When It Was Reporting Its 2016 Results, ALI May Have Solved the Potential Office Space Crisis In Case the BPO Sector Contracts
February 19, 2017
ALI released some of its 2016 results ahead of its 2016 SEC Form 17-A annual report. Growth is still evident in 2016 with construction giving the highest increase in revenues among all businesses in peso terms. ALI is launching an estimated project value of PHP117 bn in 2017 with PHP100 bn of which for residential projects. It is still eyeing a PHP40 bn net income in 2020 and is calling this its 2020-40 Plan. It needs an 18% annual net income growth to be realized assuming GDP growth stays at 6%.
The main concern of the property sector is US President Trump’s protectionist policies which may counter the growth of the local BPO sector. In a worse case scenario, BPOs will just stop expanding and probably pack home to the US. GDP has been partly fueled by this sector which provided thousands of jobs. This problem potentially leaves ALI with high vacancy rates to its 902,000 sqm of office space GLA. This is a problem shared with other property companies catering to BPOs like MEG, FLI, RLC and SMPH.
However, during ALI’s Analysts’ Briefing for its 2016 Results, ALI may have provided a solution to this potential problem. It is a business model targeting a big demand that offers convenience to both the working public and students. Pricing is of course key but this fills up those vacated office spaces in a worse-case scenario. ALI has ridden the property cycle for decades and recognizes this major concern. It and the sector has time to search for more solutions, but ALI is prepared to execute its model once and if it is needed.
This report is solely for information. It should not be constituted as an offer for solicitation for the purchase or sale of securities mentioned. The information herein has been obtained from sources believed to be reliable. Whilst every effort has been made to ensure accuracy, we do not guarantee the accuracy or completeness of the report. All opinions and estimates expressed herein constitute our judgment as of this date made on a reasonable basis and are subject to change without notice. No liability can be expected for any loss arising from the use of this report or its contents. As this is general information, it does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may obtain this report. Pictures in this report cannot be copied or redistributed and are owned by Corpecon Research.