Stock Commentary

Ayala Land FY23 profit up 32% to P24.5-B

Merkado Barkada
Ayala Land FY23 profit up 32% to P24.5-B

Ayala Land [ALI 34.90, up 2.8%] [link] teased its full-year financial performance in a press release where it revealed that its FY23 profitability increased 32% to P24.5 billion. ALI attributed the increase to “robust property demand and heightened consumer activity.” The 32% increase in profitability resulted from an 18% increase in consolidated revenues to P148.9 billion. ALI provided a brief segmented analysis, with revenue from property development up 14% to P92.3 billion, from leasing and hospitality up 25% to P41.7 billion, and its services (construction, property management, etc) up 56% to P6.6 billion.

MB bottom line: It’s a little weird for ALI to say that its financials were “fueled” by “robust property demand”, and then to drill down into the results and see that property development revenues were only up 14% and that residential reservations were only up 9%. The language they used to describe these increases was also more subdued. Instead of “robust demand” as the driver for the increase, they refer to “steady bookings” as the primary driver, followed by a “higher completion of residential projects”. More positively, it’s interesting to see that ALI’s best-performing sub-segment is actually hotel and resort revenues, which grew 42% y/y to P8.8 billion. Revenues from this sub-segment are still just around 10% of the size of its primary revenue source (property development), but if ALI can maintain the growth rates this year, that proportion will creep up to 12% of revenues and become the second-largest leasing and hospitality sub-segment behind shopping centers, displacing the office leasing sub-segment. Of course, ALI’s mall revenue is probably going to take a hit from all of the renovations that it is undertaking, so the actual FY24 results might be even more interesting for the hotel and resort sub-segment.



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