Megaworld leads Philippine developers higher as land values leap
September 27, 2014
Megaworld Corp. (MEG) shares jumped to a record, leading Philippine developers higher, as the government sold land in Greater Manila at higher-than-expected prices.
Megaworld soared 8.3 percent at the close in Manila, after rising as much as 11 percent earlier. The stock was the biggest percentage gainer today in the Philippine Stock Exchange Index (PCOMP), which rose 1.2 percent to its highest close in 16 months.
The government yesterday auctioned two plots of 1,600 square meters each in the former army camp of Bonifacio for 732.8 million pesos ($16.5 million) and 800 million pesos. The average sale price of 479,000 pesos per square meter for those two plots is higher than analysts’ estimates of 280,000 pesos per square meter in Bonifacio, according to Noel Reyes, chief investment officer at Security Bank Corp. Megaworld owns 105 hectares in the area.
“Investors are anticipating a significant adjustment in the valuation of companies with properties in Bonifacio,” Reyes said by phone in Manila today. “The expectation is there will be a big increase in the values of land in Bonifacio.”
Megaworld’s projects in Bonifacio include the 50-hectare McKinley Hill, a residential, office and commercial project, according to John Hao, the builder’s investor relations officer.
“Bonifacio land values will increase from this transaction and will have repercussion on rent and prices,” said Rommel Rodrigo, a Manila-based analyst at Maybank ATR Kim Eng, said by phone. “Megaworld is seen as a prime beneficiary because of the size of its exposure in Bonifacio. It’s Bonifacio’s biggest landlord.”
Rodrigo, who has a buy rating on Megaworld shares, said he is reviewing the 180,000 peso to 200,000 peso a square meter valuation range he uses for land in Bonifacio.
Shares of Alliance Global Group Inc. (AGI), parent of Megaworld, climbed 3.4 percent to a two-week high. Ayala Land Inc., the developer of the Fort Bonifacio Global City project, advanced to a 15-month high, while SM Prime Holdings Inc., which owns a mall in the district, rose 3 percent. GT Capital Holdings Inc., which owns land in Bonifacio through a property unit, added 1.3 percent to a record.
The Philippine Stock Exchange Property Index, a measure of the nation’s largest developers, rallied 3.6 percent, the sharpest gain in more than a year. The gauge has increased 31 percent this year, outpacing the benchmark equities index’s 25 percent advance.