About the Company

Ayala Land Inc (ALI) is a real estate company that is based in the Philippines. ALI was organized in 1988 as an independent subsidiary of Ayala Corporation. The company started its initial public offering in July 1991 in which its Class B common shares were listed in Manila and Makati Stock Exchanges. The Securities and Exchange Commission approved the declassification of the company’s Common Class A and Common Class B shares into common shares on September 12, 1997.

The company is servicing residential developments, shopping centers, hotels and resorts, offices, construction, property management and strategic investment. 

 

Ayala Land Inc (ALI) Extended Graph Analysis

 

1. ALI CASH FLOWS

	2014	2015	2016	2017	2018	2019
Operating Cash Flow	36,010,000,000	20,182,000,000	33,040,000,000	25,700,000,000	11,768,000,000	-15,886,000,000
Net cash used for investing activities	-5,151,000,000	-4,889,000,000	-5,781,000,000	-3,537,000,000	-298,000,000	1,262,000,000
Net cash provided by (used for) financing activities	1,621,000,000	1,912,000,000	2,658,000,000	980,000,000	-626,000,000	524,000,000
Capital expenditure	-3,251,000,000	-6,839,000,000	-3,722,000,000	-2,326,000,000	-2,843,000,000	-3,220,000,000
Free cash flow	32,759,000,000	13,342,000,000	29,318,000,000	23,374,000,000	8,925,000,000	-19,105,870,000
Working Capital	30,188,000,000	20,071,000,000	22,809,000,000	33,938,000,000	62,045,000,000	62,045,000,000

Facts:

• Operating cash flow was -PhP15.886 billion in 2019 trailing twelve months.
• Net cash used for investing activities was PhP1.262 billion in 2019 trailing twelve months.
• Net cash provided by (used for) financing activities was PhP524 million in 2019 trailing twelve months.
• Capital expenditure was -PhP3.220 billion in 2019 trailing twelve months.
• Free cash flow was -PhP19.106 billion in 2019 trailing twelve months.
• Working capital was PhP 62.045 billion in 2019 trailing twelve months.

Explanation:

• Operating cash flow was negative due to other working capital which is accounts and notes receivable trade in significant amount.
• Net cash provided by investing activities were investment in property, plant and equipment and purchases of investments.
• Net cash provided by (used for) financing activities were debt issued and repayment, dividends paid.
• Capital expenditure was investment in property, plant and equipment.
• Free cash flows were erratic in movement in the last five years and it has a negative FCF due to negative operating cash flows in 2019 trailing twelve months.
• Working capital has a growth of 106 percent in five years, although the movement was erratic.

Interpretation

The company has a positive cash flows except in 2019 trailing twelve months were it suffered negative due to changes in working capital which affected the free cash flow.

 

2. ALI BALANCE SHEET

	2014	2015	2016	2017	2018	2019
Cash and cash equivalent	28,677,282,000	19,087,390,000	20,904,330,000	20,998,089,000	23,996,570,000	23,996,570,000
Total current assets	165,630,000,000	166,200,000,000	211,010,000,000	218,560,000,000	302,830,000,000	302,830,000,000
Total non-current assets	223,310,000,000	276,140,000,000	325,420,000,000	355,430,000,000	365,990,000,000	365,990,000,000
Total assets	388,944,463,000	442,341,800,000	536,432,995,000	573,992,334,000	668,820,482,000	668,820,482,000
Short-term debt	21,369,215,000	19,293,910,000	29,431,461,000	24,217,125,000	37,651,890,000	37,651,890,000
Total current liabilities	135,450,000,000	146,132,855,000	188,203,171,000	184,623,237,000	240,784,527,000	240,784,527,000
Long-term debt	103,296,454,000	111,702,201,000	130,369,877,000	150,168,631,000	149,446,949,000	149,446,949,000
Total liabilities	266,949,005,000	292,516,389,000	363,749,808,000	381,728,976,000	448,599,285,000	448,599,285,000
Retained Earnings	66,478,250,000	77,951,761,000	91,798,555,000	109,976,450,000	132,090,020,000	132,090,020,000
Total stockholders’ equity	121,995,458,000	149,825,411,000	172,683,187,000	192,263,358,000	220,221,197,000	220,221,197,000

