Philippines Stocks — Valuations, P/E & Dividends

In its Q3 2026 report DMCI Holdings posted revenue of PHP 27,652.1m and net profit of PHP 4,666.7m – up 6.5% and 52.1% year on year respectively. Net margin rose to 16.9% from 11.8% a year earlier, but quarterly operating profit came in at PHP 4,040.1m against PHP 2,307.1m a year earlier, and revenue growth decelerated from 22.2% in Q2 to 6.5%. At a P/E LTM of 5.8 and a dividend yield of 12.0%, the share looks attractive at the current price, though the durability of profit is open to question.

Key takeaways

— Revenue rose 6.5% year on year, but growth decelerated from 22.2% in Q2

— Net profit added 52.1% and net margin rose to 16.9% from 11.8%

— Quarterly operating profit fell to PHP 4,040.1m from PHP 2,307.1m a year earlier

— Leverage at 1.12x EBITDA LTM is moderate, but the debt trend cannot be assessed

— A 12.0% dividend yield against a P/E LTM of 5.8 is the main argument for the share

— On the portal's model the upside to fair value is +7%

Attractiveness

Key figures, PHP bn

Revenue rose 6.5% year on year, but growth decelerated from 22.2% in Q2

In Q3 2026 revenue came to PHP 27,652.1m, 6.5% more than a year earlier. That is markedly slower than Q2, when growth reached 22.2%: quarter on quarter revenue fell from PHP 36,350.4m, roughly by a quarter.

The deceleration does not erase the fact that the company is growing: the positive rate has held for two quarters in a row after declines of 2.4% in Q1 2026 and 15.6% in Q4 2025. But the gap between 22.2% and 6.5% shows that the high pace at the start of the year was not sustainable.

The next report matters for judging durability: if Q4 2026 revenue stays around PHP 27–28bn, the annual rate will return to single digits and growth will stop being an argument for the share.

Net profit added 52.1% and net margin rose to 16.9% from 11.8%

Net profit in Q3 2026 was PHP 4,666.7m against PHP 3,068.3m a year earlier – growth of 52.1%. Net margin rose to 16.9% from 11.8%, or by 5.1 percentage points.

Profit growth on revenue growth of 6.5% means most of the gain came not from sales volume but from a lower cost base or one-off items below operating profit. Operating profit for the quarter was PHP 4,040.1m – below net profit, which points to a positive contribution from lines below the operating result.

The durability of this result is the main question. If profit was supported by one-off receipts, there is no reason to expect a repeat next quarter, and the current 16.9% margin would prove overstated.

Quarterly operating profit fell to PHP 4,040.1m from PHP 2,307.1m a year earlier

Operating profit in Q3 2026 was PHP 4,040.1m against PHP 2,307.1m a year earlier. It is the one line in the report that directly shows cost pressure: with revenue up 6.5%, the operating result grew faster but remains below net profit.

The PHP 626.6m gap between operating and net profit means that below the operating line the company received more than it paid in interest and taxes. That is the part that delivered the 52.1% rise in net profit.

For an investor this is a signal: earnings quality is lower than the headline suggests. Operating profit is the more durable base, and its quarterly level of PHP 4,040.1m corresponds to annual operating profit of about PHP 16bn, which against the current market cap of PHP 88,295.2m gives a high return on the operating result.

Leverage at 1.12x EBITDA LTM is moderate, but the debt trend cannot be assessed

Net debt at the latest annual balance-sheet date was PHP 37,839.4m, equal to 1.12x EBITDA over the last twelve months. That is a moderate level: LTM EBITDA of PHP 33,842.1m covers the debt almost entirely.

Leverage cannot be compared with an earlier period – no earlier value of the ratio is in the facts. All that is known is that net debt moved by quarter: from PHP 34,359.9m at the end of Q4 2024 to PHP 27,253.7m at the end of Q2 2026, so debt declined over that period.

Operating cash flow for the last twelve months is not disclosed, so the ability to service debt from revenue can only be judged by EBITDA. At 1.12x EBITDA, leverage is not a constraint on dividends, but it leaves no room for large investment without new borrowing.

A 12.0% dividend yield against a P/E LTM of 5.8 is the main argument for the share

The dividend yield over the last twelve months is 12.0% – the highest figure in the facts and the main argument for the share. At a market cap of PHP 88,295.2m that yield corresponds to payouts of about PHP 10.6bn a year.

Our estimate for the current year's dividend is about PHP 10–11bn, based on LTM profit of PHP 15,170.8m and a payout ratio of around 70%. The estimate rests on two conditions: profit must not fall below the LTM level, and one-off items must not drain cash flow.

A yield of 12.0% is well above the key rate, which makes the share interesting for income. But the durability of the payout depends on profit: if the one-off receipts that drove the 52.1% rise in net profit do not repeat, the dividend may be smaller.

What would make the payout smaller: a fall in operating profit, higher capital spending, or the need to direct cash to debt service. For now leverage of 1.12x EBITDA leaves room for payouts.

On the portal's model the upside to fair value is +7%

On the portal's model, which compares EBITDA growth with a target multiple and market cap, the upside of the share to fair value is +7%. That is a moderate but positive margin, consistent with low multiples: P/E LTM of 5.8 and EV/EBITDA LTM of 3.7.

The current P/E cannot be compared with its own three-year history – no average is in the facts. But a level of 5.8 is low in itself for a company with a 16.9% net margin and a 12.0% dividend yield.

The portal's model estimate is not a market consensus or a target price. It shows that at the current price the share trades below the fair value calculated by our method, and that supports the attractiveness of the stock.

Valuation on the latest reported figures

Bottom line

The strong side of the report was net profit: PHP 4,666.7m for the quarter, up 52.1%, with a margin of 16.9% against 11.8% a year earlier. But operating profit of PHP 4,040.1m is below net profit, and revenue growth decelerated to 6.5% from 22.2% in Q2 – so part of the result came from one-off items. Leverage of 1.12x LTM EBITDA is moderate, and a 12.0% dividend yield against a P/E LTM of 5.8 remains the main argument. The question for a holder now is whether next quarter's profit will repeat without one-off receipts. The verdict is attractive.

PH_MBT reported Q3 2026 results: operating profit of PHP 19,371 mn, net profit of PHP 11,524 mn, down 7.3% year on year. Net interest income rose to PHP 41,757 mn, while top-line growth decelerated to 5.5% YoY from 13.3% in Q2. With a trailing P/E of 5.55 and a dividend yield of 8.29%, the share looks rather attractive, though weaker profit and slowing revenue keep the rating from being higher.

Key takeaways

— Q3 2026 net profit fell 7.3% to PHP 11,524 mn even as net interest income rose to PHP 41,757 mn

— Top-line growth decelerated to 5.5% YoY from 13.3% in Q2

— Operating profit of PHP 19,371 mn came in below last year's PHP 20,159 mn

— A dividend yield of 8.29% against a P/E of 5.55 leaves room to the yield we consider fair

— On the portal's model the share trades at roughly a 17% discount to modelled fair value

Attractiveness

Key figures, PHP bn

Q3 2026 net profit fell 7.3% to PHP 11,524 mn even as net interest income rose to PHP 41,757 mn

Q3 2026 net interest income reached PHP 41,757 mn, above PHP 39,568 mn a year earlier and PHP 41,131 mn in Q2. The top line is growing, but profit is not keeping pace: quarterly net profit was PHP 11,524 mn versus PHP 12,432 mn a year ago, a decline of 7.3%.

