ALI stocks dip on headwinds, cautious outlook

By Matthew Miguel L. Castillo, Researcher

SHARES of Ayala Land, Inc. (ALI) declined last week as investors remained cautious amid sectoral headwinds and the company’s defensive shift, analysts said.

Data from the Philippine Stock Exchange (PSE) website showed that ALI was the sixth most actively traded stock for the week, with 58.33 million shares worth P910.33 million changing hands by Thursday.

Trading was cut short as the local bourse was closed on May 1 in observance of Labor Day.

ALI shares fell by 4.4% week on week to close at P15.10 from P15.80 previously, a steeper decline than the property sector’s 2.7% drop and the benchmark PSE index’s (PSEi) 1.8% dip.

Year to date, the stock has dropped by 32.7% from its P22.45 close on Dec. 29, underperforming the property sector’s 15.9% decline and the PSEi’s 3.6% fall.

Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., cited broad market sluggishness as a factor behind the stock’s decline.

“Currency and macroeconomic pressures played a substantial role in the stock’s decline,” he said, noting that the peso hit another record low of P61.75 against the US dollar last Thursday.

Timson Securities Equity Trader Juan Alfonso G. Teodoro said the weaker peso may have weighed on sentiment toward property stocks such as ALI, as it could lead to higher construction and financing costs.

“[A weaker currency] may signal broader economic weakness, making investors more cautious on property stocks like Ayala Land, which are sensitive to interest rates and overall economic conditions,” he said.

Mr. Arce also pointed to the ongoing conflict in the Middle East as a driver of inflation, particularly due to the Philippines’ reliance on imported fuel passing through the Strait of Hormuz.

He added that foreign investors have been “net sellers” of Philippine equities since the conflict began, with reversals seen in the financial and real estate sectors.

At its annual stockholders’ meeting on April 23, ALI Chairman Jaime Augusto Zobel de Ayala said the company would lean more on its leasing business rather than capital spending this year.

He described the Middle East conflict as a “significant disruptor” to the property and development industry, adding that the move aims to preserve liquidity and maintain flexibility.

Mr. Teodoro said the market had mixed reactions to the shift, noting that while some investors viewed it as a strategy for stability, others saw it as a sign of slower near-term growth.

Last Thursday, ALI said it would cut its capital expenditure to P50 billion this year from the initially planned P70 billion to P80 billion, citing current market conditions.

The announcement coincided with the company’s first-quarter earnings release, where it reported a 14% year-on-year decline in revenues to P37.5 billion from P43.6 billion in the same period last year.

Mr. Arce said the tempered capital spending may have raised concerns about the company’s near-term growth prospects and its ability to navigate the challenging operating environment.

He added that investors would be watching how the company balances capital discipline with growth, noting its target to open 200,000 square meters (sq.m.) of gross leasable area for retail and 70,000 sq.m. of office space.

Meanwhile, Mr. Teodoro said he expects continued caution in the near term as property demand remains subdued and interest rates stay elevated.

He placed support at P15 to P14.50 and resistance at P15.80 to P16.65.

Mr. Arce, for his part, sees support at P15.40 to P14.20 and resistance between P16.48 and P17.48.

“A breakout above this range could trigger renewed buying interest, while failure to hold support may lead to further consolidation,” he said.