{"id":327029,"date":"2024-03-07T00:02:00","date_gmt":"2024-03-06T16:02:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327029"},"modified":"2024-03-07T01:24:29","modified_gmt":"2024-03-06T17:24:29","slug":"stock-in-focus-ayala-land-inc-ali-7-mar-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-ayala-land-inc-ali-7-mar-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Ayala Land, Inc. (ALI) – 7 March 2024 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>ALI<\/td><\/tr>
Company Name<\/strong><\/td>Ayala Land, Inc.<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>7 Mar 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 45.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We set our target price (TP) for ALI at Php45.00 based on our sum-of-the-parts (SOTP) valuation estimate of Php82.00\/share, but discounted with a conglomerate discount of 45%. Our Target Price offers a total potential return of 30%, including our forecast marginal dividend yield. ALI\u2019s share price barely changed year-to-date (YTD), underperforming the PSEi by 6%, which we think is unwarranted. We believe it deserves to trade higher and end 2024 with another full year of outperformance. BUY.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Funds raised from AREIT-related deals<\/h3>\n\n\n\n

ALI (through its subsidiary) recently raised Php1.19 billion cash from the infusion of a resort hotel called Seda Lio in Palawan into AREIT and Php5.6 billion from the block sale of 181 million AREIT shares, which it had to do in preparation for the infusion of Php21.8 billion worth of flagship assets (Ayala Gardens Tower 2, Greenbelt Wings 3 & 5, Holiday Inn and Suites, all in Makati, plus Seda Hotel in Cebu), owned by ALI and two subsidiaries, into AREIT via property-for-share swap.<\/p>\n\n\n\n

There is another asset (an industrial land) to be infused into AREIT by ACEN Corp.\u2019s subsidiary, also through a property-for-share swap agreement, which may prompt ALI to unload 79 million more of its AREIT shares for AREIT to comply with the minimum public float requirement of 33%. We expect ALI to create new value from reinvesting the proceeds. ALI will also raise Php50bn through debt, 50% of which is intended for capital expenditure (capex), while the balance is for refinancing. These fundraising activities will help meet ALI\u2019s 2024 capex budget of Php100 billion.<\/p>\n\n\n\n

Residential surprise<\/h3>\n\n\n\n

ALI reported a net income of Php24.5 billion for 2023, up 32% year-on-year (y\/y). Total real estate revenues grew by 18% to Php145.5 billion, led by residential, which expanded by 22% to Php77.2 billion and accounted for 53%. Shopping center\/mall leasing rose by 31% to Php21.1 billion, office increased by 6% to Php11.8 billion, while hotels & resorts grew by 42% to Php8.8 billion, contributing 14%, 8% and 6% to the total real estate revenues, respectively. <\/p>\n\n\n\n

Meanwhile, total expenses grew by 14% y\/y, slower than the 18% revenue growth. A closer look reveals the surprise spike in residential revenues in 4Q 2023 on healthy bookings and higher project completions and the unusual mall slowdown in the same final quarter (+11% y\/y vs 9M\u2019s +40% y\/y), which may only have to do with delayed rental billings.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>