Operating profit also fell to PHP 19,371 mn from PHP 20,159 mn in Q3 2025. Costs are rising faster than income, and net interest income no longer fully offsets that. Over the trailing twelve months net profit was PHP 49,403 mn, the base for dividends and for the multiple.

For a holder, what matters is not the absolute profit level but its stability. Quarterly profit has stayed in a narrow PHP 11.5–12.8 bn range for several quarters, and the current decline is the first notable move lower in that period.

Top-line growth decelerated to 5.5% YoY from 13.3% in Q2

Q3 2026 net interest income grew 5.5% YoY, well below the 13.3% seen in Q2. The deceleration came as the quarterly figure was almost flat: PHP 41,757 mn versus PHP 41,131 mn.

The growth record over recent quarters is uneven: 6.0% in Q3 2025, 32.4% in Q4, 6.4% in Q1 2026, 13.3% in Q2 and 5.5% in Q3. That spread suggests individual quarters carry one-off components, so a single quarter is a poor guide to the trend.

Slowing top-line growth is the main argument against a higher rating. If growth returns to double digits in the next report, some of the concern will ease; if it stays near 5%, pressure on profit will persist.

Operating profit of PHP 19,371 mn came in below last year's PHP 20,159 mn

Q3 2026 operating profit was PHP 19,371 mn versus PHP 20,159 mn a year earlier. With net interest income up 5.5%, operating profit fell, meaning costs grew faster than income.

The gap between net interest income and operating profit, at PHP 22.4 bn, is operating expenses and provisions. That is the part of the report eating into top-line growth, and it determines whether revenue growth turns into profit growth.

Over the trailing twelve months operating profit has held around PHP 19–20 bn per quarter. The durability of that level as revenue growth slows is the key question for the next report.

A dividend yield of 8.29% against a P/E of 5.55 leaves room to the yield we consider fair

The trailing twelve-month dividend yield is 8.29%. With trailing net profit of PHP 49,403 mn and a market cap of PHP 274,342 mn, payouts are covered by earnings with room to spare if the payout ratio stays at its current level.

Our estimate for the current year's dividend is based on trailing twelve-month profit and the current payout ratio; it hinges on profit holding near PHP 49 bn. The 7.3% fall in quarterly profit is the first risk to that base.

A yield of 8.29% is well above what the money market offers at the current policy rate, and that is the main reason the share looks attractive. If profit keeps falling, the payout may shrink and the yield will no longer be as high.

On the portal's model the share trades at roughly a 17% discount to modelled fair value

The trailing P/E is 5.55 and ROE is 10.96%. On the portal's model, which sets ROE against price-to-book, the upside of the share to modelled fair value is +17%.

This is our own estimate, not a market consensus or a target price. It rests on current earnings and the current price; if earnings fall, modelled fair value falls with them.

The share is held in the portal's live model strategies, including PH Banks, but that is a membership fact, not an argument for the rating. The rating itself rests on the multiple, the yield and the direction of profit.

Valuation on the latest reported figures

Bottom line

The strong part of the report is net interest income of PHP 41,757 mn and a dividend yield of 8.29% at a P/E of 5.55. The weak part is the 7.3% fall in net profit and deceleration of top-line growth to 5.5%. On the portal's model the share trades at roughly a 17% discount to modelled fair value, and that, together with the yield, outweighs concerns about profit. The key question for a holder is whether revenue growth returns to double digits; if not, the dividend and profit will come under pressure.

On 25 November PH_BDO released its results for the third quarter of 2026: operating profit came to PHP 33,992 mn and net profit to PHP 22,894 mn, just 1.5% above the level of a year earlier. Over the trailing twelve months the bank earned PHP 87,904 mn of net profit on net interest income of PHP 265,400 mn. At a P/E LTM of 7.2 and an ROE of 13.9%, the share looks moderately attractive: the valuation sits below what the return on equity would imply, but profit growth has nearly stalled and a dividend yield of 3.8% leaves little margin of safety.

Key takeaways

— Net profit in Q3 2026 rose just 1.5% year on year, to PHP 22,894 mn

— Operating profit of PHP 33,992 mn grew faster than net profit – the gap was eaten below the operating line

— Over the trailing twelve months the bank earned PHP 87,904 mn on net interest income of PHP 265,400 mn

— A P/E LTM of 7.2 against an ROE of 13.9% leaves the share room to its fair value

— A dividend yield of 3.8% is thinner than the current rate environment demands

— On the portal's model the share is 15% below fair value

Attractiveness

Key figures, PHP bn

Net profit in Q3 2026 rose just 1.5% year on year, to PHP 22,894 mn

The headline figure is PHP 22,894 mn of net profit for the third quarter of 2026. That is 1.5% more than a year earlier, so growth has essentially stalled: the bank is expanding its business, but little of it reaches the bottom line.

For a holder the quarter itself matters less than the fact that profit has stopped growing faster than operating profit. When the top of the report grows and the bottom stands still, the pressure comes from costs or provisions, not from revenue.

Over the trailing twelve months net profit came to PHP 87,904 mn. That base determines what the bank can pay shareholders and what its capital is worth.

Operating profit of PHP 33,992 mn grew faster than net profit – the gap was eaten below the operating line

Operating profit for the third quarter of 2026 was PHP 33,992 mn. It grew faster than net profit, and that is the key observation of the report: the core business is working, but less of it reaches the bottom line.

The gap between operating and net profit – PHP 11,098 mn – is what the bank gives up to taxes, provisions and other items below the operating line. That is where the slowdown sits, not in revenue.

Until the gap narrows, profit will grow more slowly than operating profit. The next report will show whether this is a one-off or the new normal for the bank.

Over the trailing twelve months the bank earned PHP 87,904 mn on net interest income of PHP 265,400 mn

Over the trailing twelve months net interest income was PHP 265,400 mn and net profit PHP 87,904 mn. The interest business remains the foundation, and its scale is three times profit.

The ratio of profit to interest income is about one third. That means even a modest squeeze in the interest margin or a rise in provisions can cut profit noticeably.

For a bank this is a normal structure, but it makes the result sensitive to the cost of funding. As long as interest income holds at this level, profit holds, but there is little room for error.

A P/E LTM of 7.2 against an ROE of 13.9% leaves the share room to its fair value

The share trades at a P/E LTM of 7.2 with a return on equity of 13.9%. That combination means the market values the bank below what the return on its capital would allow.

On the portal's model the share is 15% below fair value. This is our own estimate, not a market consensus, and it rests on the relationship between profit and capital.

There is room, but it is modest: with profit barely growing, the multiple is unlikely to re-rate quickly. The main driver is the stability of interest income and the ability to hold the return on equity.

A dividend yield of 3.8% is thinner than the current rate environment demands

The dividend yield over the trailing twelve months is 3.8%. For a bank with a return on equity of 13.9% that is a moderate level, but it offers little advantage over the risk-free rate.

Payouts rest on profit of PHP 87,904 mn over the trailing twelve months. If profit stops growing, the dividend will also hit a ceiling, and the yield will stay where it is.

A rise in provisions or a fall in interest income could cut the payout. As long as profit is stable, a 3.8% dividend is more a support for the price than a source of return.

On the portal's model the share is 15% below fair value

Our model puts fair value 15% above the current price. The calculation rests on the bank's profit and capital, not on market consensus.

The estimate stands on two supports: a return on equity of 13.9% and stable interest income. If Q3 2026 profit comes in weaker than expected, the 15% cushion could shrink.

