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Ayala Land Inc (ALI) Extended Graph Analysis

November 4th, 2019 Posted by Extended Analysis No Comment yet

About the Company

ayalaland

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

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

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

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

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

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

ALI CEO AND PRESIDENT TOTAL 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

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

 

Note:

Research Reports can be found under the company tab.