By Andrea C. Abestano, Researcher
ABOITIZ EQUITY VENTURES, Inc. (AEV) shares rose last week, backed by a modest rally spurred by a share-sale agreement and consecutive share buybacks.
Data from the Philippine Stock Exchange (PSE) showed that from June 18 to 21, 11.79 billion shares worth P458.61 billion were exchanged on the trading floor.
The holding company’s stocks climbed 0.91% to P38.80 each on Friday from P38.45 on June 14. Year to date, the stock price has fallen by 13% from P44.60 on Dec. 29.
“AEV’s stock movements this week were largely driven by flows, with a notable modest rally in the days following the disclosure of its 50% stake sale,” Rastine Mackie D. Mercado, research director at China Bank Securities Corp., said in an e-mail.
On Monday last week, Aboitiz Equity Ventures disclosed a share sale deal with Ayala Land, Inc. (ALI). Ayala Land bought AEV and AboitizLand’s 50% interest in Cebu District Property Enterprise, Inc.
The transaction involved 18.1 million shares at P100 apiece and gave Ayala Land full ownership of Cebu District Property.
“We think the move aims to capitalize on an improving outlook for its property business,” Mr. Mercado said. He added that investors might view the stake sale as positive since AEV could use the proceeds to fund projects in the pipeline.
“[Despite] the initial positive sentiment, the market also perceived potential negative impacts on AEV’s future earnings from this divestiture, leading to mixed reactions from investors,” Mark Crismon V. Santarina, a trader at Globalinks Securities and Stocks, Inc. said in a Viber message.
“The divestiture may be strategic for resource reallocation but also raises questions about AEV’s long-term growth in the Visayas region,” he added.
AEV shares at P38.80 on Friday from P39.25 a day earlier, ending the stock’s short-term rally.
Mr. Santarina attributed the price volatility to investors’ concern about potential revenue losses from the Cebu District Property stake sale.
After the sale agreement, Aboitiz Equity Ventures held three consecutive share buybacks.
AEV used excess cash to buy 3.66 billion shares at P38.40 to P39.25 each. The company said in a separate disclosure on April 25 said the repurchase program aims to optimize the company’s market position.
Both analysts said these transactions positively influenced market sentiment on the stock last week.
“[Buybacks] typically indicate that the company has a strong balance sheet and expects future growth, thus positively influencing investor sentiment and providing support to the stock price amid market fluctuations,” Mr. Santarina said.
Mr. Mercado said “transactions related to its share buyback program may buoy investor sentiment as this reinforces confidence towards the stock given its first-quarter performance and positive business outlook over the balance of the year.”
For January to March, Aboitiz Equity’s net income attributable to its parent rose by 22.38% to P4.9 billion from a year earlier. Consolidated revenues fell by 8.98% to P69.1 billion.
Mr. Mercado pegged AEV’s support and resistance levels at P38.30 and P39.70, respectively.
“Immediate support level is anticipated around P35, given recent buyback activities bolstering investor confidence,” Mr. Santarina said. “The resistance level is expected near P42.”