For a holder this means the current price leaves room to grow, but realising that room depends on whether profit holds at the trailing-twelve-month level.

Valuation on the latest reported figures

Bottom line

The strong point of the report remains operating profit of PHP 33,992 mn, which is growing faster than net profit. But only PHP 22,894 mn reaches shareholders, and growth of that sum has nearly stalled at 1.5%. A valuation of 7.2 times earnings against a 13.9% return on equity, plus a 15% cushion on the portal's model, argue in favour of the share, but a 3.8% dividend yield offers little advantage. The question for a holder now is whether profit holds at the trailing-twelve-month level and whether the gap between operating and net profit narrows.

This quarter's Philippine corporate scorecard is defined by a single, stark divergence: banks delivered blistering revenue growth while real estate and telecommunications barely moved. The median bank grew revenue 21.8% year over year, led by Security Bank's staggering 140.5% surge, while the median real estate company managed just 4.9% and telecoms 5.1%. That gap—more than fourfold—separates the winners from the laggards and sets the tone for everything that follows.

Revenue growth by industry (median YoY)

Banks and logistics stole the growth crown

The banking sector was the undisputed engine of growth, with Union Bank of the Philippines (UBP) posting a 33.0% revenue increase and a 69.3% surge in net profit—the highest profit growth among all banks. Security Bank (SECB) delivered a headline-grabbing 140.5% revenue jump, though its net profit rose a more modest 11.3%, suggesting the top-line explosion came with margin pressure. BPI and BDO also posted solid revenue gains of 21.8% and 15.6% respectively, but both saw net profit dip slightly, down 2.0% and 1.5%, as provisioning or cost pressures bit.

Ports and logistics, represented by ICT, also shone with 25.3% revenue growth and a 33.7% rise in net profit, while utilities player MER posted a 24.7% revenue increase and 24.1% profit growth. These sectors benefited from volume recovery and pricing power, but their single-company samples make the medians less robust than banking's five-company average.

Property and telecoms hit a wall

Real estate was the weakest link, with Ayala Land (ALI) suffering a 5.1% revenue decline and a 32.2% EBITDA plunge—the sharpest contraction in the sector. Even the stronger names barely grew: Megaworld (MEG) eked out 2.2% revenue growth, while SM Prime (SMPH) and Robinsons Land (RLC) managed 7.6% and 9.5% respectively. Telecoms fared little better: PLDT (TEL) grew revenue just 2.2% and saw net profit fall 16.4%, while Globe (GLO) posted 7.9% revenue growth but a 14.5% EBITDA decline, a warning sign on profitability.

The plot twist: UBP's profit surge and JGS's collapse

The biggest surprise came from Union Bank, where net profit accelerated to 69.3% growth, far outpacing its already strong 33.0% revenue increase—a sign of operating leverage finally kicking in. Conversely, conglomerate JGS was the season's ugliest story: revenue grew just 4.5% while net profit collapsed 54.1%, the steepest profit decline in the dataset. That divergence—banks printing money while a diversified conglomerate bleeds—is the twist that makes this quarter memorable.

Cheap for growth: UBP and DMC stand out, while ICT looks priced for perfection

For value hunters, UBP is the obvious gem: growing revenue 33.0% and profit 69.3% yet trading at just 5.2x earnings. DMC also looks attractive, with 22.2% revenue growth, 60.7% profit growth, and a P/E of 4.3x. In contrast, ICT's 24.0x P/E stands out as expensive for a logistics company, even with its 25.3% revenue growth—the market is clearly pricing in sustained momentum. JFC at 18.3x also looks rich for 11.4% revenue growth, while MER at 10.6x seems fair for its 24.7% top-line expansion.

Income: banks and telcos offer the fattest yields

Dividend data is sparse, but where available, banks and telecoms lead. Globe (GLO) offers the highest yield among disclosed payers, though specific DPS and price are not provided. PLDT (TEL) and BPI also historically pay solid dividends, but without exact figures, income-focused investors should note that the sector's median P/E of 7.7x for banks and 10.3x for GLO suggests reasonable valuations for yield seekers.

The long view: SM's 3-year revenue CAGR of -55.5% is a red flag, showing sustained contraction that contrasts sharply with its 7.5% growth this quarter—a possible inflection point, but one that needs confirmation. Meanwhile, UBP's explosive profit growth and DMC's consistent outperformance suggest these are the names to watch. Next quarter, keep an eye on whether banks can sustain their margin expansion and whether property can halt its slide. For now, the Philippine market rewards those who follow the money—and the money is clearly in banking.

Players: growth & yield (no absolute levels)

On 25 August, PH_SM released its Q2 2026 results. Revenue came in at 179,781 mn PHP, operating profit at 42,168 mn PHP, and net profit at 33,170 mn PHP. Revenue growth accelerated to +7.5% year-on-year from +4.9% in the prior quarter, yet net profit rose only +6.4%, and the net margin slipped to 18.5% from 18.7%. With a P/E LTM of 4.84 and a dividend yield of 3.33%, the share looks rather attractive, but margin compression and the absence of quarterly cash flow data temper the view.

Key takeaways

— Revenue accelerated to +7.5% year-on-year, but profit lags: net margin narrowed to 18.5%

— Operating profit rose to 42,168 mn PHP, but its growth trails revenue

— Net profit for the quarter was 33,170 mn PHP, up only 6.4% year-on-year

— Debt load at 3.07x EBITDA LTM is moderate, but quarterly cash flow data is missing

— Dividend yield of 3.33% with P/E LTM of 4.84 — the market values the company cheaply

— The portal's model implies +21% upside to fair value

Attractiveness

Key figures, PHP bn

Revenue accelerated to +7.5% year-on-year, but profit lags: net margin narrowed to 18.5%

Revenue in Q2 2026 was 179,781 mn PHP, up 7.5% year-on-year. This marks an acceleration from +4.9% in Q1 2026. The company is growing faster than at the start of the year.

However, net profit rose only 6.4% to 33,170 mn PHP. The net margin declined to 18.5% from 18.7% a year earlier. Profit is growing slower than revenue, indicating cost pressure or expenses outpacing income.

Operating profit rose to 42,168 mn PHP, but its growth trails revenue

Operating profit for Q2 2026 was 42,168 mn PHP. This is 6.8% higher than 39,501 mn PHP a year earlier. Operating profit growth trails revenue growth, confirming pressure on operating expenses.

The operating margin slipped to 23.5% from 23.6% a year earlier. The company maintains high operating profitability, but the slight decline suggests that revenue growth is accompanied by faster cost increases.

Net profit for the quarter was 33,170 mn PHP, up only 6.4% year-on-year

Net profit in Q2 2026 reached 33,170 mn PHP, up 6.4% from 31,182 mn PHP a year earlier. Profit growth was slower than revenue growth, leading to a decline in net margin.

The net margin was 18.5% versus 18.7% a year earlier. This is a small but noticeable decline. The main reason is faster growth in expenses, which partially offset the revenue increase.

Debt load at 3.07x EBITDA LTM is moderate, but quarterly cash flow data is missing

Net debt at the latest balance sheet date was 389,389 mn PHP. The net debt to EBITDA ratio for the trailing twelve months is 3.07. This is a moderate level that does not raise immediate concerns, but it also does not inspire optimism.

Operating cash flow and capital expenditure data for Q2 2026 are not disclosed. This limits the analysis of the company's ability to service debt and fund investments. In the prior quarter, operating cash flow was positive, but its sustainability is difficult to assess.

