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报告摘要

Ayala Land (ALI PM) Summary

Core Content

Ayala Land Inc (ALI) has demonstrated robust performance in 1H14, with a 25.4% year-over-year (YoY) increase in net profit to PHP7.1b, contributing to 47% of the FY14 forecasted net profit. The company's share price is at PHP31.05, with a target price of PHP40.30, reflecting a 30% upside. ALI's market capitalization is PHP440.5B, and the average daily trading volume is USD8M.

Main Points

1. Strong Earnings and Revenue Growth

ALI's 1H14 net profit reached PHP7.1b, with a YoY growth of 25.4%.
The company's sales take-up reached an all-time high of PHP27.3b in 2Q14, up 11% YoY and 28% quarter-over-quarter (QoQ).
Revenue in 1H14 amounted to PHP46.198b, representing a 26.1% YoY increase.
The company is expected to maintain strong performance throughout the year, with a projected revenue of PHP85.374b for FY14.

2. Segment Performance

Property Development: Revenues surged 30.5% YoY to PHP31.08b in 1H14, driven by improved sales take-up, completed residential projects, and higher office sales.
Commercial Segment: Shopping center revenues increased by 9.6% YoY to PHP5.52b, attributed to higher same-store rental growth, occupancy, and new GLA additions.
Office Segment: Office revenues rose 31.3% YoY to PHP2.1b due to increased lease rates and new buildings.
Hotels and Resorts: Revenues grew 47.7% YoY to PHP2.74b, thanks to better occupancy, higher room rates, and expanded room count.
Services Segment: Grew 38.8% YoY to PHP14.574b, led by the construction business.

3. Margin and Profitability

ALI's consolidated EBIT margin slightly improved to 30% in 1H14 from 29% in 1H13.
Gross margins for horizontal residential projects narrowed by 200bps to 40%, while vertical projects maintained 34%.
Office EBITDA margins improved by 300bps to 83%, and hotel EBITDA margins surged by 11pps to 29% due to new hotel openings.
The company's net dividend yield increased to 1.2% in FY14, and core net profit growth was 28.8% for the year.

4. Valuation Metrics

The target price of PHP40.30 reflects a 30% upside from the current share price.
The core P/E ratio is at 28.7 for FY14, while the P/BV ratio is 3.7.
The EV/EBITDA ratio is 20.8 for FY14, showing a declining trend from previous years.
Net debt/equity is at 33.4% for FY14, indicating a more balanced capital structure.

5. NAV Update

The updated net asset value (NAV) estimate using DCF assumptions shows a value of PHP634,471m, or PHP44.80 per share.
The target price of PHP40.30 is below the NAV, suggesting potential undervaluation.

Key Information

ALI's revenue is expected to grow from PHP49,904m in FY12A to PHP115,921m in FY16E.
The company's EBITDA is projected to increase from PHP14,111m in FY12A to PHP30,392m in FY16E.
Core net profit is forecasted to grow from PHP9,038m in FY12A to PHP20,008m in FY16E.
ALI's core EPS is expected to increase from PHP0.68 in FY12A to PHP1.43 in FY16E.
Free cash flow (FCF) yield is projected to increase from 0.7% in FY12A to 5.9% in FY16E.

Outlook

ALI's strong operating performance across all segments is expected to continue into the rest of 2014.
The company is anticipated to reveal its next medium-term strategy later in the year, likely emphasizing a 50:50 split between residential and recurring income.
The company's strong fundamentals and growth in key segments support the "BUY" rating, with a target price of PHP40.30.

Research Team

Philippines: Luz Lorenzo, Rommel Rodrigo, Lovell Sarreal
Malaysia: Wong Chew Hann, Ong Seng Yeow, Desmond Ch'ng
Singapore: Ng Wee Siang, Gregory Yap, Jesada Techahusdin
Thailand: Maria Lapid, Kittisorn Pruithipat, Sittichai Duangrattanachaya
Vietnam: LE Hong Lien, Thai Quang Trung, Le Nguyen Nhat Chuyen
India: Jigar Shah, Anubhav Gupta, Urmil Shah
Hong Kong/China: Howard Wong, Alexander Latzer, Jacqueline Ko

Appendices

Terms for Provision of Report: The report is for general information and should not be considered as an offer to sell.
Disclaimers: Maybank and its affiliates disclaim any liability for the content of the report.

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