ALI sets record high P88B capex, to launch P100B products
Property giant Ayala Land Inc. plans to bring to the local property market about P100 billion in fresh property inventory this year, marking a 64-increase from the previous year, following a banner performance last year.
“Overall, we feel good about 2016 and we’re optimistic about 2017,” ALI president Bernard Vincent Dy said in a press briefing on Wednesday.
“The property market will continue to be be buoyant,” Dy said, adding that while interest rates may rise this year, a gradual increase won’t curb demand for property.
Last year, ALI sold more property assets than the new inventory rolled out to the market. Gross sales amounted to P108 billion from the sale of 19,000 units. This brought down inventory age from 18 months to 10 months which Dy said was “a bit on the low side.”
As such, ALI’s new property launches worth P100 billion planned this year will mark a big increase from the P61 billion launches last year. Over 90 percent of the new launches will consist of residential products, reflecting ALI’s optimism on this segment which closely tracks macroeconomic cycles.
ALI plans to launch 18,000 residential units this year, more than double the 7,300 units it launched last year.
After four straight years of decline, property developers in Metro Manila sold more residential condominium units to homebuyers ahead of completion in 2016 even as they curbed pre-selling inventory to the property market, property consulting firm Colliers Philippines said. Property developers sold a total of 38,800 residential units in Metro Manila via pre-selling last year, about 25 percent higher than the volume sold in 2015. The volume of new residential launches, however, eased by 12 percent last year to 23,000, reflecting caution among property developers.
ALI’s capital spending budget this year also reflects ALI’s sustained optimism on the residential property market. The company has earmarked P88 billion which marks another record investment program for the company after spending P85 billion last year, Dy said.
The biggest outlay this year will be for the residential property business, with a budget of P40.7 billion or 47 percent of total, ALI chief finance officer (CFO) Jaime Ysmael said. Budget for mall development was set at P11.8 billion while P10.6 billion was set aside for acquisitions. Office developments will get P9.2 billion while estate developments will get P5.5 billion. Some P4.8 billion will be earmarked for hotel and resort development while P4.9 billion will be set aside for other investments.
The capital expenditures (capex) this year will be funded mostly by internally generated cash. If ALI chooses to tap the bond market, it still has leeway to raise P25 billion using its bond shelf registration but the company is evaluating other financing sources such as issuance of corporate notes, said ALI deputy CFO Augusto Bengzon.
“We’ll have higher capex but less debt on account of internally generated cash,” he said.
Meanwhile, Dy explained that ALI remained committed to achieve the company’s “Vision 2020.”
“Back in 2013, we ended with P11.7 billion in net income. We had said we’ll grow that to P40 billion by 2020. At that time, that implied a 20 percent year-on-year compounded annual growth rate,” Dy said. Taking into account ALI’s compounded growth rate since then, Dy said it would only have to grow henceforth by at least 18 percent to reach the P40-billion profit goal.
Last year’s growth in net profit of 19 percent to P20.9 billion was seen in line with this “Vision 2020.”
