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Expectations of better third-quarter earnings drive Ayala Land’s stock movement

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By Marissa Mae M. Ramos
Researcher

AYALA LAND, Inc. (ALI) was the seventh most actively traded stock last week, ahead of the release of the company’s earnings report this week.

A total of P1.059 billion worth of 21.663 million shares were exchanged on the trading floor from a shortened trading week from Oct. 28 to 31, data from the Philippine Stock Exchange (PSE) showed.

ALI shares closed at P48.55 apiece on Thursday, up by 0.10% from the P48.5 on Oct. 25, but down 2.02% from the previous day’s P49.55 closing price. Year to date, it is up 17.55%.

“The recent movement of ALI shares is primarily due to the anticipation of [nine-month] and [third-quarter] earnings,” said Philstocks Financial, Inc. Client Engagement Officer and Research Associate Piper Chaucer E. Tan in an e-mail.

“We think that ALI will still bring strong earnings primarily from its retail, residential and office leasing business. The bulk of the revenue drivers will be coming from its residential business due to its rapid expansion of townships across Philippines…,“ he added.




For Diversified Securities, Inc. Equity Trader Aniceto K. Pangan, ALI’s share price movement last week was influenced by improving market sentiment due to the US-China trade talks “moving in a positive direction” as well as the “expectation of a better second-half for the [Philippine] economy.”

“Ayala Land sustained its growth momentum in the first half of this year despite a lower local economic growth of less than six percent. This is indicative of a strong fundamental,” said Mr. Pangan.

“ALI will continue to project a strong growth as our country maintains its strong growth momentum.”

The company booked an attributable net income of P7.834 billion in the second quarter, up 11.58% from its P7.021-billion earnings in the same period last year. This brought its bottom line in the first half to P15.157 billion, up 12% from last year’s P13.538 billion.

Philstocks’ Mr. Tan expects ALI’s net income to reach P33.8 billion for 2019: “The long term outlook for ALI is [a] rapid expansion outside Metro Manila adding to the government’s easing monetary policy which will ease credit, thus increasing demand for real estate properties,” he said.

However, he cautioned of the delay in the government’s infrastructure projects that might pose a risk to ALI’s growth prospects as well as that of the entire industry.

The Philippine economy’s 5.5% gross domestic product (GDP) growth in the first half of the year was slower than the 6.3% expansion recorded in 2018’s comparable six months, with analysts blaming the disappointing result to the 2019 budget’s nearly four-month delay which had left new projects unfunded. Up until April 15 when the 2019 budget was signed, the government had operated on a reenacted 2018 budget.

Third-quarter GDP growth is set to be released on Thursday, with the market expecting the economy to recover from the disappointing first-half performance.

Meanwhile, Reuters reported last Thursday of Chinese officials expressing optimism that Beijing and Washington could still sign a trade deal next month despite the abrupt cancellation of the Asia-Pacific Economic Cooperation (APEC) Summit in Chile last Wednesday due to ongoing protests in the South American nation. The said meeting would have potentially led to both economic superpowers signing a much needed trade deal to de-escalate the 15-month-old trade war.

Moving forward, Diversified Securities’ Mr. Pangan said that ALI is expected to continue consolidating with a major resistance level of P50 and a support of P45 “due mainly to challenging external and internal factors such as US-China trade war, Brexit, geopolitical tension, [and] the catch-up [on] government spending…”

For Philstocks’ Mr. Tan: “We see the stock reaching the primary resistance as earnings of ALI may be released [this] week…”

Mr. Tan pegged ALI’s primary and secondary support at P48.5 and P47, respectively, with primary resistance at P50 and secondary resistance at P52.7.









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