Aboitiz Equity Ventures: revenue up 16.7% but profit down 44.6% as margin halves

Aboitiz Equity Ventures' third-quarter 2026 results showed revenue of PHP 99,770.85 mn (+16.7% year on year) and net profit of PHP 8,196.106 mn (–44.6%). Revenue growth decelerated from +36.8% in the second quarter to +16.7% in the third, while the net margin fell from 17.3% to 8.2%. Our conclusion: the share is fairly valued – the portal model implies +8% upside to fair value, consistent with a neutral rating. Our view: the share is fairly valued; upside on the portal model +8%.

Our view: is there upside

Our view in numbers

Key takeaways

— Revenue rose 16.7% but growth decelerated from 36.8% in Q2 to 16.7% in Q3

— Net profit fell 44.6% despite revenue growth, with the margin compressing from 17.3% to 8.2%

— Operating profit for the quarter was PHP 6,859.628 mn – well below year-ago levels

— Leverage at 5.64x EBITDA LTM is high, though the direction of change is not disclosed

— Dividend yield of 4.03% depends on profit and payout policy

— P/E LTM 10.96 and EV/EBITDA LTM 8.55 – valuation looks neither cheap nor expensive

— The portal model implies +8% upside to fair value – a modest cushion

Key figures, PHP bn

Revenue rose 16.7% but growth decelerated from 36.8% in Q2 to 16.7% in Q3

Revenue for Q3 2026 was PHP 99,770.85 mn, up 16.7% year on year. This marks a notable deceleration from Q2, when growth reached 36.8%. Nevertheless, the absolute level remains high – above PHP 99 bn for the second consecutive quarter.

The slowdown may reflect a high base effect from last year as well as changing conditions in key segments. Without further detail from the report, the cause cannot be pinpointed, but the deceleration itself matters for assessing the sustainability of the trend.

Net profit fell 44.6% despite revenue growth, with the margin compressing from 17.3% to 8.2%

Net profit for Q3 2026 was PHP 8,196.106 mn versus PHP 14,787.594 mn a year earlier – a decline of 44.6%. Revenue grew 16.7%, so the profit drop was not driven by weak sales.

The net margin compressed from 17.3% to 8.2% – more than halved. This points to faster cost growth or one-off factors weighing on profit. Operating profit for the quarter was PHP 6,859.628 mn, also below the year-ago level, confirming pressure on profitability at the operating level.

Operating profit for the quarter was PHP 6,859.628 mn – well below year-ago levels

Operating profit for Q3 2026 was PHP 6,859.628 mn. A year earlier this figure was significantly higher, which explains the compression in net margin. The decline in operating profit despite revenue growth indicates that costs are rising faster than revenues.

The absence of quarterly EBITDA data does not allow a precise assessment of the cost structure, but the operating profit dynamics point to pressure on profitability. For investors this is a key signal: revenue growth alone does not guarantee profit growth.

Leverage at 5.64x EBITDA LTM is high, though the direction of change is not disclosed

Net debt at the latest reported balance sheet was PHP 405,469.561 mn, corresponding to a net debt / EBITDA LTM ratio of 5.64x. This is a high level of leverage that limits the company's financial flexibility.

The direction of change in the ratio is not disclosed in the provided data, so it cannot be stated whether leverage is rising or falling. However, the level of 5.64x warrants attention: at such leverage, even a modest decline in EBITDA could significantly worsen credit metrics.

Dividend yield of 4.03% depends on profit and payout policy

The trailing 12-month dividend yield is 4.03%. This is a moderate level that may appeal to income-oriented investors, but it is noticeably below the key rate, reducing the relative attractiveness of payouts.

Future dividends depend on profit and the company's payout policy. Given the 44.6% decline in Q3 net profit, the risk of lower payouts increases. If profit remains under pressure, the dividend could be reduced, negatively affecting yield.

P/E LTM 10.96 and EV/EBITDA LTM 8.55 – valuation looks neither cheap nor expensive

The P/E LTM multiple is 10.96, and EV/EBITDA LTM is 8.55. These levels are in a range that is neither clearly low nor inflated. For a company with high leverage and declining profit, such multiples do not look attractive.

Comparison with its own three-year history is not possible due to lack of data, but current levels do not imply a substantial cushion. The market appears to have already priced in current risks, leaving limited upside for the share price.

The portal model implies +8% upside to fair value – a modest cushion

According to the portal model, the fair value of the share implies +8% upside to the current market price. This is a modest cushion consistent with a neutral rating. The model incorporates EBITDA growth and a target multiple but does not reflect possible one-off factors.

Given the profit decline and high leverage, 8% upside does not appear sufficient for a confident purchase. However, it also does not signal overvaluation. A change in rating in either direction would require new data on profit dynamics and leverage.

Valuation on the latest reported figures

Bottom line

The report's strong point remains revenue growth of 16.7%, but it has decelerated and does not translate into profit: net profit fell 44.6%, with the margin compressing from 17.3% to 8.2%. Leverage at 5.64x EBITDA LTM remains high, and the 4.03% dividend yield does not compensate for the risks. Valuation at P/E 10.96 and EV/EBITDA 8.55 offers no clear cushion, and the portal model implies only +8% upside. Our conclusion: the share is fairly valued – the +8% upside from the portal model does not provide a sufficient margin of safety for attractiveness. Our view: the share is fairly valued; upside on the portal model +8%.