Buyer's Guide to Ayala Land

MANILA — Amid central Manila’s construction boom, a redevelopment project by Ayala Land is especially eye-catching. The project includes a 69-story building and a condominium whose apartments go for an average 80 million pesos ($1.65 million). That is almost on a par with prices in Tokyo, yet the real estate developer said it received a flood of inquiries when the apartments went on sale in June.

Investors are buying the company’s shares in expectation of higher revenues. The share price rose about 14% from the start of the year to the end of September.

The Ayala project highlights the rising income levels in the Philippines. Taking advantage of its large English-speaking population, the country has become one of the biggest providers of business process outsourcing services. Surging employment in this sector has created a consumption boom among the growing middle class.

Robinsons Retail Holdings, which operates convenience store and supermarket chains, saw its sales rise 60% in 2015 from three years before, while its share price has risen 20% since the start of the year. Real estate developer Megaworld plans to invest some $3.68 billion in commercial complexes and housing projects over the next 10 years. The government of President Rodrigo Duterte plans to focus on developing rural areas, which will likely to help the company receive more orders.

Domestic demand-oriented manufacturing is also growing. Food maker D&L Industries is expected to post double-digit revenue growth after 2016, and its share price hit a year-to-date high in late September.

Concepcion Industrial, which owns one of the largest home appliance factories in the country, is another closely watched issue. President Raul Concepcion forecasts that the demand for home-use air conditioners will grow and said he is eager for merger and acquisitions.

But many Philippine shares are overvalued. The prospective price/earnings ratio for the country’s largest fast-food restaurant operator, Jollibee Foods, is over 40. Additionally, contentious remarks by President Duterte can prompt investors to dump Philippine shares.