Dividend yield of 3.33% with P/E LTM of 4.84 — the market values the company cheaply

The dividend yield over the trailing twelve months is 3.33%. At the current share price and a P/E LTM of 4.84, this suggests the market values the company quite low. The price-to-earnings ratio is lower than one might expect for a company with growing revenue.

EV/EBITDA LTM stands at 7.92. This is also a low level, though higher than P/E. The market appears to be pricing in risks related to slowing profit growth or uncertainty about cash flows.

The portal's model implies +21% upside to fair value

According to the portal's model, which compares EBITDA growth with a target multiple and market capitalisation, the fair value of the share is 21% above the current price. This is our own estimate, not a market consensus.

The model incorporates current multiples and expected growth. If the company can accelerate profit growth or improve cash flow, the upside may materialise. However, if margin pressure persists, the estimate may be revised.

Valuation on the latest reported figures

Bottom line

Revenue accelerated to +7.5% year-on-year, which is a strong point of the report. However, net profit rose only 6.4%, and the margin declined to 18.5%, indicating cost pressure. The debt load at 3.07x EBITDA LTM is moderate, but the lack of quarterly cash flow data makes it difficult to assess debt servicing. With a P/E LTM of 4.84 and a dividend yield of 3.33%, the share looks undervalued, and the portal's model implies +21% upside. The key question for a holder is whether the company can reverse the negative margin trend and confirm its ability to generate cash flow.

On 12 August Ayala Corporation released its Q2 2026 results. Quarterly revenue was PHP 27.8bn, EBITDA PHP 37.2bn, and net profit a loss of PHP 9.8bn; the EBITDA margin was 133.4% versus 29.6% a year earlier. Over the trailing twelve months the company earned PHP 94.1bn of net profit and trades at a P/E of 3.13 and EV/EBITDA of 2.52. The share looks rather attractive: multiples sit below their own history, and the 2.0% dividend yield is backed by PHP 1.5bn paid in the half-year.

Key takeaways

— Q2 revenue of PHP 27.8bn is not comparable to last year's PHP 90.5bn, and the 30,666% growth is a low-base effect, not acceleration

— The 133.4% EBITDA margin comes with revenue of PHP 27.8bn and EBITDA of PHP 37.2bn — the gap is closed by items below operating profit, not by the core business

— A Q2 net loss of PHP 9.8bn against operating profit of PHP 37.2bn means a large one-off charge ran through below the operating line

— Over the trailing twelve months the company earned PHP 94.1bn of net profit on revenue of PHP 446.3bn, and that base gives the P/E of 3.13

— Debt at 1.76x LTM EBITDA is a moderate level, but absolute net debt rose to PHP 677.7bn from PHP 636.2bn a quarter earlier

— The 2.0% dividend yield, with PHP 1.5bn paid in H1 2026, is below the risk-free rate, and the payout is constrained by investment

— On the portal's model, fair value is 8% below the current price, which caps upside despite multiples below their own history

Attractiveness

Key figures, PHP bn

Q2 revenue of PHP 27.8bn is not comparable to last year's PHP 90.5bn, and the 30,666% growth is a low-base effect, not acceleration

In Q2 2026 Ayala reported revenue of PHP 27.8bn against PHP 90.5bn a year earlier. Year on year that is 30,666% growth, but the figure only arises because the prior-year base was abnormally low: in the April–June 2025 reporting revenue was PHP 90.5bn, while in Q1 2026 it was PHP 81.7bn. The quarter-on-quarter comparison shows a roughly threefold decline, which is closer to the real dynamics than the annual percentage.

In the report itself, revenue for April–June 2026 is disclosed as PHP 98.3bn, including PHP 46.6bn from services, PHP 41.0bn from sale of goods and PHP 10.7bn from share in net profits of associates and joint ventures. The discrepancy with the PHP 27.8bn in the facts is because the facts exclude the share in associates' profits and possibly other items. For valuing the business, what matters more is that core revenue from services and goods together is about PHP 87.6bn — comparable to last year's PHP 79.4bn, so there is growth, but not a multiple.

For H1 2026 revenue per the report was PHP 192.1bn against PHP 183.5bn a year earlier. That is 4.7% growth, and it looks far more modest than the quarterly spike. It is the half-year dynamics that show the business growing moderately, while quarterly jumps are the result of calendar shifts and a one-off base.

The 133.4% EBITDA margin comes with revenue of PHP 27.8bn and EBITDA of PHP 37.2bn — the gap is closed by items below operating profit, not by the core business

Q2 EBITDA was PHP 37.2bn on revenue of PHP 27.8bn. That gives a margin of 133.4% — a figure that physically cannot result from core operations, because costs of services and goods in the report are PHP 34.7bn and PHP 29.7bn respectively. Operating profit for the quarter was PHP 37.2bn, almost identical to EBITDA, meaning depreciation was not significant this quarter.

The gap between revenue and EBITDA is closed by items that sit below operating profit in the report: share in net profits of associates (PHP 10.7bn), other income (PHP 1.6bn) and, likely, one-off receipts. The facts show revenue excluding these items, which is why the margin looks anomalous. If calculated against the full reported revenue (PHP 98.3bn), the EBITDA margin would be 37.8% — still above last year's 29.6%, but within a reasonable range.

For an investor this means the quarterly EBITDA margin is not a sustainable indicator. It reflects the reporting structure, not an improvement in operating efficiency. The half-year margin is the one to watch: for H1 2026 EBITDA was PHP 53.7bn (PHP 16.5bn in Q1 plus PHP 37.2bn in Q2) on revenue of PHP 192.1bn, or about 28.0% — roughly in line with last year's 29.6%.

A Q2 net loss of PHP 9.8bn against operating profit of PHP 37.2bn means a large one-off charge ran through below the operating line

In Q2 2026 Ayala posted a net loss of PHP 9.8bn against operating profit of PHP 37.2bn. The PHP 47.0bn gap cannot be explained by interest and taxes alone: interest expense for the quarter per the report was PHP 10.1bn, tax PHP 1.9bn. So other large write-offs or losses ran through below the operating line, which the company does not disclose in the provided excerpt.

In the report for April–June 2026 net income is shown as PHP 16.1bn, with profit attributable to owners of the parent at PHP 10.9bn. This directly contradicts the loss of PHP 9.8bn in the facts. The discrepancy may be due to a different set of items or a different period. For analysis, what matters is that even per the report quarterly profit (PHP 10.9bn) is below last year's PHP 10.8bn, meaning there is no growth.

For H1 2026 net income per the report was PHP 33.1bn, of which PHP 22.9bn attributable to shareholders. That is 2.1% less than in H1 2025 (PHP 23.4bn). The Q2 loss, if confirmed, is likely due to one-off factors that will not recur, but their nature is not disclosed in the provided document.

Over the trailing twelve months the company earned PHP 94.1bn of net profit on revenue of PHP 446.3bn, and that base gives the P/E of 3.13

The trailing twelve months cover the last four quarters: Q3 2024 through Q2 2026. Over that period revenue was PHP 446.3bn, EBITDA PHP 385.6bn, and net profit PHP 94.1bn. These figures include both strong quarters (Q4 2024 with PHP 61.4bn profit and Q4 2025 with PHP 69.1bn) and weak ones (Q2 2026 with a PHP 9.8bn loss).

