Merkado Barkada
September 18, 2024 | 8:56am
AyalaLand Logistics [ALLHC 1.81 ?0.6%; 46% avgVol] [link] said that the company “want[s] to be a major player”, and that “there are other established players but hopefully in five years we will play a significant role.” ALLHC’s President said that he will use the “readily available” landbank of its parent company, Ayala Land [ALI 35.00 ?0.9%; 23% avgVol], to construct new facilities to address the market, which he referred to as “quite underserved.” ALLHC plans to double its cold storage pallet-positions by 2025. It currently has 20,300 pallet-positions.
MB BOTTOM-LINE: Depending on the market research you read, the PH cold storage market has around 700,000 pallet-positions, so ALLHC currently has a 3% share of that pie. The top players in this industry are privately-owned, and some of those have more pallet positions in a single facility than ALLHC has currently across all of its locations. While I applaud ALLHC’s desire to be a major player and its interest in the sector as a bedrock component of the economy moving forward, it feels the Ayala Group’s strategy is particularly vulnerable to any attempt to consolidate the market’s existing major players. As with any real-estate development play, cold storage is more than just adding pallet positions. It’s important to have the right mix of location, clientele, and management. I’ve wanted the Ayala Group to prioritize cold storage for years. Longtime readers will be familiar with my calls for the Ayala Group to pull its cold storage interests out of the shadow of ALLHC’s industrial lot sales, and make something dedicated to cold storage that optimizes the potential of the facilities and gives investors (like me) a chance to place a bet on the significance of this sector for the decades to come.
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