Investors profit-take on Ayala Land’s optimistic outlook

SHARES in the Ayala-led property developer Ayala Land, Inc. dropped last week as investors took profits amid signals of rate cuts this year, which could support the company’s rosy outlook.

A total of 44.23 million shares, worth P1.52 billion, were traded from Jan. 8 to 12, according to data from the Philippine Stock Exchange (PSE), making it the eighth most actively traded stock last week.

Shares of the property development company dropped by 0.7% week on week, closing at P34.05 apiece last Friday from its P34.30 closing price on Jan. 5.

Year to date, Ayala Land’s stock slid by 1.2%.

To kick off the year, Ayala Land announced its plans to boost activities with the aim of doubling its earnings by 2028.

The property developer’s double-digit growth, seen during the third quarter of 2023, supported Ayala Land’s aggressive stance on its medium-term goal.

In the January to September 2023 period, the company’s net income grew by 28.5% to P20.94 billion from P16.3 billion in the same period in 2022.

Net attributable income also surged by 37.9% year on year to P18.39 billion from P13.34 billion.

In an e-mail exchange, Timson Securities, Inc. Equity Trader Jervin S. de Celis said that Ayala Land’s plans to double its earnings in the next five years can be supported by better economic conditions anticipated this year.

“Foreigners are noticeably net buyers of the stock since the first week of November and I guess their appetite for [Ayala Land’s] stock is stemming from the strong earnings performance of the company for the [nine]-month period of 2023 and the anticipation for the rate cuts in 2024,” he said.

“The stock price has been moving sideways since the [third] week of December. After touching the P35 level this week, it has since then retraced to P34 and may form a support level at around P32.50 within this month,” he added.

On a quarterly basis, Ayala Land’s net attributable income increased by 33% to P7 billion during the July-to-September period last year.

Its third quarter net income also rose by 28.1% to P7.88 billion.

The property developer arm of Ayala Corp. also announced last week its loan deal with Metropolitan Bank & Trust Co. (Metrobank) worth P15 billion to fund its capital expenditure and debt refinancing.

Metrobank became the second largest lender to Ayala Land after the loan.

The country’s inflation slowed to 3.9% in December last year, with full-year inflation settling at 6%, meeting the BSP’s targets for 2023.

This was also the third-straight month of easing since the 6.1% inflation in September last year.

Mr. De Celis placed his full year income forecast for the stock to reach at least P20 billion, advising investors to lookout for headwinds this year namely El Niño and the ongoing conflict in Yemen, which could affect prices of oil once again.

For the week, he placed his support and resistance levels at P32.50 and P35, respectively.

“[T]he big players in the [Philippine] real estate market have weathered the effects of the pandemic as well as the skyrocketing inflation and interest rates for the past couple of years, so while there are headwinds coming from the local and international scene, ‘sustained local macroeconomic expansion and sound economic policies’ as Colliers mentioned in their December 2023 report will likely support the industry’s fast recovery this year and beyond,” Mr. De Celis said. — Bernadette Therese M. Gadon