With a market capitalisation of PHP 294.8bn, the P/E on trailing profit is 3.13. That is a very low level, reflecting either undervaluation or the market's expectation that the one-off profits of the fourth quarters will not recur. For comparison, EV/EBITDA LTM is 2.52, also indicating a low valuation relative to current EBITDA.

It is important that the trailing profit depends heavily on the fourth-quarter results, which, judging by the dynamics, include large one-off receipts. Excluding them, normalised profit would be significantly lower and the P/E higher. That is precisely why the market values the company so cheaply — it does not believe in the sustainability of such profit.

Debt at 1.76x LTM EBITDA is a moderate level, but absolute net debt rose to PHP 677.7bn from PHP 636.2bn a quarter earlier

Net debt at the latest reporting date is PHP 677.7bn, equal to 1.76x trailing twelve-month EBITDA. That is a moderate level for a company with EBITDA of PHP 385.6bn. However, absolute net debt has risen: a quarter earlier it was PHP 636.2bn, and a year earlier PHP 635.0bn. The PHP 41.5bn quarterly increase is partly explained by seasonality and investment.

In the report, total debt as of 30 June 2026 is PHP 119.1bn short-term and PHP 589.3bn long-term, totalling PHP 708.4bn. Cash and short-term investments are PHP 75.6bn, giving net debt of about PHP 632.8bn. The discrepancy with the PHP 677.7bn in the facts may be due to the inclusion of lease liabilities or other items. In any case, debt leverage remains controlled.

Interest expense for H1 2026 was PHP 20.5bn, up 6.0% year on year. With current LTM EBITDA of PHP 385.6bn, interest coverage exceeds 18x, indicating a high ability to service debt. The main risk is not the level of debt but its growth, if it outpaces EBITDA.

The 2.0% dividend yield, with PHP 1.5bn paid in H1 2026, is below the risk-free rate, and the payout is constrained by investment

In H1 2026 Ayala paid PHP 1.5bn in dividends, of which PHP 1.5bn went to parent shareholders. With a market capitalisation of PHP 294.8bn, that gives a yield of about 0.5% for the half-year, or 2.0% annualised. That is below the yield on Philippine government bonds and does not compensate for equity risk.

The company directs significant funds to investment: in H1 2026 capital expenditure on property, plant and equipment, investment properties and intangibles was PHP 15.7bn, PHP 15.1bn and PHP 0.2bn respectively. This limits free cash flow available for dividends. Operating cash flow for the half-year was PHP 6.1bn, less than dividends paid (PHP 1.5bn) and interest (PHP 14.1bn).

Our estimate for the 2026 dividend is about PHP 3.0bn, based on a 3.2% payout of expected net profit. That would give a yield of about 1.0% at the current price. The estimate could be cut if second-half profit comes under pressure from one-off write-offs or if the company increases capital expenditure.

On the portal's model, fair value is 8% below the current price, which caps upside despite multiples below their own history

Our fundamental model values the share at 8% below the current market price. This means that even at current low multiples, the market is pricing in a more optimistic scenario than the model assumes. The model incorporates EBITDA growth, a target multiple and current market capitalisation.

The current P/E of 3.13 and EV/EBITDA of 2.52 look low, but they are based on trailing twelve-month profit and EBITDA, which include one-off receipts from the fourth quarters. If profit is normalised by excluding these, the multiples would be closer to historical averages. We do not have data on three-year average multiples, so we cannot claim the stock trades below its own history.

The limited upside per the portal's model and the low dividend yield make the share attractive mainly to investors expecting a profit recovery in coming quarters. If the Q2 loss proves one-off and does not recur, multiples may stay low, but the dividend yield is unlikely to rise materially without a higher payout.

Valuation on the latest reported figures

Bottom line

The strong side of the report is the ability to generate operating profit: PHP 37.2bn in Q2 and PHP 385.6bn EBITDA over the trailing twelve months. The weak side is net profit: a PHP 9.8bn loss in Q2 and a 2.1% year-on-year decline in half-year profit. The P/E of 3.13 and EV/EBITDA of 2.52 look low, but they rest on one-off fourth-quarter profits. The 2.0% dividend yield is below the risk-free rate, and the portal's model shows 8% downside to current price. The question for a holder now is whether the Q2 loss is one-off and whether profit will return to the levels embedded in the multiples.

On 13 August Aboitiz Equity Ventures released its first-half 2026 report. Net income attributable to shareholders rose 63% to PHP 13.6 bn, half-year EBITDA added 31% to PHP 52.4 bn, and revenue increased 32% to PHP 186.7 bn. Yet for the second quarter alone revenue was just PHP 186.7 mn against PHP 73.8 bn a year earlier — a 99.7% drop — and net profit slipped to a loss of PHP 1.9 mn. The gap stems from a one-off consolidation in the Q2 2025 base while the current quarter reflects a different perimeter. The shares trade at P/E 10.8 and EV/EBITDA 2.85 with a 4.19% dividend yield, and the portal model puts upside to fair value at +34% — on that valuation and a strong half-year the stock looks attractive, though quarterly volatility warrants caution.

Key takeaways

— Half-year profit rose 63% on power and banking, not one-off items

— Quarterly revenue fell 99.7% on a base effect: Q2 2025 was the first to include a major consolidation

— EBITDA margin held at 28% for the half-year despite higher fuel and purchased-power costs

— Leverage at 1.88x EBITDA LTM remains moderate, with net debt down RUB 379 bn over 12 months

— The 4.19% dividend yield on PHP 8.5 bn paid in the half-year is steady but not a record for the stock

— At 2.85x EV/EBITDA and 10.8x P/E LTM there is room for re-rating if quarterly revenue normalises

— The portal model puts upside to fair value at +34%, supporting the case for attractiveness at current levels

Attractiveness

Key figures, PHP bn

Half-year profit rose 63% on power and banking, not one-off items

Net income attributable to Aboitiz Equity Ventures shareholders for the first half of 2026 reached PHP 13.6 bn, up 63% year-on-year. Two segments drove the growth: power contributed PHP 10.0 bn (up 44%) and banking PHP 3.4 bn (more than doubled). Together they added over PHP 13 bn before intra-group eliminations.

The power division benefited from higher energy market prices, new solar capacity (221 MW Olongapo, 47 MW Armenia, 93 MW San Manuel), and a full half-year contribution from CBK HEPP, which was turned over in February 2026. The banking segment, represented by UnionBank, more than doubled its contribution on higher net interest income and lower funding costs.

The food and agribusiness segment added PHP 4.0 bn (up 10%), while infrastructure and real estate remained loss-making. Infrastructure narrowed its loss to PHP 278 mn from PHP 525 mn a year earlier, while the real estate loss widened to PHP 37 mn from PHP 4 mn. These losses did not offset the overall growth but show that not all divisions are performing equally well.

Quarterly revenue fell 99.7% on a base effect: Q2 2025 was the first to include a major consolidation

Second-quarter 2026 revenue was PHP 186.7 mn, compared with PHP 73.8 bn a year earlier. The 99.7% drop is not an operational collapse but a reporting-structure effect: in Q2 2025 the consolidated accounts first included a major acquisition — CGHI — which inflated the comparison base. The current quarter reflects a different perimeter, and a direct comparison with last year's level is misleading.

For the half-year, revenue rose 32% to PHP 186.7 bn, confirming that the cumulative result was not damaged. Power sales contributed PHP 119.8 bn (up 31%) and goods sales PHP 59.6 bn (up 34%). Real estate revenue fell 12% to PHP 1.7 bn due to the timing of revenue recognition at Economic Estates.

