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ACCORD CAPITAL EQUITIES CORPORATION

COMPANY REPORT: Ayala Land, Inc. (ALI)


Outlook: NEUTRAL / Long-Term BUY

PRICE (trade date) Price Range (52-wk) PHP PE Ratio (TTM) Dividend Payout (3 yr average) Outstanding Shares % Free Float

Php16.70 (10/29/2010) 9.90 – 18.70 46.46x 17.69% 13,023.36M 46.00%

COMPANY PROFILE:
The Ayala Group's property arm engaged in strategic landbank management, residential development, shopping centers, corporate and geographic businesses. It
sources bulk of its revenue from real estate sales, rentals and construction contracts (86.34% - 3 yr average) and hotel operations (4.35% average.) Ayala Corporation,
its parent, holds 53.21% of the firm's issued and outstanding capital stock. The Company continues to pursue major high-end land development projects, residential
and office condominium development, liesure community projects and shopping center operations.

OVERVIEW:
THE firm's liquidity position has consistently improved over the last three years
through the first semester of the current year. The figures, however, do not
present a potential asset play. At the very least, there is not a iota of doubt this
company is not one to go down the drain even in times of economic turbulence.
Leverage has been kept at fairly stable levels, with Debt Ratio rising to no more
than 32%, during the crisis year of 2008. It's debt obligations are well-covered
with pre-tax incomes averaging over 5x its scheduled interest payments. It thus
remains a good credit risk for lenders, increasing the firms' flexibility in fund
sourcing.

Its asset utilization levels and leverage is on even keel with another firm with
similar business segments and principal revenue sources, even as it has trended
downward over the last three years to 2009. As of June 2010, the competitor's
ROE is twice that of ALI's as it is able to achieve a wider margin on the translation
of its revenue-to-profits. As a result, ALI trades at a higher PE of 46.32x vs. the
other firm's 13.43x based on annualized 2010 earnings.

Quarter-on-quarter earnings have been on the rise over the last five (5) quarters
to Q2 2010 at a compounded rate of 7.7%. Assuming it continues on this pace, we
may see a full year growth of 35% in net income, translating to an EPS of php0.41
vs. 2009's php0.35. Given an average year-end trailing PE range of 25x to 48x,
ALI's price could be anywhere between the php10.25 to php19.68 range. PER SHARE DATA
2010 (1h) 2009 2008 2007
The firm has also been generous with sharing the wealth with its shareholders,
consistently distributing dividends representing 16% to 19% of current year net BOOK VALUE 4.730 4.550 4.260 3.240
incomes. For the first semester alone, with its bottomline growing 34.3%, the
Company has already declared and paid out cash dividends totaling php586.05M EARNINGS 0.1900 0.3100 0.3700 0.3300
or php0.045 per share. Dividend Payout 13.36% 19.31% 16.20% 17.83%

Real estate sales and services remains its principal revenue driver even as PE (based on 60.3x 34.4x 45.4x 64.2x
contributions from rental income has steadily climbed from 26% in 2007 to 27% trailing year EPS)
31.9x 15.4x 15.4x 43.3x
last year.

INCOME DATA ( in millions PHP)

Year Ended Revenues/ Sales EBIT Net Income NPM %

2010 (1h) 18,447.000 3,748.000 2,512.000 13.62%

2009 30,455.244 5,845.938 4,039.256 13.26%

2008 33,743.983 7,447.957 4,812.348 14.26%

2007 25,707.229 6,053.136 4,386.362 17.06%

BALANCE SHEET DATA ( in millions PHP)

Year Ended Current Ratio Quick Ratio Debt Ratio Basic Earning Power ROA ROE

2010 (1h) 1.960 1.290 0.170 3.25% 2.18% 4.07%

2009 1.950 1.400 0.170 5.41% 3.74% 6.82%

2008 1.880 1.340 0.320 7.40% 4.78% 8.72%

2007 1.650 1.230 0.120 7.29% 5.29% 10.27%

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR
MADE AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY
SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE
AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD
CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.
ACCORD CAPITAL EQUITIES CORPORATION
COMPANY REPORT: Ayala Land, Inc. (ALI)
Outlook: NEUTRAL / Long-Term BUY

Technical Considerations:

ALI's weekly price advance since mid-March this year, interrupted by two-to-three week periods of declines, appear to have hit a top at php18.70 seven weeks ago. The
most recent attempt to sustain the php18.00 level fizzled out at php18.44. It has slumped over the last three weeks, closing Friday's trades at php16.70. The market
may have began to run out of reasons to push the price higher over the near term. A tepid 3.8% run up in the March-to-June period reflected investors' rather cautious
view of Q1 results. The outlook turned optimistic however when Q1 reported a 31.97% increase in the bottom line. This spilled over to trades in the third quarter,
reflecting in a price run up to php17.26, or a 27% uptick. This time, the fundamentals matched expectations reporting a 36.41% year-on-year Q2 2010 net income
growth, pushing the first semester performance at 34.26% up over the same period in the preceding year. Part of the advance was also impelled by excitement over
anticipations of REIT listings, originally planned for December. ALI, among other listed-property developers have indicated its interest in forming a REIT corporation to
take advantage of the innovative investment product's features, which benefit both issuers and investors.

The charts are pointing to a SELL over the near term. Price has broken under a second uptrend line and the failure to at least match a previous high (php18.70) in a rally
off a reaction low (php17.00), plus a fall below such low on the ensuing drop may have sapped optimism borrowed off the techncial front. STO (10,3) provided
chartists a confirmation signal when it fell below the 80-overbought line for a second time, dragging it further to 64.96 at last week's close. MACD (12,26,9) on the
other hand, adds another reason to stay off the issue after it broke under the signal line last week as the spread narrows and threatens to go under. The strength and
the momentum of the decline is magnified by trading volumes at or above 10-day moving averages.

Initial support is found at the php15.80 price level, coinciding with the first Fibonacci retracement line (-38.2%) with the major support at php13.50. Resistance is
pegged at the php18.40-18.70 range.

Summary:

ALI will be among the first to report on its Q3 financial and operating results. An analysts' briefing is scheduled for Tuesday, November 9 th for this purpose. If the
extrapolations based on the figures above are close to accurate, the Company will be able to sustain the five quarterly growths it has registered through Q2 of the
current year. However, even such projected bottomline growth of 35% year-on-year may have minimal impact on the medium-term price range. As was mentioned on
top, a sustained growth pace of 7.7% quarter-on-quarter will only bring estimated full year EPS to php0.41. The upper end of its 3-year PE average translates to a
maximum share price of php19.68, nearly a peso more than its most recent high of php18.70. Thus, from a fundamental valuation standpoint, it will take an above
average (or expected) Q3 and Q4 performance to justify a sustained push towards and past the php20.00-line – at least for the balance of the year.

Nevertheless, the long-term prospects of the Company, given the various development projects it has launched either on its own or in a joint venture with other
developers, remains bright. Among these are the Avida Towers Cebu, the release for sale is seen this year, the Lerato in the Makati CBD North [expected to be
completed in 2015], the 2.3 has. PNB property in Mandaluyong [development work starts next year] and its partnership with Lucio Tan-owned ETON over a 4-hectare
parcel of land in Calamba, Laguna. This will eventually parlay the issue into a potentially strong asset and growth play. Its regular dividend payouts should compensate
long-term investors even as potentials for short-term capital gains are limited by the considerations mentioned on top.

DISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR
MADE AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY
SECURITY. WHILE THE INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR COMPLETE
AND IT SHOULD NOT BE RELIED UPON AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY
INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD
CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.