Ayala Corporation Investor Presentation August 2020 Key Messages - - PowerPoint PPT Presentation

Ayala Corporation

Investor Presentation

August 2020

Key Messages

• The Philippines saw the worst economic contraction for over 30 years in 2Q20, but

signs of recovery have been materializing slowly.

• Consumer confidence indicators are recovering as evidenced in trends seen in some of
• ur business units when quarantine restrictions were eased in June as demand

improved and operations ramped up.

• We are ideally positioned to capture the opportunities around the accelerated digital

adoption in the country, with BPI Online, GCash, Entrego, and Zalora seeing unprecedented growth.

• With a strong brand and a healthy balance sheet, Ayala is poised to weather the

impact of the health crisis.

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The Philippines saw the worst economic contraction for over 30 years in 2Q20, but signs of recovery have been materializing slowly

PHILIPPINE MACROECONOMIC SNAPSHOT

Source: BPI Economic Research

The Philippines’ 2Q20 GDP growth saw a steep contraction, falling by 16.5% with the industrial sector (-22.9%) recording the biggest decline among the three major sectors of the economy Mobility has improved in August with grocery, pharmacy, and workplace activity recovering fastest, but there's still a long way to go before reverting to pre-crisis levels China's manufacturing PMI has recovered sharply (50.9 as of June) and much earlier than economies; SE Asia may benefit from China's demand Monetary easing worldwide will help alleviate the economic/social fallout of the COVID 19 pandemic Assuming a vaccine can be administered late next year, we expect the economy to bounce back to pre-crisis levels early in 2022 The worst is over; now, the strength of fiscal response and ability to balance health with economic goals will be the key to a speedy recovery

BPI’s online platform sees continued momentum in digital enrollments, volume, and value

AYALA GROUP DIGITAL CHANNELS

#5 finance app on

App Store

#10 finance app on

Active digital user penetration in 2Q20 vs 23% in 1Q20

26%

Online/mobile transaction value grew by 18% vs pre-ECQ.

18%

Online/mobile transaction count grew by 61% vs pre-ECQ.

61%

Digital enrollment penetration in 2Q20 vs 44% in 1Q20

47%

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GCash is seeing unprecedented growth with P2P , load purchases, and bank transfers remaining as top use cases

AYALA GROUP DIGITAL CHANNELS

Increase in payment value in July vs pre-ECQ

Main Growth Drivers

#2

Finance app on

App Store Charges on features such as Send Money, Cash-ins via 7/11, and InstaPay

Payments

Merchant discount rate for vendors who charge through GCash

Financial services

Share for provided financial services such as mutual funds and insurance

Transactions

2.4x

Growth in user base versus pre-ECQ

>2x

GCash user base vs the 2nd biggest e-money platform*

2.5x

*according to a 3rd party intelligence provider

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Entrego’s operations have gradually recovered volumes going back to pre-ECQ levels and a surge of new onboarded clients from April to June

AYALA GROUP DIGITAL CHANNELS

Volume saw a slump during ECQ, but by July, figures have recovered to even surpass pre-COVID levels. 38 new clients onboarded from April to July (26 from June- July) versus 3 from January to March

Operations Areas for expansion

Develop domestic backhaul freight forwarding to capitalize

• n existing trucks routes servicing provincial areas

myEntrego is a web-based booking and delivery platform that targets online SME sellers On trial to developing a standard courier express delivery service which delivers better margins

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Zalora is now the third most downloaded e-commerce app in both the App Store and Google Play store in the Philippines

AYALA GROUP DIGITAL CHANNELS

#3

PH e-commerce platform

App Store

Launched the Essentials category on April 28; now accounts for over 5% of items sold ~30% increase in new customers acquired from April - July vs the same period last year Around 400 new brands from April – June, with +250 Essential brands

Others

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Ayala Land continues to adapt to the new normal while glimpses of recovery are seen in its various segments as quarantine restrictions loosen

BUSINESS OPERATIONS UPDATE

• 2Q 2020 sales reservations reached

P13.6B

• Average monthly sales for May and

June at P6.1B

• Hotel bookings mostly from BPO locators.

