April 06, 2015

Ayala Land Inc unit acquires 9% stake in Malaysian real estate company

In a disclosure to the Exchange, Ayala Land Inc said that a wholly-owned subsidiary has acquired a 9.16% stake for P1.9b in MCT Bhd, a Malaysian construction company which is also engaged in mixed-use property development.

The company employs a modular construction technique and is an integrated builder with an in-house design team, in-house trading company, and utilizes its own pre-cast and ready-mixed concrete plants. As such, it is able to deliver projects at lower costs. According to ALI’s disclosure, the company has several ongoing projects and land bank in the Klang Valley in Malaysia.

Our take: In its disclosure, ALI said the investment will provide an avenue through which it can expand its footprint in Southeast Asia and bodes well for its diversification goals. ALI has investments in projects in countries like Thailand and China but these have insignificant contribution to earnings.

Given ALI’s limited stake in the MCT Bhd, we are not anticipating any major earnings boost from this investment. However, it could provide ALI some access to modern and more efficient technology and expertise in property construction and development which could, in the long, provide some synergy to its operations. The P1.9b investment can easily be financed by ALI given that it ended last year with a cash balance of P28.7b. – WealthSec