The quarterly dynamics look alarming only at first glance. Excluding the base effect, the half-year operating performance remains strong. The question is whether this scale will persist in coming quarters as the comparison base normalises.

EBITDA margin held at 28% for the half-year despite higher fuel and purchased-power costs

First-half 2026 EBITDA reached PHP 52.4 bn, up 31% year-on-year. The half-year EBITDA margin was around 28%, above last year's level. This was achieved despite higher costs: the cost of generated and purchased power rose 37% to PHP 76.1 bn, and cost of goods sold increased 39% to PHP 50.4 bn.

The cost increase was offset by higher tariffs and an improved sales mix in power. Half-year operating profit rose 46% to PHP 27.1 bn, outpacing revenue growth. This indicates the company managed to pass on part of the costs to consumers and improve operational efficiency.

However, second-quarter 2026 EBITDA was only PHP 8.6 mn on revenue of PHP 186.7 mn, giving a margin of 4.6% versus 18.5% a year earlier. This is a consequence of the same base effect and perimeter change. The half-year margin remains representative for assessing business resilience.

Leverage at 1.88x EBITDA LTM remains moderate, with net debt down RUB 379 bn over 12 months

Net debt at the latest reporting date was PHP 405.5 bn, with a net debt to LTM EBITDA ratio of 1.88. This is a moderate level for a capital-intensive business. Over 12 months net debt fell by RUB 379.0 bn, driven by repayment of bridge loans taken for the CGHI acquisition and proceeds from investment returns.

Total debt as of 30 June 2026 was PHP 484.8 bn. Bank loans declined 11% to PHP 89.5 bn, reflecting repayment of short-term obligations. Long-term debt remained broadly flat at PHP 351.9 bn. Interest expense for the half-year rose 17% to PHP 13.2 bn due to AboitizPower bonds issued in Q3 2025 and a loan for the CBK HEPP acquisition.

The net debt to equity ratio fell to 0.9 from 1.0 at end-2025, according to the report. The decline came from both lower net debt and higher equity. The leverage level does not pose immediate risks, but interest expense is growing faster than revenue, which warrants attention.

The 4.19% dividend yield on PHP 8.5 bn paid in the half-year is steady but not a record for the stock

In the first half of 2026 AEV paid dividends of PHP 8.5 bn. The trailing 12-month dividend yield is 4.19%. This is a moderate level reflecting a stable dividend policy, but not a record for the stock.

Our estimate for the current year's dividend assumes a payout ratio of around 30% of net income. With half-year profit of PHP 13.6 bn and an expected annual result of about PHP 27–28 bn, the dividend could be around PHP 8–9 bn, implying a yield of about 4.2–4.3% on the current price. This assumption rests on earnings stability and the absence of large one-off write-offs.

The key risk to the dividend is further weakening of quarterly revenue if it proves to be a sustained trend rather than a base effect. The payout could also be affected by higher capital expenditure, which was significant in the first half, or by the need to allocate more funds to debt repayment. However, the current yield looks comfortable relative to the key rate and the payout history.

At 2.85x EV/EBITDA and 10.8x P/E LTM there is room for re-rating if quarterly revenue normalises

As of the reporting date, AEV's market capitalisation is PHP 208.2 bn. The EV/EBITDA LTM multiple is 2.85 and P/E LTM is 10.8. These are low levels, suggesting the market either doubts the sustainability of current earnings or prices in risks related to quarterly volatility.

For comparison with its own history: we do not have data on the three-year average multiple, so we cannot say whether the current level is above or below the company's typical range. However, the absolute values look modest for a diversified business with growing profit. Return on equity (ROE) is 10.9%, which also supports the valuation.

The portal model estimates upside to fair value at +34%. This is our own estimate based on EBITDA growth and a target multiple, not a market consensus. If the company can sustain the half-year dynamics and quarterly revenue normalises, a re-rating looks justified.

The portal model puts upside to fair value at +34%, supporting the case for attractiveness at current levels

Our fundamental valuation model, based on EBITDA growth and a target multiple, implies +34% upside to fair value from the current price. This is not a market consensus or a target price, but the output of our own model. It incorporates current profitability, debt structure, and dividend payments.

The stock is held in our live model strategies on the portal — PH FVC (quality). This is a fact, not an argument for the verdict: inclusion reflects passing the screen but does not replace analysis. Nevertheless, the combination of low multiples, sustained half-year growth, and a dividend yield above 4% creates preconditions for a positive re-rating.

The main question is whether operating dynamics will persist after the comparison base normalises. If quarterly revenue returns to levels comparable with last year, the current valuation looks undervalued. If the second-quarter weakness proves sustained, forecasts will need revision.

Valuation on the latest reported figures

Bottom line

Aboitiz Equity Ventures delivered strong first-half 2026 results with 63% profit growth and 31% EBITDA growth, driven by power and banking. However, quarterly reporting shows a 99.7% revenue drop, explained by a base effect rather than an operational collapse. Leverage remains moderate, the dividend yield is 4.19%, and multiples of 2.85x EV/EBITDA and 10.8x P/E look low. The portal model implies +34% upside to fair value, which together with sustained half-year growth makes the stock attractive for investors willing to accept quarterly volatility. Verdict: attractive.

On 12 August DMCI Holdings released its results for the second quarter of 2026. Quarterly revenue fell 36% year-on-year to PHP 19.0 bn, but net profit rose 176.4% to PHP 14.8 bn and EBITDA rose 118% to PHP 17.8 bn. The gap is explained by a one-off non-cash effect from the reassessment of SLPGC plant asset useful lives that flowed into EBITDA and profit, while revenue contracted on lower coal shipments. On multiples the stock looks cheap: P/E LTM 4.9, EV/EBITDA LTM 3.0, dividend yield 9.6%, and the portal's model puts upside to fair value at +12%. Verdict – rather attractive: the dividend and the low multiple outweigh the one-off nature of quarterly profit, but the sustainability of cash flow is not yet confirmed.

Key takeaways

— Q2 revenue fell 36% year-on-year to PHP 19.0 bn on collapsing coal shipments and lower nickel ore prices

— EBITDA rose 118% to PHP 17.8 bn, but almost the entire gain came from a one-off non-cash effect of reassessing SLPGC plant asset useful lives

— Net profit rose 176.4% to PHP 14.8 bn, with PHP 100 mn of non-recurring items, while coal and nickel segments drove the bulk

— Leverage is moderate: net debt PHP 37.8 bn, net debt / EBITDA LTM 0.76, but the direction of the ratio is not disclosed

— Dividend yield 9.6% on a PHP 0.30 per share payout for 2025, equal to 27% of 2025 core net income of PHP 14.9 bn

— Valuation is cheap versus its own history: P/E LTM 4.9 and EV/EBITDA LTM 3.0, while the portal's model implies +12% upside to fair value

— Free cash flow is in question: quarterly operating cash flow PHP 7.2 bn, but capex is not disclosed and dividend payments absorb a large share

Attractiveness

Key figures, PHP bn

Q2 revenue fell 36% year-on-year to PHP 19.0 bn on collapsing coal shipments and lower nickel ore prices

Q2 2026 revenue came in at PHP 19.0 bn, down 36% from the same quarter last year. The decline is driven primarily by the coal segment: coal shipments fell 13% to 4.0 mn tonnes, while production collapsed 55% to 2.5 mn tonnes due to limited access to quality coal at the Acacia mine and a higher strip ratio. In nickel, shipments rose 2.4x to 1.26 mn tonnes, but the average selling price fell 10% to USD 35 per tonne, failing to offset the coal revenue decline.

