
“The block sale initially boosted investor confidence due to the significant capital raised, indicating strong liquidity and strategic financial management by Ayala Land ,” Mr. Santarina said.
On Wednesday, Ayala Land raised 3.18 billion from a block sale of 98 million AREIT, Inc. shares at P32.45 apiece as part of a property-for-share swap deal. The swap deal includes ALI real estate properties amounting to P11.25 billion in exchange for 252.13 million AREIT primary common shares worth P44.65 apiece.
Mr. Santarina said that the deal resulted in positive short-term sentiment among investors despite this “some investors remained cautious about the long-term impact of asset sales on the company’s growth prospects and operational focus.”
On the other hand, Mr. Mercado said that this development influenced AREIT’s price action more than ALI.
In the first quarter of the year, ALI’s net income attributable to parents grew by 39.44% to P6.29 billion from P4.51 billion in the same period last year.
For the January to March period, Ayala Land’s net income reached P7.44 billion, 43.35% higher than the P5.19 billion in the same period last year.
Mr. Santarina expects Ayala Land, Inc.’s full-year income to reach P10 billion while its net attributable income is at P8.8 billion.
“[Assuming that there is] continued operational efficiency and favorable market conditions,” he said.
Mr. Mercado placed immediate support and resistance levels of ALI at P27.60 and P29.75, respectively.
“Immediate support is anticipated at P28.50, with stronger support at P27.80 if the stock experiences further declines while the major resistance point at P30, which the stock will need to breach to signal a potential upward trend,” Mr. Santarina said. — Andrea C. Abestano with Reuters