Facts:

• Cash and cash equivalent was PhP23.997 billion in 2018, 2019 trailing twelve months.
• Current assets were PhP 303.830 billion in 2018, 2019 trailing twelve months.
• Non-current assets were PhP365.990 billion in 2018, 2019 trailing twelve months.
• Total assets were PhP668.820 billion in 2018, 2019 trailing twelve months.
• Short-term debt was PhP 37.652 billion in 2018, 2019 trailing twelve months.
• Current liabilities were PhP240.785 billion in 2018, 2019 trailing twelve months.
• Long-term debt was PhP149.447 billion in 2018, 2019 trailing twelve months.
• Total liabilities were PhP448.599 billion in 2018, 2019 trailing twelve months.
• Retained earnings were PhP132.090 billion in 2018, 2019 trailing twelve months.
• Total stockholders equity was PhP 220.221 billion in 2018, 2019 trailing twelve months.

Explanation:

• Current assets has grown 83 percent in five years.
• Non-current assets has grown  64 percent in five years.
• Total assets has a growth of 72 percent in five years.
• Short-term debt represents 8 percent of the total liabilities.
• Current liabilities represents 50.01 percent of the total liabilities.
• Non-current liabilities represents 49.99 percent of the total liabilities.
• Long-term debt represents 31 percent of the total liabilities.
• Total liabilities represents 72 percent of the total liabilities and equity.
• Retained earnings grows 99 percent in five years.
• Retained earnings represents 60 percent of the total equity.
• Stockholders equity represents 33 percent of the total liabilities and equity.
• Equity has a growth of 81 percent in five years.

Interpretation

The company’s total assets and equity were increasing year-over-year in the last five years. Moreover, the retained earnings were increasing too year-over-year at an average rate of 15 percent. 

 

3.  ALI FINANCIAL RATIOS

	2014	2015	2016	2017	2018	2019
Asset Turnover (avg)	0.25	0.24	0.24	0.25	0.26	0.26
Return on Asset (ROA) %	4.14	4.24	4.27	4.55	4.70	4.78
Return on Equity (ROE) %	14.51	14.65	14.86	16.12	16.61	16.97
Financial Leverage (avg)	3.64	3.31	3.63	3.47	3.60	3.50
Return on Invested Capital %	7.00	7.18	7.63	9.44	9.84	9.59
Interest Coverage	5.59	5.45	5.70	5.91	6.06	5.83
Net Margin %	16.63	17.51	17.76	18.22	17.90	18.58
Earnings per Share PhP	1.05	1.20	1.43	1.71	1.98	2.08
Dividends PhP	0.41	0.41	0.47	0.48	0.50	0.51

Facts:

• Asset turnover was averaging 0.26 in 2019 trailing twelve months.
• Return on assets was 4.78 percent in 2019 trailing twelve months.
• Return on equity was 16.97 percent in 2019 trailing twelve months.
• Financial leverage was averaging 3.50 in 2019 trailing twelve months.
• Return on invested capital was 9.59 percent in 2019 trailing twelve months.
• Interest coverage was 5.83 in 2019 trailing twelve months.
• Net margin was 18.58 percent in 2019 trailing twelve months.
• Earnings per share was PhP2.08 in 2019 trailing twelve months.
• Dividends was PhP0.51 in 2019 trailing twelve months.

Explanation:

• Asset turnover indicates that for every Peso in asset, the company generates only 26 centavos of sales, which is not very efficient.
• Return on assets indicates that every Peso invested in asset, it generates PhP 0.47 of net income.
• Return on equity indicates that for every Peso invested in equity, it generates PhP 0.16 centavos in profit.
• Financial leverage indicates that for every Peso in equity, the company had 3.50 pesos in total assets. In other terms, the other 2 pesos and 50 centavos was borrowed. The ratio of 4 or more tells us that the company starts to be at risk.
• Return on invested capital tells us that for every Php 1 invested in capital the company yielded a PhP 0.096 return.
• Interest coverage indicates that the company is earning enough for payment of its  current interest and some extra earnings left to pay for principal.
• Net margin was averaging 17.77 percent of sales in the last five years. This is the percent of income produced after deducting all expenses including interest and taxes from sales.
• Earnings per share means that each shareholder will receive PhP 2.08 for each share of stock if the company distributed income..
• The company’s dividends was stable in the last five years at average 0.46. 
• The dividend declared in 2019 trailing twelve months was PhP 0.51, meaning each shareholder will receive the same amount for each share invested in the company’s equity as their reward.

