Ayala Land is the largest and most diversified company in the real estate sector, with businesses in residential development, commercial leasing and other services. This report provides an analysis and evaluation of ALI’s financial, stock, and industry performance in order to arrive at a decision whether to hold or sell existing ALI shares, or buy new shares (based on closing price of Php17.98). This report is based on a long-term investment plan of at least 10 years.
Methods used for measuring financial performance include common size, horizontal/trending and financial ratio analyses. Ratios such as profitability, liquidity, and solvency over a 5-year period (2006-2010) were calculated. Net income was at its highest growth rate for 2010 at 34.33%, and revenues increased by 24.16%. ALI appears on track to meet its 2014 revenue targets and will remain profitable given its present performance.
Analysis for stock performance includes a study of stock price trends and valuation measures. Ratios such as market-to-book, earnings per share, price-to-earnings, and dividend yield were calculated. Key indicators were compared with ALI’s nearest competitors in the industry such as SM Development Corp, Robinsons Land Corp, and Megaworld corp. Results of data analyzed showed ratios were above industry averages. ALI stocks are expected to warrant premium because of its 1) commitment to 5-10-15 plan; 2) bold strategies in its current projects such as Alveo and Nuvali; and 3) its investments in hotels and resorts.
Lastly, opportunities and threats for the properties and real estate sector were identified to gauge the viability of investing in ALI stock. Some of these opportunities include growth of the middle class, affordability and availability of mortgage financing, and growth of tourism and BPO sectors. Threats include government regulations (e.g., increase in capital-gains tax) and force majeure.
This report finds...