Investors pick ALI on economy rebound bets, REIT income boost

INVESTORS’ divided views on economic recovery this year as well as income prospects for Ayala Land, Inc.’s (ALI) real estate investment trust (REIT) pushed it to be one of the top-traded stocks last week.

Data from the Philippine Stock Exchange showed a total of 28.45 million ALI shares worth P1.17 billion exchanged hands in the first trading week of the year.

The stock price of the Ayala group’s property arm closed at P41.55 on Friday, up by 1.6% from its finish last year at P40.90 apiece.

“[T]rading of its shares were likely driven by market movement as it is an index/sector heavyweight. Shares have continued to trade within the tight range of around P40 to P42 as likely driven by the prevailing indecision between local and foreign funds,” China Bank Securities Corp. Research Associate Zoren Philip A. Musngi said in an e-mail.

Mr. Musngi said there remains skepticism on year-ahead recovery expectations amid ongoing pandemic concerns.

In a mobile message, Diversified Securities, Inc. Equity Trader Aniceto K. Pangan saw ALI’s activity as “more of a regular heavy volume” of the company, partly due to the cautious optimism on the business outlook of its parent firm, conglomerate Ayala Corp., which announced last week a higher capital expenditure for the year at P182 billion versus the P157 billion programmed in 2020.

The analysts also noted possible additional income for ALI through AREIT, Inc.’s acquisition of the 9.8 hectares of land owned by Technopark Land, Inc. disclosed to the bourse on Wednesday.

“The acquisition enables ALI to participate in the leasing income that will be generated through its stake in AREIT,” Mr. Musngi said as ALI has a 54% stake in AREIT.

“With IMI as the lessee, it becomes more stable on its added revenue,” Mr. Pangan said, referring to electronics manufacturer Integrated Micro-Electronics, Inc. leasing four parcels of the land for the next seven years.

AREIT said in its disclosure that the acquisition will add to its income generation starting this month and will strengthen the company’s potential for capital appreciation. It bought the land that is situated in Laguna Technopark via a deed of sale amounting to P1.1 billion, inclusive of value-added tax.

The 471-hectare Laguna Technopark covers portions of Biñan and Sta. Rosa, Laguna and is managed by ALI subsidiary, AyalaLand Logistics Holdings Corp.

“Barring any second wave infection, definitely, the property sector will perform better this year, vis-a-vis last year,” Mr. Pangan said.

“With this scenario, Ayala Land is expected to transition back to growth cycle this year, especially with the improvement in consumer behavior and mobility as seen with the ease in restrictions. Rollout of a number of COVID-19 vaccines will further help in the containment of the pandemic,” the trader added.

“However, there is still considerable uncertainty on when the Philippines would be able to procure the vaccines and how swift we can roll out a vaccination program,” China Bank Securities’ Mr. Musngi said for his part.

He also said that optimism on the property sector, in general, is tempered by the possibility of tighter quarantine restrictions due to the outbreaks of the new COVID-19 strain in several countries.

ALI’s consolidated gross revenue nearly halved to P63.32 billion in the nine months to September as the pandemic limited the property developer’s business operations. Likewise, its attributable net income dropped by 72.6% to P6.37 billion in the same period.

For the coming weeks, Mr. Musngi pegged ALI’s support and resistance at P40 and P42 apiece, respectively.

Mr. Pangan meanwhile placed the company’s immediate support and resistance at P40.05 and P42 per share, respectively.