AyalaLand Logistics [ALLHC 2.10, up 1.9%] [link] said that it will begin construction on three cold storages in 2024, with one facility in Luzon and the other two in VisMin. This is in addition to the two facilities that ALLHC will complete in H1/24. The ALogis Artico Santo Tomas facility (5,000 pallet positions) in Batangas will be finished by the end of March. The ALogis Artico Mabalacat in Pampanga Technopark (5,000 pallet positions) will be completed in Q2/24. Both of these facilities will cater to the frozen meat, seafood, and chemical industries. Once completed, the Santo Tomas and Mabalacat facilities will double ALLHC’s cold storage capacity to 20,000 pallet positions.
MB bottom-line: There are two (edit: three (edit2: ok, four)) things to note here. First, these facilities are relatively small in comparison to those operated by the established private players (which usually come in at 15,000 to 20,000 pallet positions per location), and even once completed, won’t even put ALogis on the map when it comes to marketshare of the temperature controlled storage market. Second, while there is a need for temperature-controlled storage in all areas of the country, not all clients are created equal. Some of the least profitable clients are those in the relatively simple frozen foods business (like meat traders). Cold storages make better margins as they provide value-added services to more sophisticated clients; don’t get me wrong, we need cold storage everywhere for everything, but from a business perspective, there’s a difference. Third, I sincerely love that the Zobel Family is getting more aggressive in this space, which has been a proven financial performer for ALLHC and also has significant social and governmental backing as a pillar of this administration’s efforts to combat harvest waste and reduce supply-chain problems. I just wish that an organization of this size and quality would be the one to step up and consolidate the private players to truly smash the turbo button on this industry’s growth. They still seem content just to fiddle around on the edges. Fourth, if ALLHC is going to continue on a path of cold storage development, it really needs to figure out how it will package this for investors going forward. I love the cold storage sector as a way to play my thesis of middle-class growth, but ALLHC’s cold storage assets are just a rounding error compared to its actual purpose, which is to sell the Ayala Group’s bulk industrial land. I know I’ve said this before, but if it’s worth saying once it’s worth saying again and again: spin the cold storage assets off into an industrial REIT. Let us invest directly in this growth sector.
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