ALI all in

Stock traders are lamenting the market’s over-reaction to Ayala Land Inc. (ALI) shares which had weakened by year’s end despite the company’s strong fundamentals.

The earnings growth of the company is estimated at 16 percent from a year ago but its share price ended the period 24 percent lower year-on-year.

RCBC Securities, a brokerage unit of Unibank, said ALI has underperformed the market index by 25 percent.

The weakness was blamed on the uncertain timing of interest rate cuts in the early part of the year and the victory of Donald Trump in the November US presidential election that spiked fears of protectionist policies.

“Those seem to be the main reasons for the sell-offs that we believe were exaggerated,” according to RCBC Securities.

It said that investors should focus on ALI’s strong earnings, flexible strategies, and competitive position in the property development space, all rooted in brand equity and should be magnified under a declining interest rate environment.

“We are not worried about the decline in the residential real estate price index as ALI’s prospective property buyers are not sensitive to banks’ appraised values (for mortgage purposes) in our observation,” the brokerage outfit indicated.

ALI’s 9-month (9M) 2024 net income reached P21.2 billion, 15 percent higher than a year ago.

Consolidated revenues grew 27 percent year-on-year to P125.2 billion, driven by the residential segment on higher bookings.

Residential reservation sales climbed 17 percent year-on-year to P100.5 billion.

Net income may have grown by 16 percent in 2024 from a year ago, and for 2025 we forecast another 15 percent year-on-year broad-based growth.