Interpretation

The company has a good financial ratios except for asset turnover which is not very efficient. Moreover, financial leverage tells us that the company can be at risk. The management has maintained a record of making regular dividend payments to its shareholders. 

 

4. ALI INCOME AND MARKET

	2014	2015	2016	2017	2018	2019
Revenue	89,027,534,000	100,660,792,000	117,700,488,000	138,507,775,000	162,996,894,000	165,752,894,000
Operating Income	24,048,387,000	29,214,954,000	34,245,707,000	43,714,104,000	53,070,919,000	55,178,919,000
Net Income	14,802,642,000	17,630,275,000	20,908,011,000	25,304,965,000	29,240,880,000	30,859,709,000
EBITDA	34,042,375,000	39,052,117,000	45,490,190,000	50,900,886,000	60,447,416,000	64,033,416,000
Market Capitalization	478,219,000,000	506,265,000,000	470,806,000,000	656,733,000,000	598,236,000,000	728,644,000,000
Intrinsic Value	782,224,821,480	788,087,616,944	669,674,546,995	1,194,071,123,075	1,195,333,380,218	1,436,283,382,660

Facts:

• Revenue was PhP 165.753 billion in 2019 trailing twelve months.
• Operating income was PhP 55.179 billion in 2019 trailing twelve months.
• Net income was PhP 30.860 billion in 2019 trailing twelve months.
• EBITDA was PhP 64.033 in 2019 trailing twelve months.
• Market capitalization was Php 728.644 billion in 2019 trailing twelve months.
• The calculated intrinsic value was Php 1.436 trillion in 2019 trailing twelve months.

Explanation:

• Revenue has a five year growth of 86 percent. 
• Revenue increases year-over-year at an average rate of 13 percent.
• Operating income has a five year growth of 129 percent.
• Net income has a five year growth of 108 percent.
• Net income represents 19 percent of the revenue.
• EBITDA has a five year growth of 88 percent.
• EBITDA represents 39 percent of revenue.
• The market capitalization growth was 52 percent in five years.
• Intrinsic value has five year growth of 84 percent. 
• Intrinsic value was greater by 97 percent of the market value.

Interpretation

The company has not suffered any losses in the last five years in its bottomline.

 

5. ALI BOARD OF DIRECTORS TOTAL COMPENSATION

BOARD OF DIRECTORS TOTAL COMPENSATION IN 2018

	Position	2018 (PHP)
Fernando Zobel de Ayala	Chairman	3,200,000
Jaime Augusto Zobel de Ayala	Vice Chairman	2,600,000
Jaime C. Laya	Lead ID	3,100,000
Rizalina G. Mantaring	ID	3,300,000
Cesar V. Purisima	ID	2,300,000
Ma. Angela E. Ignacio	NED	600,000
Antonio T. Aquino	NED	3,600,000
Arturo G. Corpuz	NED	2,500,000
Delfin L. Lazaro	NED	2,800,000
Total		24,000,000

Facts:

• Total Director’s salary in 2018 was PhP 24 million.
• Fernando Zobel de Ayala, Chairman’s total compensation in 2018 was PhP 3.2 million.
• Jaime Augusto Zobel de Ayala, Vice Chairman total compensation in 2018 was PhP 2.6 million.
• Jaime C. Laya, Lead ID total compensation in 2018 was PhP 3.1 million.
• Rizalina G. Mantaring, ID toptal compensation in 2018 was PhP 3.3 million.
• Cesar V. Purisima, ID total compensation in 2018 was PhP 2.3 million.
• Ma. Angela E. Ignacio, NED total compensation in 2018 was PhP 600,000.
• Antonio T. Aquino, NED total compensation in 2018 was PhP 3.6 million.
• Arturo G. Corpuz, NED total compensation in 2018 was Php 2.5 million.
• Delfin L. Lazaro, NED total compensation in 2018 was PhP 2.8 million.

