SB Equities Inc., the research and brokerage arm of Security Bank Corp., has lowered its income projections for property developer Ayala Land Inc. after the firm raised its outlook for operating expenses.
In its latest research note, SB Equities reduced its estimated attributable income for Ayala Land by 5.6 percent for 2026 and 2.2 percent for 2027. The adjustment comes even as costs eased in the second quarter, noting operating expenses still run above earlier expectations. The revision also reflects a more cautious outlook on when revenue from residential projects and estate lots will be officially recorded.
Alongside the earnings tweak, the brokerage cut its target share price by 4 percent to P22 per share. Ayala Land shares closed last week at P15.54 apiece — half their level from the same period last year.
Despite the downward adjustments, SB Equities kept its buy rating, pointing to roughly 39 percent upside potential from current prices. The stock currently trades at 9.3 times this year’s expected earnings, well below its 10-year historical average of 17.9 times.
The report flagged key risks: slower property sales, elevated costs, higher debt levels, and uncertainty around funding plans. Other concerns include weaker-than-expected residential demand, higher cancellation rates, delayed project launches, and slower growth in rental income. While planned asset transfers to AREIT Inc. are meant to free up capital, the firm noted “weaker earnings, higher capital spending, and elevated leverage are limiting near-term balance sheet flexibility,” even as these metrics stay within internal limits and loan agreements.
Ayala Land’s board recently approved the infusion of four malls and three hotels valued at P20 billion into AREIT Inc., lifting the REIT’s total assets to P179 billion and broadening its portfolio across retail, office, hospitality, and industrial land.
Capital expenditures in the first half reached P39.5 billion, down 2 percent year-on-year. Spending on income-generating leasing properties rose 17 percent to P13.2 billion, supporting the completion and launch of key assets this year. President and CEO Anna Ma. Margarita Bautista-Dy confirmed the company now targets full-year capex at P60 billion, up from the earlier guidance of roughly P50 billion.
