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Stock Commentary

Ayala Land Q2 profit up 1,558%

Merkado Barkada
Ayala Land Q2 profit up 1,558%

Ayala Land [ALI 33.30 1.48%] recorded Q2/21 profit of P3.3 billion, up 1,558% from Q2/20 profit of P0.2 billion, and up 17% from Q1/21 profit of P2.8 billion.

The Ayala Corp [AC 750.00 1.19%] property development subsidiary (and AREIT [AREIT 36.40 unch] parent) saw its profit continue to climb through what it calls an “extremely challenging environment”. ALI noted the resilience of the demand for its residential developments, and revenues in this segment were driven by reservations (+45% y/y) and project completions. ALI’s commercial leasing segment was hit by the re-imposition of movement restrictions in Q2, however, and posted revenues that fell 26% y/y. Shopping center revenues were down 43% because of reduced operations and the discounts and payment holidays that were offered to tenants. 

AyalaLand Logistics [ALLHC 4.07 1.45%], a subsidiary of ALI, saw its quarterly net income grow 59% y/y (mostly on industrial lot sales);. ALI indicated that it had only spent P32.1 billion on capex in the first half of 2021, just 36.4% of the P88 billion that ALI set aside for capex for the full year.

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Continuing my trend of comparing a company’s Q2/21 to Q1/20, or 1H/21 to 1H/19, we see that ALI’s Q2 net income was down 35%, and that ALI’s 1H/21 net income of P6.0 billion was still down around 60% from 1H/19’s net income of P15.1 billion.

The headline numbers are comical because of how far ALI dropped during the initial onset of COVID last year, but once you get beyond those numbers it’s pretty stark to see that one of our country’s top development firms is still limping along at less than half of what it was making two years ago. To me, the H1/19 number is the real yardstick for measuring ALI’s overall recovery, as it pits whatever it’s done recently against the juggernaut in full stride.

There’s a long way to go. Things are improving, but they’re improving slowly. A new round of super-COVID and the associated lockdowns will definitely hurt ALI’s Q3 numbers and will probably bleed significantly into its Q4 numbers as well. The company was already behind on its spending of its capex budget before these new lockdowns, so the ability of ALI (and its mega-corp compatriots) to spend the entirety of its annual budget is put into question. This is not a good situation, but we (and ALI) are stuck between a rock and a hard place.

 

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AREIT AYALA CORP. AYALA LAND INC. AYALALAND LOGISTICS HOLDINGS CORP. PHILIPPINE STOCK EXCHANGE
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