JP Morgan is projecting a seismic shift in Philippine property stocks with former industry leader Ayala Land Inc. losing its premium valuation among peers.
“ALI’s premium valuation was anchored on profit growth consistency and outperformance relative to peers; this is no longer the case today,” said JP Morgan in a June 30 report which has been widely shared on social media.
After leading the industry in profit growth since 2009, JP Morgan expects ALI to place last among the Big Five property companies in the country in terms of net income growth.
ALI is the only Big Five property player to post negative growth in profits (minus four percent) from 2019 to 2024 after posting an industry-leading 23 percent average growth rate from 2009 to 2019.
Robinsons Land Corp. (RLC) led by bilyonaryo Frederick Go will have the highest profit growth rate through 2024 at seven percent, followed by SM Prime Holdings (SMPH) of the Sy family with five percent, Megaworld Corp. of ultra bilyonaryo Andrew Tan with two percent.
Filinvest Land Inc. of the Gotianun family is expected to have a zero growth average from 2019 to 2024.
JP Morgan said it preferred SMPH and RLC with their high, recurring income streams (leases) over ALI due to its high reliance on residential sales for growth.
It blamed ALI’s fall from grace to “murky growth outlook, elevated residential inventory and cancellations.”
JP Morgan reckoned it would take more than 21 months for ALI to sell its inventory of residential properties.
Profit margins are likely to erode further as ALI will unlikely be able to increase its average selling price and will be forced to give easy payment terms in view of the weak demand and high interest rates.
Based on its estimates, JP Morgan said SMPH now has the highest premium valuation among the Big Five (24 times price/earnings ratio for 2023) with ALI falling to second with a P/E of 17 (from a an average P/E of 27.8 from 2009 to 2019. RLC is third with a P/E ratio of 8.6 times in 2023 followed by FLI (4.3 times P/E) and MEG (4.2 times P/E).
“ALI’s premium valuation was anchored on profit growth consistency and outperformance relative to peers; this is no longer the case today,” said JP Morgan in a June 30 report which has been widely shared on social media.
After leading the industry in profit growth since 2009, JP Morgan expects ALI to place last among the Big Five property companies in the country in terms of net income growth.
ALI is the only Big Five property player to post negative growth in profits (minus four percent) from 2019 to 2024 after posting an industry-leading 23 percent average growth rate from 2009 to 2019.
Robinsons Land Corp. (RLC) led by bilyonaryo Frederick Go will have the highest profit growth rate through 2024 at seven percent, followed by SM Prime Holdings (SMPH) of the Sy family with five percent, Megaworld Corp. of ultra bilyonaryo Andrew Tan with two percent.
Filinvest Land Inc. of the Gotianun family is expected to have a zero growth average from 2019 to 2024.
JP Morgan said it preferred SMPH and RLC with their high, recurring income streams (leases) over ALI due to its high reliance on residential sales for growth.
It blamed ALI’s fall from grace to “murky growth outlook, elevated residential inventory and cancellations.”
JP Morgan reckoned it would take more than 21 months for ALI to sell its inventory of residential properties.
Profit margins are likely to erode further as ALI will unlikely be able to increase its average selling price and will be forced to give easy payment terms in view of the weak demand and high interest rates.
Based on its estimates, JP Morgan said SMPH now has the highest premium valuation among the Big Five (24 times price/earnings ratio for 2023) with ALI falling to second with a P/E of 17 (from a an average P/E of 27.8 from 2009 to 2019. RLC is third with a P/E ratio of 8.6 times in 2023 followed by FLI (4.3 times P/E) and MEG (4.2 times P/E).
SOURCE: Bilyonaryo
