POPI’s Added Intrinsic Value

In a disclosure to the stock exchange on Friday, Ayala Land Inc. (ALI) said its executive committee has approved the exchange of shares with Prime Orion Philippines Inc. (POPI) valued at P3 billion.

Under the deal, POPI will issue 1.225 billion common shares to ALI in exchange for 30,186 LTI common shares, resulting in POPI acquiring a 75% equity interest in LTI.

ALI Management stated that “Combining LTI and POPI will create a bigger entity that will pursue real estate logistics and industrial development and reposition POPI to be a leading real estate logistics and industrial estate developer and operator in the Philippines.”

Formed through a partnership between ALI and Mitsubishi Corp., LTI develops industrial parks in the country. Its portfolio includes the Laguna Technopark, a 460-hectare industrial estate that caters to light and medium, non-polluting locators from both local and global firms, according to its website.

LTI has further developed the Cavite Technopark, a 118-hectare estate similar to Laguna Technopark that aims to attract manufacturing investors that specialize in electronics, automotive, consumer products, food processing, and pharmaceuticals.

POPI returned to profitability in the first nine months of 2017, posting an attributable profit of P91.57 million against an attributable loss of P394.31 million in the same period in 2016.

This year, the listed firm said it will focus on the further development of Tutuban Center, which covers a gross leasable area of 60,000 square meters sitting on a 20-hectare property. POPI plans to double the leasable area of the shopping center and convert it into a mixed-use development in the future.

Based on chart, price action unable to form a 4th parabolic base, instead moved downtrend from its high price at 4.10 on February 26, 2018 but failed to break-out the support at 2.85. I am expected the price action to test the current resistance at 4.10 in the coming days.

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