Ayala Land earmarks P25B for stock buyback plan

Property giant Ayala Land Inc. (ALI) has strengthened its market arsenal with P25 billion in new budget for a stock buyback program.

This is the largest budget set by a local company for stock repurchases that market pundits could remember in recent history.

The P25-billion additional budget was approved by the company’s directors. It brought ALI’s total war chest to P26.1 billion, the company disclosed to the Philippine Stock Exchange on Friday.

Companies with sufficient earnings embark on share buyback programs when they deem that their shares are undervalued by the market.

In the case of ALI, the company’s leasing deal with the University of the Philippines for the Technohub property in Quezon City has recently come under scrutiny. Chief presidential legal counsel and presidential spokesperson Salvador Panelo recommended a contract review, alleging very low rental rate being paid to the premier state university.

Another overhang comes from the uncertainty on whe­ther ALI could meet its goal of hitting P40 billion in net profit this 2020 as stated in its “Vision 2020” five years ago.

ALI recently reported that 2019 net profit had gone up by 13 percent to P33.2 billion on higher earnings from lot sales and new leasing formats alongside steady residential development revenues. This means that ALI will have to grow its net profit by at least 20 percent this year to hit the P40 billion profit target, which many analysts now acknowledge could be difficult.

One veteran stock broker said ALI might be bracing for rough times in the stock market.

Meanwhile, ALI’s board also approved a fresh P10-billion fundraising through the issuance of retail bonds, to partially finance general corporate requirements and to refinance maturing loans. This is under the company’s current shelf registration program and will be lis­ted on the Philippine Dealing and Exchange Corp.