BWorld 9/1/2008
Ayala Land, Inc.
Recommendation: BUY

Listed company Ayala Land, Inc. (ALI) remains a good investment considering its good earnings performance in the first half, analysts said.

"ALI is one of the most reliable land developers in the country," Claire Quiray, an Accord Capital Equities Corp. analyst, said.

Investors should monitor the movement of this stock, Ms. Quiray added, advising investors to buy ALI shares once they hit below P10.

For two consecutive days last week, ALI's share price closed at P10. It ended the week at P10.25 per share with a total of P127.294 million shares changing hands. Its highest price in the past 52 weeks was P17.75 per share.

Moreover, Ms. Quiray noted that compared with other developers, ALI's performance remains positive with its earnings potential remaining strong.

Early this month, the country's leading land developer reported that net profit expanded by 37% in the first half to P2.91 billion from P2.13 billion recorded last year.

In a disclosure to the Philippine Stock Exchange, ALI attributed growth to higher operating revenues, improved equity earnings from affiliates, higher interest and other income, and effective cost control measures.

First-half consolidated revenues of ALI amounted P15.38 billion, 32% more than the P11.63 billion it posted in the same period last year.

ALI said that growth in its residential and construction businesses pushed operating revenues up by 26% to P13.71 billion.

"Strategic land bank management, corporate business and Visayas-Mindanao operations also contributed to consolidated revenue growth," ALI said.

In addition, higher equity earnings from ALI's corporate investment vehicles like Bonifacio Global City, Cebu Holdings, Inc., and Alabang Commercial Corp. contributed to its net income growth.

However, ALI said its overall net operating income margin declined by three percentage points to 31%, as margins of its shopping center and property management businesses dropped due to the continued closure of high-margin Glorietta 2, the startup operations at Greenbelt 5 and lower car park volume with the ongoing Ayala Center redevelopment.

ALI has earmarked P24.3 billion this year, of which 42% would be spent on ongoing and new residential projects, 30% on business process outsourcing offices, and 14% on the redevelopment of the Ayala Center in the Makati business district and other malls.

Ms. Quiray advises investors to keep their eyes on financial stocks, especially banks, that consistently give good dividends despite the US subprime mortgage crisis.

"Though the subprime woes still have an impact on financial institutions, companies were able to handle the crisis," Ms. Quiray said.

"But I think the effects of the crisis has gone down significantly," she added.

All told, Ms. Quiray said investors should consider the sentiment of the market at this point.

"Investors should be familiar with the company they plan to invest in," she added.