Ayala Corp.

AYALA CORP. was the most actively traded stock in the exchange last week on account of the results of the country’s fourth-quarter economic performance and the spillover effects from Mitsubishi Corp.’s block sale a week prior.
Data from the Philippine Stock Exchange showed a total of P2.832 billion worth of 3.098 million shares having exchanged hands on the trading floor from Jan. 21-25.
Shares in Ayala closed at P921.5 apiece on Friday, up 0.99% from the previous day and down 1.9% on a week-on-week basis. For the year, Ayala’s shares were up 1.7%.
“What made [Ayala] one of the most actively traded recently is the share sale made by Mitsubishi after the latter sold around 13 million shares at P900 apiece. So, market participants are probably repositioning or rebalancing their holdings after the event and they’re probably assessing the growth prospects and expansion plans of the firm… [T]hat’s why we’re seeing large volume of shares being exchanged in the market,” said Jervin S. de Celis, trader at Timson Securities, Inc.
Rachelle C. Cruz, research analyst at AP Securities, Inc. said the Mitsubishi sale was a negative for the stock in the short term. “When a placement like this happens, expect consolidation. It was an overhang from the placement made by Mitsubishi,” she said.
On Jan. 16, Mitsubishi cut its stake in Ayala Corp. as part of its portfolio rebalancing. The transaction weighed down the market that day, with Ayala having a 6.4% weight on the benchmark Philippine Stock Exchange index.
Meanwhile, Ayala bounced back later in the week, which analysts attributed to foreign buying.
Ms. Cruz said Ayala benefitted from the fourth-quarter gross domestic product (GDP) growth reading that came out last Thursday, noting it “is one of the companies representing the Philippine economy. If the economy does well, expect more foreign inflow.”
“The country’s GDP did not disappoint. Although it remained below consensus, it is better compared to what’s happening outside the country,” she added.
The Philippine economy expanded by 6.1% in the fourth quarter, which is slower than expectations. This brought full-year 2018 GDP growth at 6.2%, falling short of the downward-revised 6.5%-6.9% growth target of the government for the year.
“We don’t often see big dips among blue chip stocks, so I think people took it as a chance to buy at lower price,” Mr. de Celis said, noting P880-P900 per share remains as the “support area” for Ayala, with P940 per share as the stock’s short-term resistance.
For this week, Ms. Cruz placed the stock’s support and resistance at P905 per share and P945 per share, respectively.
The conglomerate’s net income attributable to owners of the parent went up by 3% to P23.86 billion during the first nine months of 2018, from P23.24 billion in the same period a year ago supported by strong earnings growth of its real estate, telecommunications, and power segments. It, however, posted higher interest expenses at the parent level on account of increased borrowing to finance its capital spending.
Mr. de Celis noted Ayala has been “consistently profitable” for the past five years, with the company projected to book P279 billion in revenue. “If the odds go in favor of the firm, Ayala can rake as much as P310 billion worth of revenue by the end of 2019,” he said.
He also noted that Ayala will continue to benefit from its main revenue contributor Ayala Land, Inc., followed by its electronic business Integrated Micro-Electronics, Inc. (IMI) through AC Industrial Technology Holdings, Inc.
“I think Ayala Land is well positioned in this area because the demand for office spaces is still strong while housing sales is getting a boost from Chinese investors. In its electronics business (IMI), it can benefit from lower peso, [which is] projected to weaken this year,” Mr. de Celis said. — Carmina Angelica V. Olano