Ayala Corp. drops after Mitsubishi sells shares

SHARES in Ayala Corp. fell sharply on Tuesday after a key shareholder sold a block of shares at a steep discount to the prevailing market price.

Ayala shares plunged 7.23% — the biggest decline since September 2017 — to settle at P937 each at the close of trades on Tuesday after Mitsubishi Corp. unloaded 8.5 million of the conglomerate’s shares at P934 apiece, the Philippine company confirmed in a mobile phone message.

The selling price represents a 7.53% discount to the closing price of P1,010 each on Monday.

Prior to the sale, Mitsubishi owned 10.15% or some 63.08 million shares in the Philippines’ oldest conglomerate.

“The market leveled down their valuation for Ayala at the selling price of Mitsubishi,” Rens V. Cruz II, analyst at Regina Capital Development Corp., said in a phone interview.

The selldown in Ayala triggered the plunge in the broader stock market, which entered a correction phase after falling 10% from its peak. The bellwether Philippine Stock Exchange index lost 175.94 points or 2.13% to close at 8,059.60 on Tuesday.

Ayala shares are expected to move between its lowest trading level on Tuesday of P935 and its 200- day moving average at P972, Mr. Cruz said.

The Ayala group is ramping up its capital expenditure budget by nearly half to P249 billion this year to support the expansion of its business units after sustaining a double-digit growth in profits for the sixth consecutive year.

The conglomerate registered a 16% growth in net income to P30.3 billion last year from P26 billion, putting it on course to hit its net income goal of P40 billion by 2020.

Equity earnings contributions from the conglomerate’s business units improved 12% to P35.8 billion, with the income share of Ayala Land rising 21% and that of AC Energy Holdings, Inc. climbing 30%.