In the last six years, Ayala Corporation (AC) had spent around P720 billion for the continued expansion of its traditional and emerging businesses. The company released that it plans to allocated over P200 billion for its capital expenditures (CAPEX) this 2018 as it continues to grow its property, telecommunications, water, power, industrial, health care, and education businesses. In 2017, the company budgeted P185 billion to support its expansion plans of core subsidiaries. For the past years, Ayala Land, Inc. (ALI) has cornered bulk of the group’s CAPEX.
Its Chief Finance Officer (CFO) Teodoro Limcaoco said that the CAPEX included the P20 to P25 billion budget for the banking unit’s planned stock rights offering. He also mentioned that the group-wide capital expenditures will be more than P200 billion this year.
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Bank of the Philippine Islands (BPI)’s P40 to P50 billion stock rights offering is considered by the company as a CAPEX. It intends to acquire about a 48-percent stake which will cost around P20 to P25 billion. P5 billion is also budgeted for the stock rights offering of Integrated Microelectronics Inc. (IMI) Ayala is also planning a peso bond offering to partially fund this year’s CAPEX. Limcaoco said that the company plans to participate in the Philippine bond market at least once a year so as to be known by investors. Said bonds may come from the unused portion of the P30 billion worth that has been shelf-registered with the Securities and Exchange Commission (SEC). The other subsidiaries of Ayala Corporation include Globe Telecom, Manila Water Co. Inc., AC Energy Holdings Ltd. and AC Infrastructure Holdings Corporation.
The merging of AC Education Inc. and Yuchengco-owned iPeople Inc. are still being finalized and that an approval from the Philippine Competition Commission (PCC) is still being secured. Due diligence is still on-going but a definitive agreement might be signed within the first quarter. Should this push through, AC and iPeople Inc. will be able to cover the full spectrum of the education cycle which is in line with their objective of further developing APEC schools.
The corporation will also put in the University of Nueva Caceres, one of the oldest and largest universities in Bicol region and APEC Schools, the largest stand-alone chain of private high schools in the country. It will cover a total student population of 40,000. For its health care business, AC plans to include hospitals in its business as well. Ayala Land Inc. (ALI) is considering the sale of its hospital business. They are looking at transferring the business under Ayala Healthcare Holdings, Inc. ALI also expects a higher CAPEX for 2018 as compared to the P88 billion allotted last year since it will be launching more projects.
AC has a five-year target to hit a net income of P50 billion by 2020. Last year, its profit stood at P23.2 billion in the first nine months which is 18% higher year on year. The company is aiming for consistent growth and demand over the years.
After making a very strong upward move from August to November 2017. Ayala Corporation has started to move sideways with a tradable range of 980 to 1,090. The stock is currently falling now because of its failure to breakout of 1,090 last January 30, 2018. With that the possible downside movement may bring the stock back to 980.
For quick traders, if the stock bounces from 980, this presents a buy opportunity to make a trade and sell at 1,090. This is an 11% trade if executed properly. Should the stock fail to hold 980, please avoid the stock first as it may retrace and go back to the stronger support at 945.
For position traders, the prevailing trend is still up and no need to take profits yet. Should the stock go to 945 and it would hold this level you may add more to your position. However if it fails to hold 945, please take profits as well.
I do hope this helps you in your trades!