Ayala to benefit from Myanmar investment

DIVERSIFIED conglomerate Ayala Corp. is seen to benefit in the long run from its investment in Myanmar-based Yoma Group.

Last week, the listed firm announced that it was acquiring a maximum 20-percent stake in Yoma Group for $237.5 million to further its presence in the Association of Southeast Asian Nation (Asean) region.

Yoma Group, led by the Pun family, comprised of Singapore-listed Yoma Strategic Holdings Ltd. and Myanmar-listed First Myanmar Investment Public Co. Ltd.

Ayala, to date, has reached Indonesia, Vietnam, China, Australia, Europe, United States and Mexico.

Philstocks Financial Inc. research associate Japhet Tantiangco said that Ayala’s investment offers “a lot of opportunities which could improve its fundamentals in the long run.”

He noted that Myanmar’s economy has been growing by 6.9 percent in the last five years, and Ayala could participate in this narrative through its ownership.

“At the same time, with the investment, Ayala Corp. gets to expand its footprint further in the Asean region,” he said.

Tantiangco added that the investment was strategic as Ayala has the same interests with the Myanmar firms including financial services, real estate and healthcare.

“With this, Ayala could use its expertise and years of experience to help the two companies in improving their performance,” he explained.

Regina Capital Development Corp. head of sales Luis Limlingan agreed that the investment would spur Ayala’s regional operations.

Limlingan explained that “it’s hard to grow double digits when most business activity in Metro Manila is saturated.”

“Myanmar is one of the last frontier markets that presents this opportunity,” he added.

Despite this, investor sentiment over Ayala shares were overshadowed by the overall market outlook due to uncertainties brought about by the ongoing US-China trade war, Tantiangco said, noting that the firm’s stocks dropped 2.18 percent week-on-week.

But Ayala shares surged by P12 or 1.47 percent from the previous day to close at P830 apiece on Friday.

The latest closing price is 17 percent weaker than its year-to-date peak of P1,000 notched on January 9 but 1.47 stronger than the November 14 year-to-date low P818.

Ayala shares have gone down by 8.39 percent year-to-date.

“Week-on-week capital losses were partially offset by the bargain hunting this past Friday backed by the company’s robust nine-month earnings,” Tantiangco said.

Ayala’s nine-month net earnings nearly doubled to P46.2 billion from P23.86 billion the previous year on the back of robust performance of its real estate, banking and telecommunications segments. Equity earnings for the period climbed by 77 percent to P51.9 billion.

Tantiangco sees Ayala shares testing the P840 level this week.

Source : Che Manilatimes Cimes

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