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By Jobo E. Hernández, Investigator
AYALA CORP. Was among the most traded stocks last week after the Philippine Competition Commission approved the acquisition by Philippine billionaire Enrique Razon of the Manila Water Co., Inc. unit.
A total of 994,220 Ayala Corp. shares worth P724.63 million were traded from Aug. 24-28, according to data from the Philippine Stock Exchange.
Shares of Ayala Corp. fell 1.3% to P733.50 each at the close of business on Friday. The stock has lost 4.7% this year.
Investors may still be assimilating the government’s approval of the acquisition, Darren Blaine T. Pangan, head of online operations at Timson Securities, Inc., said in a Viber message.
The commission approved the purchase by Trident Water Holdings Co., Inc., a unit of the holding Prime Metroline Infrastructure Holdings, Inc. led by Razon, of a 51% voting stake in Manila Water.
Trident Water, which has interests in hotels, casinos, mining, infrastructure, power generation and distribution and port services, will buy the controlling stake after subscribing 820 million ordinary shares of Manila Water’s undisclosed capital stock, the commission said in a release. week.
The agreement is unlikely to reduce competition in the eastern concession area’s water supply market, the regulator said. He noted that, as the only water distributor in the area, Manila Water has a captive customer base and has no downstream competitors.
Manila Water told the stock exchange in March that Prime Infra would own 28% of the company after it purchases 820 million shares at P13 each. At that time, Trident Water had not been incorporated.
The purchase will reduce Ayala Corp.’s ownership in Manila Water from 41% to 30%. Public ownership will drop from 58% to 41%, while foreign ownership will drop to 9.18% from 10.41%.
The regulatory approval comes after Manila Water revealed on Monday that it had received regulatory approval to increase its authorized share capital to P4.4 billion after the Securities and Exchange Commission (SEC) approved changes to its articles of incorporation. .
The utility company also said the SEC approved increasing its transferred shares to 900 million non-issued common shares, which are reserved for cash, property or assets to carry out its business.
The commission’s approval could “stimulate business activity somewhat,” Regina Capital Development Corp. equity analyst Anna Corenne M. Agravio said in an email. She added that the activity of the stock could also have been affected by the “surplus effects” of the rebalancing of the MSCI announced in mid-August that will take effect this week.
“We believe that its effect is minimal,” he added.
Ayala Corp.’s net income fell 95.7% to P1,280 million in the second quarter from a year earlier. First half earnings fell 79% to P7.94 billion.
“As more developments unfold in the coming days, we will have to see how market participants interpret this new information,” said Pangan.
The coronavirus pandemic has severely affected Ayala Corp.’s main business segments, Agravio said. “In our bearish case scenario, the conglomerate’s profits for 2020 will decline by double digits,” mainly driven by higher loan loss provisions from the Bank of the Philippine Islands unit, he added.
Tort placed immediate support from Ayala Corp. – the price that drives traders to buy the shares – at P715, while Pangan put it at P700 to P710.
He put the resistance level of the stock, the price that drives traders to sell it, at P760 each.
Reactionary buying causes the price of a stock to stop falling and begin to rise, while selling causes the opposite.
“While P760 is where traders may experience some selling pressure, given that it appears to be a minor resistance area, the P800 level is still the most important resistance level to clear,” Pangan said.
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