Business World Research’s Stock Picks for the Week: Ayala Land Inc.

August 18, 2008

Business World 4/28/2008

Ayala Land, Inc.
Recommendation: BUY

ANALYSTS PLACE a buy tag on Ayala Land, Inc. (ALI) shares on account of the property firm’s joint ventures with companies here and abroad.

“Considering the expansion and joint ventures of ALI, and knowing ALI, there will always be a positive outcome. [It] will not enter into any project where [it] won’t profit anything,” said Claire Quiray of Accord Capital Equities. “ALI is fundamentally good.”

Last April 22, Ayala Land and US conglomerate General Electric (GE) signed an agreement to jointly develop environmentfriendly homes in a 1,700-hectare property in Laguna.

Ayala Land said it will use energy-efficient GE products from lighting fixtures and water process technologies to advanced building designs and real-time energy management systems.

The two companies’ collaboration creates a new company called Mahindra Residential Development Ltd., which will be 51% owned by the Indian company, and 49% by its affiliate, Ayala Land said in its disclosure to the Philippine Stock Exchange.

This is the first project of Ayala Land in the Indian real estate market.

In a statement, company President and Chief Executive Jaime I. Ayala said Ayala Land is expected to post strong sales in the first quarter despite the market slowdown caused by the US subprime mortgage crisis. It posted P25.7 billion in total revenues last year, a flat growth of 0.58% compared to P25.6 billion in 2006.

Also, despite controversies that hounded the company in the past months, the real estate giant remains strong in its game.

“Even after the Glorietta blast, ALI’s shares didn’t decline, not until the dilution of its shares together with the subprime losses of mortgage,” Ms. Quiray said.

“Investors must look at the accounting of the losses of subprime and any indication of US’s recovery from the recession period it is [headed] into right now,” she added.

Ayala Land earlier said it is now refocusing its selling efforts in the US market, a major source of sales last year, to affordable housing from high-end property units in view of an expected drop in the spending power of USbased Filipinos.

Still, analysts recommend investors to take up blue chips, Ayala Land included, in a moderate and cautious manner.

Ayala Land stocks closed at P10.25 per share last Friday, a slide from Thursday’s close of P10.50, with 8.6 million shares changing hands.

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