AYALA Land Inc.  (ALI) is one of the stock market’s most reliable blue chips. Foreign funds invest on ALI shares and their continued acquisitions bring foreign ownership in the property company close to 40-percent constitutional limit. As of September 30, 2007, PCD Nominee Corp. held 5,198,479,846 common shares, or 39.8821 percent. With foreigners cornering ALI shares available in the open market, Filipino investors compete with them hoping to cash in on future dividends and market rally of the stock of the Philippines’ most profitable property company.

How was ALI as an investment? Not bad really. Otherwise, traders would have deserted it a long-time ago even before the controversial tinkering by the police in investigating the cause or causes of the blast that hit Glorietta 2 and killed 11 people and hurt several others. 

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It is unfortunate ALI is getting choked by inconclusive reports. The police are confusing the public when they arrived at their “initial conclusion” based on their “initial findings” which were based, in turn, on “initial evidence” gathered from the site of the blast. It is more unfortunate that the police “initially concluded” that the blast was “an accident waiting to happen” after ruling out in the beginning—a few minutes after the blast —that LPG was the cause of the deadly explosion.

Luckily, traders and investors do not rely on the police theories for investment decisions but on the stocks’ fundamentals. In the case of Ayala Land, they look forward to dividends. When the company started 2007 with the distribution of P0.03 dividend per common share, the future looked bright. It was not much but it gave the public investors something to hope for even if the biggest beneficiary of this kind of generosity is, of course, the majority stockholder. Ayala Corp., which is the listed holding company controlled by the Zobels, got P186,478,190.55 as owner of 6,215,939,685 common shares equivalent to 57.32 percent as of December 31, 2006. 

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In the last three years, ALI said in a filing with regulators it had distributed P5,725,516,000 cash dividend —P0.17, or a total of P1,842,817,000 in 2006; P0.30, or P3,236,521,000 in 2005; and P646.178 million in 2004.

After all these cash dividends, ALI still had unrestricted retained earnings of P19,973,445,000 as of end-2006 because of its consistent profitability. Based on audited financial reports, ALI registered net profits of P10,468,394,000 in the last three years —P3,865,602,000 in 2006; P3,616,673,000 in 2005; and P2,986,119,000 in 2004. As of June 30, 2007, the company had retained earnings of P25.536 billion including P6 billion it has appropriated for future expansion. To investors these numbers mean only one thing: Ayala Land makes money faster that it can disburse or spend it. 

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ALI has been publicly traded since July 5, 1991, the day it listed its shares on the now-defunct Manila Stock Exchange and Makati Stock Exchange. As of November 5, 2007, the web site of the Philippine Stock Exchange showed ALI has 13,007,198,468 outstanding common shares of which AC owns 6,939,009,512 shares, or 53.347 percent and 12,679,029,436 preferred shares, or 97.27 percent of outstanding preferred shares. The recent issuance of preferred shares was intended to open up more ALI common shares to foreigners whose ownership in a property company is limited to 40 percent under the Constitution. 

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ALI hit a high of P17.75 on October 8, 2007. A day before the Glorietta incident, ALI closed at P16.75 after peaking at P17. In eight sessions since October 19, when it ended trading at P17, until November 5, 2007,  when it closed unchanged at P15, it had lost P2 or 11.176 percent. Apparently, foreign selling is hurting ALI. On Monday, of its huge value turnover of P579,771,925, foreign selling accounted for P370,140,925, or 63.842 percent. In previous sessions, foreign selling amounted to P160,892,900 of P363,225,175 turnover on October 31; and P56,660,150 of P247,705,875 turnover on October 30.

On the other hand, foreign buying of ALI amounted to P16,638,375, or 6.820 percent of P243,977,600 turnover on October 26; P55,053,125, or 22.290 percent of P246,991,925 on October 25; P78,613,450, or 30.876 percent, of P254,609,575 on October 24; and P81,676,825, or 25.082 percent, of P325,639,475 on October 23. (www.duediligencer.com)

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