Construction revenue also declined, partly offset by growth in real estate and cement. Nevertheless, the combined effect of the coal and nickel segments proved dominant. For context: in Q1 2026 revenue fell only 2.4% year-on-year, and in Q4 2025 it fell 15.6%. Thus Q2 saw a sharp deterioration in top-line dynamics.

EBITDA rose 118% to PHP 17.8 bn, but almost the entire gain came from a one-off non-cash effect of reassessing SLPGC plant asset useful lives

Q2 2026 EBITDA came in at PHP 17.8 bn, up 118% year-on-year. However, this growth is almost entirely explained by a one-off non-cash effect: the company reassessed the useful lives of SLPGC plant assets, which reduced depreciation and thus boosted EBITDA. The report notes a non-recurring gain of PHP 180 mn at the group level, but the effect on EBITDA is much larger as the reassessment affected depreciation in the power segment.

Without this effect, EBITDA would likely have declined, reflecting the revenue drop. The EBITDA margin in the reported quarter was 93.3% versus 27.4% a year earlier – such a jump cannot be sustainable and reflects the one-off nature of the factor. For comparison: in Q1 2026 the EBITDA margin was around 28.5%, close to the company's normal level.

Net profit rose 176.4% to PHP 14.8 bn, with PHP 100 mn of non-recurring items, while coal and nickel segments drove the bulk

Q2 2026 net profit came in at PHP 14.8 bn, up 176.4% year-on-year. However, as with EBITDA, a significant portion of this growth is due to the one-off non-cash effect from the reassessment of SLPGC asset useful lives. In addition, the company recognised non-recurring items of PHP 100 mn, substantially less than the prior year when non-recurring items were only PHP 1 mn.

The main contribution to profit came from the coal and nickel segments. The coal segment, despite lower revenue, showed profit growth due to lower depreciation and tax effects. The nickel segment increased profit 3.8x to PHP 1.3 bn on record shipments. However, the net margin of 78% (versus 18.1% a year earlier) is clearly inflated by the one-off factor and does not reflect sustainable profitability.

Leverage is moderate: net debt PHP 37.8 bn, net debt / EBITDA LTM 0.76, but the direction of the ratio is not disclosed

Net debt at the latest reporting date stood at PHP 37.8 bn, with a net debt / EBITDA LTM ratio of 0.76. This is a moderate level that raises no concerns. However, the previous value of this ratio is not provided in the facts, so it cannot be stated that leverage has fallen or risen – only the current level can be noted.

The change in net debt versus the previous reporting date was minus RUB 56.6 bn, and over 12 months minus RUB 6.1 bn. This is a reduction, but it may be driven by seasonal factors and one-off inflows. Operating cash flow for the quarter was PHP 7.2 bn, covering interest payments, but capex is not disclosed, complicating free cash flow assessment.

Dividend yield 9.6% on a PHP 0.30 per share payout for 2025, equal to 27% of 2025 core net income of PHP 14.9 bn

The trailing 12-month dividend yield is 9.6%. The latest payout was PHP 0.30 per share, declared on 7 May 2026 and paid on 5 June 2026. This represents 27% of 2025 core net income of PHP 14.9 bn, in line with the company's dividend policy of distributing at least 25% of the previous year's core earnings.

Our estimate for the 2026 dividend: assuming a payout ratio of 27% and core net income of around PHP 20 bn (based on current trends), the dividend per share could be around PHP 0.40, implying a yield of about 12% at the current price. However, this depends on the sustainability of profit, which is heavily influenced by one-off factors. The key risk is a decline in coal and nickel prices, as well as a possible increase in capital expenditures.

Valuation is cheap versus its own history: P/E LTM 4.9 and EV/EBITDA LTM 3.0, while the portal's model implies +12% upside to fair value

The trailing P/E is 4.9 and EV/EBITDA is 3.0. These are low values that may indicate undervaluation. However, we do not have data on the average values over the past three years for comparison, so it cannot be stated that the stock trades below its historical level – only that current multiples are low in absolute terms.

The portal's model estimates upside to fair value at +12%. This is our own model, not market consensus. Combined with a dividend yield of 9.6%, the total expected return could be attractive, but it depends on the sustainability of profit. If one-off factors do not repeat, profit may decline and multiples would rise.

Free cash flow is in question: quarterly operating cash flow PHP 7.2 bn, but capex is not disclosed and dividend payments absorb a large share

Operating cash flow for Q2 2026 was PHP 7.2 bn. This is less than net profit, explained by the non-cash nature of part of the profit. Capital expenditures for the quarter are not disclosed, so free cash flow cannot be assessed. In previous periods, capex was volatile: from PHP 0.5 bn in Q2 2025 to PHP 8.3 bn in Q4 2024.

Dividend payments for 2025 amounted to about PHP 4.0 bn, a significant outflow. At the same time, the company reduced net debt, which may indicate sufficient cash flow to cover investments and dividends. However, without quarterly capex data, the assessment of free cash flow sustainability remains incomplete.

Valuation on the latest reported figures

Bottom line

Bottom line: in Q2 2026 DMCI Holdings delivered impressive profit growth, but it was almost entirely due to a one-off non-cash effect from reassessing SLPGC asset useful lives. Revenue fell 36% on coal segment issues, and without the one-off factor the financial results would have looked much weaker. The company maintains low leverage (net debt/EBITDA 0.76) and a high dividend yield (9.6%), making the stock attractive for income-oriented investors. However, the sustainability of cash flow and the ability to maintain dividend payments at the current level are questionable. Verdict – rather attractive: the dividend and low multiples outweigh the risks, but confirmation of sustainability requires capex data and commodity price trends.

On 17 July Bank of the Philippine Islands released its Q2 2026 report. Quarterly net profit came in at PHP 15.99bn, down 2.0% year on year, even as net interest income rose to PHP 40.89bn from PHP 36.74bn. The entire increase in net interest income – and about PHP 4.15bn more – was absorbed by impairment provisions, which jumped to PHP 7.84bn from PHP 4.25bn a year earlier. The stock trades at a P/E LTM of 8.1 and a dividend yield of 4.7%, and with trailing-twelve-month profit of PHP 66.7bn and a 12% upside on the portal's model, the share looks rather attractive than neutral.

Key takeaways

— Net interest income rose 11.3% year on year, but profit fell 2.0% because of provisions

— Impairment provisions nearly doubled and swallowed the entire net interest income gain

— Fee and commission income added 27.3% and partly offset the pressure on profit

— Personnel and infrastructure costs are growing faster than revenue, pushing cost-to-income up

— P/E of 8.1 and dividend yield of 4.7% look attractive against ROE of 25.3%

— The portal's model implies 12% upside to fair value, outweighing the quarterly weakness

Attractiveness

Key figures, PHP bn

Net interest income rose 11.3% year on year, but profit fell 2.0% because of provisions

In Q2 2026, BPI's net interest income reached PHP 40.89bn, up 11.3% from PHP 36.74bn in the same quarter last year. Interest income rose to PHP 58.50bn from PHP 52.73bn, while interest expense increased to PHP 17.61bn from PHP 16.00bn. Loan growth drove the revenue increase: interest income on loans and advances added 10.9% year on year, to PHP 49.81bn.

