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Tuesday, May 24, 2016

The Philippine Real Estate Bubble Has Also Burst For... Ayala Land!

It seems like that the real estate bubble has also burst for one of the biggest and most prestigious real estate developers in the country: Ayala Land or ALI for short.

Although Installment Contract Receivables (ICRs) in absolute terms looks fine and dandy, there is a very discernable quadrupling of its Past Due but Not Impaired Installment Contract Receivables in 2015.

A closer look shows that a big jump in past due ICRs took place in the past due ICRs that are less than 30 days old and over 120 days old.

The jump in past due ICRs becomes clearer when viewed in relative terms.

So past due ICRs and Impaired ICRs now comprise a striking 13.4% of the entire ICR portfolio.

If all the past due ICRs go bad, it will take away a nice chunk (5.88%) of ALI's Stockholder's Equity.

 Although Past Due ICRs have been rapidly going up, Impaired ICRs have remained static at Php 9.55 million and have represented a declining share of Total ICRs.  As the Past Due ICRs age further and become even more unrecoverable, Impaired ICRs have only one place to go: up!

Source: Ayala Land 2015 Annual Report

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