Explanation:

• The total directors compensation in 2018 represents 0.08 percent of net income.
• Fernando Zobel de Ayala total compensation represents 13.33 percent of the total directors salary in 2018.
• Jaime Augusto Zobel de Ayala total compensation in 2018 represents 10.83 percent of the total directors salary.
• Jaime C. Laya total compensation in 2018 represents 12.92 percent of the total directors salary.
• Rizalina G. Mantaring total compensation in 2018 represents 13.75 percent of the total directors salary.
• Cesar V. Purisima total compensation in 2018 represents 9.58 percent of the total directors salary.
• Ma. Angela E. Ignacio total compensation in 2018 represents 2.50 percent of the total directors salary.
• Antonio T. Aquino total compensation in 2018 represents 15 percent of the total directors salary.
• Arturo G. Corpuz total compensation in 2018 represents 10.42 percent of the total directors salary.
• Delfin L. Lazaro total compensation in 2018 represents 11.67 percent of the total directors salary.

Interpretation

The total director compensation was less than one percent of the total net income for the period.

 

5.a EXECUTIVE COMPENSATION

	2017	2018	2019
CEO and President, Bernard Vincent O Dy
Basic salary	112,300,000	122,950,000	131,560,000
Other variable pay	93,100,000	112,300,000	112,300,000
Total	205,400,000	235,250,000	243,860,000
CFO and Treasurer, Augusto D. Bengzon	–	–	–

Facts:

• Bernard Vincent O. Dy, CEO and President total executive compensation was:

• 2019 PhP 243,860,000
  • Basic salary PhP 112,300,000
  • Other pay PhP 112,300,000

• Augusto D. Bengzon, CFO and Treasurer total executive compensation was not available in the record.

Explanation:

The total compensation of the CEO in 2018 represents 0.79 percent of the net income.

 

6. ALI LOBBYING AND CONTRIBUTIONS

There was no lobbying and contributions in record found in Ayala Land Inc (ALI) for the year 2018 and the previous years.

 

7. ALI FINANCIAL STRENGTH

DATA: (In PhP)

Working capital	62,045,000,000
Total assets	668,820,482,000
Sales	165,752,894,000
EBIT	55,178,919,000
Market value of equity	728,644,000,000
Book value of total liabilities	481,520,630,000
Retained earnings	132,090,020,000

CALCULATION:

	Ratio	Score	Result
A – Working Capital / Total Assets	0.09	1.20	0.11
B – Retained Earnings / Total Assets	0.20	1.40	0.28
C – EBIT / Total Assets	0.08	3.30	0.27
D – Market Value of Equity / Book Value of Total Liabilities	1.51	0.60	0.91
E – Sales / Total Assets	0.25	1.0	0.25
Z-Score			1.82

Formula: Z-Score = 1.2A + 1.4B + 3.3C + 0.6D + 1.0E

Explanation

Z-Score is a statistical measurement that compare data points from different sets of data to find correlations. This measurement by Dr. Edward Altman is a significant measure in determining the financial strength of the company because it relies on different weighted financial liquidity and profitability metrics to come up with the overall score. This measure indicates the probability of bankruptcy.

Interpretation

The calculated Z-Score for Ayala Land Inc was 1.82. According to Dr. Edward Altman a grading scale of 1.8 to 3 indicates that the company will likely declare bankruptcy or be insolvent in the near future. In other terms, the company might have difficulty in finances in the near future if its operating cash flows continue to fall. It indicates that the company is a higher risk investment.

The reason in low score is most likely that the operating cash flow of the company dive deeply in 2019 trailing twelve months at a rate of 235 percent from 2018 which resulted in a negative operating cash flow. Moreover, the free cash flow had decreased by 314 percent from 2018, which also resulted in a negative FCF. 

Hence, this measurement categorized the profitability or return on investment, liquidity, leverage and the efficiency in operating.

CITATION

https://ir.ayalaland.com.ph/wp-content/uploads/2019/03/ALI-FY-2018-Audited-Financial-Statements-2019-03-01.pdf

https://ir.ayalaland.com.ph/corporate-governance/board-processes/

 

Researched and written by Criselda