Ayala Land Incorporated (ALI)’s net income for the first quarter of 2018 grew by 17% to P6.52B to which the company takes up a big chunk of Ayala Corporation (AC)’s capital expenditure (CAPEX). The investment now is paying back as it is able to lock in a higher profit and it’s only the start of the year. The company sees more demand and potential in the market that is why it is continually investing its property development sector.
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Given the investments by ALI, revenues generally increased by 17% to P36.98 billion. A breakdown of its earnings came from the different revenue growth from each segment. The biggest growth came from residential revenues which stood at 34% to P21.77 billion followed by property development revenue by 29% to P25.14 billion and last but not least, 11% from commercial leasing revenues. The said increase from commercial leasing is attributable to the newly opened malls, offices, hotels, and resorts.
ALI’s President and CEO Bernard Dy is positive that due to the sustained economic growth in the country, this likely means more demand will be created. The newly implemented tax reform law decreased the personal income tax of worker therefore increasing its disposable income that may be allocated for matters such as property investments. This will push and create a demand for residential products.
AC has already allocated funds for its upcoming projects. In fact, earlier this year, it has recently partnered with Eton to build a P53 billion township and it has just launched its 25th estate named Parklins. As for malls, ALI will open five shopping centres which are the following: One Bonifacio High Street, Ayala Malls Circuit Makati, Ayala Malls Capitol Central, The Shops at Ayala North Exchange and Ayala Malls Bay Area. It will also open three offices: Vertis North BPO Tower, Ayala North Exchange, and Capitol Central Corporate Center, and 782 new rooms under its Seda hotels chain and 72 new rooms in Sicogon Island Resort in Iloilo.
Ayala Corporation (AC) has spent over P720 billion in the last six years in its expansion projects and a big chunk of its CAPEX goes to ALI. The latter has set aside a total capital expenditure (CAPEX) of P111 billion for 2018 and the break down or allocation are as follows: 41% will be allocated for the completion of residential developments, 23% for equity investments, 22% for commercial leasing projects, 9% for land acquisition and lastly, 5% for the development of estates. At the end of the first quarter, ALI has already spent P26.7 billion of the P111 billion CAPEX. The company is still within its targeted spending. The CEO is positive that the company will continually grow especially when the projects will be executed further. The spending is bringing in the returns that the company has been expecting.
For position traders, the trend is still down. The bears are still control and a reversal is still not in sight. As of this point, we have no buy signal yet for position traders. It would be could to stay in the sidelines until we see a proper reversal happen. A possible peg for a reversal could be a successful breakout from 42.80. Until that happens the market still remains bearish.
For quick traders, the market started to consolidate since March 2018. The support is at 40 and the first resistance is at 42. So the trading range is a buy as close as you can to 40 and sell at 42. If 40 does not hold, sell and cut loss. If the stock breaks out of 42, it will now move up to challenge the very strong resistance at 42.80.