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Wednesday, January 1, 2014

Stocks Analysis: Ayala Land, Inc. (ALI)

Company Profile

Ayala Land is the largest and most diversified real estate company in the Philippines. It was organized in 1988 when Ayala Corporation decided to spin off its real estate division into an independent subsidiary to enhance management focus on its real estate business. ALI went public in July 1991.

Its line of operations include:

Property Development
Residential Business - sale of high-end residential lots and units (including leisure community developments),
middle-income residential lots and units, affordable lots, units and house and lot packages, economic housing units and house and lot packages, and socialized housing packages; lease of residential units; marketing of residential developments.
Commercial Leasing
Shopping Centers - development of shopping centers and lease to third parties of retail space and land therein; operation of movie theaters, food courts, entertainment facilities and carparks in these shopping centers; management and operations of malls which are co-owned with partners.
Corporate Business - development and lease or sale of office buildings; sale of industrial lots and lease of factory buildings
Hotels and Resorts
Development, operation and management of branded and owner-operated hotels and eco-resorts; lease of land to hotel
Construction – land development and construction of ALI and third-party projects
Property management – facilities management of ALI and third-party projects; operation of water and sewage treatment facilities in some ALI projects

Income and Operations
In just 3 quarters for 2013, Ayala Land Inc. has already managed to exceed its total 2012 revenues, but posting only similar net income of 10.33B. Net income grew by 30% from same period last year. Administrative expenses declined by 7.3%. Gross profit margins decreased from 38.66% to 36.63% as of third quarter 2013. ALI attributed the decrease to development costs from newly acquired parcels in Nuvali. Direct expenses have increased by 8.56% after three quarters, due to development costs incurred in Arca South parcels.

Notes and Observations

- Land and Improvements and net Investment properties make up the increase in Noncurrent assets, higher by 16.6% and 12.6% respectively.

- Accounts and other payable increased by 13% mainly due to higher payable to suppliers and taxes.

- There were no major changes in cash flow from operating activities while there was 10B worth of additional short term investments. Around 15B worth of short-term debt were also paid.

- Ayala Land raised approxiamtely 1.97B from its homestarter bonds to finance various projects such as Park Terraces, Garden Towers, Parkpoint Residences, Ayala Westgrove heights, Luscara, Elaro and Santierra. About 650M of the fund is also used to acquire a 32% stake in ALI Property Partners Corp.

- In July 2013, the company raised 14.9B from bonds issuance to various projects such as Vertis North and Arca South, formerly FTI.

-On April 2013, ALI sold its 60% interest in Asian i-Office Properties to a company partially owned by Cebu Holdings, Inc., a subsidiary of ALI, to consolidate its BPO operations in Cebu.

-Profits from its residential development which make up for 49% of its revenues increased by 36%. Its Hotel and Resorts segment likewise increased by 38%.

-A cash dividend of .14348287 per share was declared last August.
-Capital expeditures as of three quarters amounted to 36.6N, about 56% of allocated budget of 65.7B.
Majority of expenses were related to residential projects development and land acquisitions.

-Expect leasing segment to generate higher profits in 4th quarter due to holiday spending.

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