Cebu Holdings (CHI - P1.78) : The Little Ayala
Cebu Holdings offers a proxy play to its parent - Ayala Land (ALI - P11.50). Cebu Holdings is the property subsidiary of Ayala Land that focuses on development projects in the southern Philippines.
Cebu Holdings currently trades at 1.0x Price to Book Value (PBV) while Ayala Land trades at 4.0x PBV. I do believe that the valuation disparity between the two affiliated companies will narrow in due time. My thinking is that the market will be willing to pay at least 2.0x PBV on Cebu Holdings as investors upgrade their outlook on Ayala Land. At those levels, Cebu Holdings should be trading at around P3.20 - P3.50.
Today, some 6.5m shares of Cebu Holdings were traded in the market. This is roughly 4x the average daily turnover of the stock. I think the move signifies that the stock has indeed broken out of its P1.52-P1.72 trading range and is poised to trade higher in the next few days.
Cebu Holdings currently trades at 1.0x Price to Book Value (PBV) while Ayala Land trades at 4.0x PBV. I do believe that the valuation disparity between the two affiliated companies will narrow in due time. My thinking is that the market will be willing to pay at least 2.0x PBV on Cebu Holdings as investors upgrade their outlook on Ayala Land. At those levels, Cebu Holdings should be trading at around P3.20 - P3.50.
Today, some 6.5m shares of Cebu Holdings were traded in the market. This is roughly 4x the average daily turnover of the stock. I think the move signifies that the stock has indeed broken out of its P1.52-P1.72 trading range and is poised to trade higher in the next few days.
posted by jack galt at
11:23 PM
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