Ayala Land wins FTI and its effect with PHES

ALI bagging the FTI deal raises doubts on the probability of the PHES JV deal. PHES is down today with 17M pesos transactions. Volume is considerably higher than the previous two days.

For the past 3 months PHES traded sideways with major support of .63 holding very well. Mr. Market tried to break the sideways trend but failed. Let’s see if the FTI deal will break .63. The FTI deal really drags down PHES but it will be worth watching the next few days whether PHES will go below .63. If .63 holds after a week of selling with volume, then I'll take the stride and hold knowing that the market could have discounted the FTI news. ALI's desire to beef its landbank to capitalize on strong demand for real estate is the cause of the JV with PHES. Now that the FTI bid is in the bag, where will the ALI/PHES JV go?

http://www.flickr.com/photos/21496790@N06/5065834411

ALI surprises everyone in the Ortigas deal and perhaps the FTI's deal also. It looks like ALI is good in surprises. I, on the other hand won’t be surprised if the JV is consummated notwithstanding the fact that the FTI and Ortigas deal devours most of the allocated budget of ALI. ALI is the premier developer and favorite of foreigners for nothing.

FTI is one of the last parcels of land of this size close to Manila’s CBDs.¹The other one I believe is the Plastic City.

PHES has been in the .60s level without the FTI deal and should go down today considerably (+10%) but it did not. The market has factored the JV speculation already at these price ranges. However if the JV will not materialize that is a different story and the price can go south dramatically and eventually will break the .63 barrier.

House 111 sold most of the shares it bought above .7 when PHES rose recently but House 219 and 106 bought it shares.

http://www.flickr.com/photos/91545223@N00/2772190827

The Play

The play at .63 to .67 is still intact as I wrote three days ago. If the JV with ALI will not materialize or .63 is broken, then it’s time to sell because the price may go back to where it started before at .20 ranges. Go back again in PHES if it goes to .2 ranges and then wait for another JV story.

¹ http://bworldonline.com/content.php?section=TopStory&title=Ayala-wins-FTI-auction&id=56817