Hotel operations may operate at 50% in MGCQ areas

• Construction has restarted across 125

projects

• ALI listed the Philippines’ first REIT,

raising P13.6B in August 2020

• Foot traffic and tenant occupancy

continue to improve since opening in mid-May

• Dine-in at restaurants allowed at 30%

capacity in GCQ areas and 50% for MGCQ areas

• Launched contactless e-initiatives for

mall navigation, curbside pick-up, and delivery

• Sustained growth from the continued
• perations of BPO and HQ buildings.
• No rent waivers granted
• BPO tenants indicated no intention to

close

Residential Offices Shopping Centers

Ayala Malls observes strict health and social distancing measures to ensure the safety of its shoppers and adopted digital initiatives for a contactless experience

BUSINESS OPERATIONS UPDATE

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BPI remains liquid and capital sufficient with its focus on asset quality preservation and provisioning to manage effects of expected NPL formation

BUSINESS OPERATIONS UPDATE

July credit card billings as a % of pre-ECQ level; significant recovery from the lowest point in April which was at just 38%

Credit cost Loan growth

Base case for NPLs for the year is a doubling of the 1.8%1 NPL ratio in 1Q 2020 to 4% be the end of 2020, forecasting the peak to be in 2021 or even 2022 Guidance for 2020 loan growth is 0-2%. This year’s focus will be on asset quality and NIM- accretive loans. Credit cost guidance of 100-120 bps for 2020

93%

NPLs

July OTC branch transactions have nearly tripled vs the low in April during ECQ

2.9x

1) under Bayanihan Act

Globe has been seeing improvement in mobile data and home prepaid Wi-Fi demand since the lifting of ECQ

BUSINESS OPERATIONS UPDATE

As Metro Manila shifted to GCQ, Globe’s roll out of personnel improved to 70%. Site acquisition activities have also resumed.

CAPEX

ECQ saw increased sales for HPW products; we expect further growth as more students shift to online learning in SY 2020-21.

Home prepaid Wi-Fi

Monthly mobile top-ups slumped in April but are now approaching pre-ECQ levels with the improvement in mobility under GCQ.

Mobile top-ups

Building on the 45% YoY growth in mobile data traffic in 1H20, mobile data usage continues to grow due with the deeper adoption of a digital lifestyle.

Mobile data usage

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AC Energy and Manila Water saw relatively steady demand despite the crisis as both continued to operate despite the quarantine

OPERATIONAL AND FINANCIAL HIGHLIGHTS

Increase in East Zone’s June billed volume vs June 2018

9%

Collection status for the month of June from 31.5% in May. By July, this overshoot 100% as payment of arrears came in

63%

Increase in East Zone’s 1H20 billed volume vs 1H18

2%

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Pro forma1 attributable capacity of assets

• perating and under construction of

ACEN Luzon peak demand in July 2020 compared to July 2019’s Cash as of end-June with additional P17.2B in credit lines available

1,832 MW 95% P35.7B

• 1. Pro forma capacity after the completion of onshore and offshore asset infusions to ACEN, and the sell-down of Ingrid

Power to Axia Power Holdings

ACI has restarted all plants, AC Health is seeing higher clinic traffic, and AC Infra is recording better tollway and LRT ridership levels

BUSINESS OPERATIONS UPDATE

MCX volume in July 2020 as a percentage

• f pre-ECQ levels

LRMC ridership in July as percentage of pre-ECQ levels All 30 manufacturing sites are operating as quarantine measures ease globally Increase in clinic foot traffic in July vs April AC Health has expanded to helping companies facilitate a back- to-office program, establishing health protocols at offices Units serviced by AC Motors have recovered from nearly no activity in April Count of operational clinics (70) vs pre-ECQ

62% 3.2x 85% 80% 21%

The health crisis has made opportunities in logistics more apparent; Entrego’s figures have surpassed the company’s target

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Ayala maintains a strong balance sheet, with ample cash to ride through the uncertainties

PARENT BALANCE SHEET

Credit lines have ₱42.5B available as of July 2020

₱ 43B

June Net D/E is healthy with liquidity levels sufficient to support annual cash burn of P11.0B, inclusive of preferred dividends

0.69x

Net debt is at P91.9B as of July 2020 vs P91.3B pre-ECQ

₱ 92B

AC Parent cash level is at ₱29.7B as of July 2020 vs P17.8b pre-ECQ

₱ 30B

Amid the Philippines’ economic growth, our unique portfolio of businesses provides various engines for growth and diversification

BUSINESS OVERVIEW

Core Value Drivers

AC Energy and Infrastructure

Portfolio Investments Social Infrastructure

Industrial and Technologies

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Disclaimer

Statements in this presentation describing the Company’s objectives, projections, estimates, expectations may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include, among others economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in Government regulations, tax laws, and other statutes and incidental factors. For more information, please contact: Ayala Corporation – Investor Relations

investorrelations@ayala.com.ph https://www.ayala.com.ph/investors/investor-relations 16