Ali Case Analysis
EXECUTIVE SUMMARY
Ayala Land Inc. is a leading real estate company offering properties for both residential and commercial customers. The company reported strong financial results based on their declarations in the past 5 years. In this case, the group took the point of view of a minority investor who would like to determine if he should sell, hold or buy more shares. The case was analyzed using three screens which consider both internal and external factors to the company: financial ratio analysis, industry news/trends and technical analysis of the share price. Based on these screens, the group concluded that this is a good time to BUY Ayala Land shares.
1. POINT OF VIEW Point of view of a minority investor
2. CASE CONTEXT Ayala Land, Inc. (“ALI”) is the largest and most diversified real estate company in the Philippines. Its main business includes residential development, shopping centers, offices and strategic landbank management. Other businesses include construction, property management, waterworks operations, and hotels. In 2010, the residential development accounted for the bulk of its recurring revenues at 62%, while shopping centers and office accounted for 13% and 7% respectively. [1]
As a result of ALI’s profitable operation in 2010, it achieved a net income of Php5.5 billion which is 35% higher than in 2009. ALI also raised the dividend payout ratio from 16% to 30% and increased total cash dividends paid to Php1.2 billion, from Php780 million in 2009.
Ayala Land Inc. is the leader when it comes to real estate development. Compared to other developers, Ayala Land Inc. has the most diverse projects to date; from High-end to Low-end, vertical and horizontal residential developments, commercial, office leasing and retail service.
3. PROBLEM Should I buy, hold or sell ALI shares at PhP17.98/share[2]?
4. FRAMEWORK The group used three screens to assess potential of ALI shares namely,
Ayala Land Inc. is a leading real estate company offering properties for both residential and commercial customers. The company reported strong financial results based on their declarations in the past 5 years. In this case, the group took the point of view of a minority investor who would like to determine if he should sell, hold or buy more shares. The case was analyzed using three screens which consider both internal and external factors to the company: financial ratio analysis, industry news/trends and technical analysis of the share price. Based on these screens, the group concluded that this is a good time to BUY Ayala Land shares.
1. POINT OF VIEW Point of view of a minority investor
2. CASE CONTEXT Ayala Land, Inc. (“ALI”) is the largest and most diversified real estate company in the Philippines. Its main business includes residential development, shopping centers, offices and strategic landbank management. Other businesses include construction, property management, waterworks operations, and hotels. In 2010, the residential development accounted for the bulk of its recurring revenues at 62%, while shopping centers and office accounted for 13% and 7% respectively. [1]
As a result of ALI’s profitable operation in 2010, it achieved a net income of Php5.5 billion which is 35% higher than in 2009. ALI also raised the dividend payout ratio from 16% to 30% and increased total cash dividends paid to Php1.2 billion, from Php780 million in 2009.
Ayala Land Inc. is the leader when it comes to real estate development. Compared to other developers, Ayala Land Inc. has the most diverse projects to date; from High-end to Low-end, vertical and horizontal residential developments, commercial, office leasing and retail service.
3. PROBLEM Should I buy, hold or sell ALI shares at PhP17.98/share[2]?
4. FRAMEWORK The group used three screens to assess potential of ALI shares namely,