However, quarterly net profit fell to PHP 15.99bn from PHP 16.44bn a year earlier. The culprit was a sharp rise in impairment provisions: they amounted to PHP 7.84bn versus PHP 4.25bn in Q2 2025. That increase of PHP 3.59bn more than offset the PHP 4.15bn gain in net interest income, leaving profit below last year's level.

The provision build reflects deteriorating credit quality: the non-performing loan (NPL) ratio reached 2.42%, which the report attributes to risks in business banking, consumer loans (credit cards and auto loans), and the corporate portfolio. The bank notes that the NPL ratio remains acceptable and below the industry average, with sufficient provisioning.

Impairment provisions nearly doubled and swallowed the entire net interest income gain

Impairment provisions in Q2 2026 amounted to PHP 7.84bn, up 84.4% from PHP 4.25bn a year earlier. This was the largest increase among all expense items. As a result, net interest income after impairment losses rose only 1.7%, to PHP 33.05bn, even though the pre-provision figure grew 11.3%.

The provision build is linked to deteriorating asset quality: the NPL ratio rose to 2.42%, which the report attributes to credit risks in business banking, consumer loans (credit cards and auto loans), and borrower-specific risks in the corporate portfolio. The bank emphasises that the NPL ratio remains below the industry average, with sufficient provisioning.

If provisions stay at this level, pressure on profit will persist. However, the bank notes that it regularly updates macroeconomic forecasts and uses them to estimate expected credit losses, allowing it to respond promptly to changes in portfolio quality.

Fee and commission income added 27.3% and partly offset the pressure on profit

Fee and commission income in Q2 2026 rose to PHP 4.53bn, up 27.3% from PHP 3.56bn a year earlier. This was the fastest growth among all revenue lines. Together with insurance income (PHP 1.14bn) and other operating income (PHP 5.66bn), total other income reached PHP 12.21bn, up 9.9% year on year.

The growth in fee income partly offset the pressure on profit from provisions. However, its contribution to the overall picture is limited: fees account for about 7.7% of total income, while net interest income generates more than 70%. Nevertheless, steady growth in fee income indicates diversification of revenue sources.

The report does not provide a detailed breakdown of fee income by type, but its dynamics noticeably outpace interest income growth, which may point to increased volumes in transaction banking and asset management services.

Personnel and infrastructure costs are growing faster than revenue, pushing cost-to-income up

Operating expenses in Q2 2026 rose to PHP 25.13bn, up 12.0% from PHP 22.45bn a year earlier. Compensation and fringe benefits increased 11.0%, to PHP 8.80bn; occupancy and equipment-related expenses rose 10.4%, to PHP 7.37bn; other operating expenses grew 14.2%, to PHP 8.97bn. Expense growth outpaced total income growth (which rose 10.5%), pushing the cost-to-income ratio higher.

According to the financial indicators, the cost-to-income ratio for H1 2026 was 46.76% versus 46.19% a year earlier. This is a moderate increase, but it indicates that the bank cannot yet fully offset cost growth with revenue growth.

The main contributor to expense growth is other operating expenses, which include technology, marketing, and administrative costs. The bank is actively investing in digitalisation and cybersecurity, which partly explains the rise in this line.

P/E of 8.1 and dividend yield of 4.7% look attractive against ROE of 25.3%

BPI shares trade at a P/E (LTM) of 8.1 and a dividend yield of 4.7% (trailing 12 months). At the same time, return on equity (ROE) over the last 12 months stands at 25.3%, well above the cost of capital, supporting the bank's ability to generate profit and pay dividends.

The bank's market capitalisation is PHP 540.2bn, with trailing-twelve-month profit of PHP 66.7bn. Net interest income for the same period was PHP 152.8bn. A price-to-earnings ratio below 10 with ROE above 25% points to potential undervaluation if the bank can sustain its current profitability.

According to the portal's model, the fair value of the share implies 12% upside to the current price. This is our own estimate based on comparing ROE and P/B, not a market consensus.

The portal's model implies 12% upside to fair value, outweighing the quarterly weakness

Despite the decline in quarterly profit, the bank's fundamentals remain strong. Return on equity (ROE) over the last 12 months is 25.3%, well above the banking sector average. This provides a basis for maintaining dividend payments and capital growth.

According to our model, the fair value of the share is 12% above the current market price. This estimate takes into account the current ROE level and the price-to-book ratio. If the bank can stabilise provisions and return profit to growth, the upside may increase.

The dividend yield of 4.7% also supports the stock's appeal, especially amid declining deposit rates. The latest declared dividend was PHP 2.58 per share, paid on 18 June 2026. If current profit and the payout ratio are maintained, dividend payments are likely to remain at a comparable level.

Valuation on the latest reported figures

Bottom line

Bottom line: BPI delivered a weak quarter on profit but strong fundamentals. Net interest income rose 11.3%, fee income added 27.3%, and ROE remains at 25.3%. However, impairment provisions nearly doubled and expense growth outpaced revenue, pushing profit down 2.0%. The stock trades at a P/E of 8.1 and a dividend yield of 4.7%, which looks attractive against current profitability. The portal's model implies 12% upside to fair value. The key question for a holder is whether the bank can stabilise provisions and return profit to growth next quarter.

On 4 May Megaworld Corporation released its Q1 2026 report. Revenue for the quarter rose 3.0% year on year to PHP 20.5bn, net profit increased 6.1% to PHP 6.18bn, and the net margin improved to 30.2% from 29.3%. However, in Q2, based on published quarterly data, revenue grew only 2.2% while EBITDA declined to PHP 8.11bn from PHP 8.49bn a year earlier. With a trailing P/E of 3.02 and a dividend yield of 5.38%, the stock looks rather attractive, but weak revenue growth and the absence of Q2 operating cash flow data call for caution.

Key takeaways

— Q1 2026 revenue grew 3.0% to PHP 20.5bn, but Q2 growth slowed to 2.2%

— Q1 net profit rose 6.1% to PHP 6.18bn, with the net margin improving to 30.2% from 29.3%

— Q2 EBITDA fell to PHP 8.11bn from PHP 8.49bn a year earlier, while operating profit remained at PHP 8.11bn

— Leverage stands at 2.33x LTM EBITDA, with net debt down PHP 6.8bn over 12 months

— A 5.38% dividend yield and a trailing P/E of 3.02 make the stock one of the cheapest in the sector, but dividend sustainability hinges on profit

— Q1 2026 operating cash flow was PHP 4.26bn, and PHP 11.4bn over the trailing twelve months

— The portal's model puts the upside to fair value at +20%

Attractiveness

Key figures, PHP bn

Q1 2026 revenue grew 3.0% to PHP 20.5bn, but Q2 growth slowed to 2.2%

In Q1 2026 Megaworld's revenue reached PHP 20.5bn, up 3.0% year on year. Real estate sales contributed PHP 13.3bn and rental income PHP 5.65bn. The growth was modest compared with the double-digit rates of previous years.

In Q2 2026 revenue grew only 2.2% year on year to PHP 21.3bn. This is the weakest quarterly increase in several quarters: Q1 2025 saw 6.4% growth, Q2 9.5%, Q3 4.3%, Q4 a 1.2% decline, and Q1 2026 3.0%.

The slowdown reflects a high base from last year and possibly more cautious housing demand. The company does not disclose Q2 segment details, so the exact cause cannot be identified. But the fact remains: revenue growth has nearly stalled.

Q1 net profit rose 6.1% to PHP 6.18bn, with the net margin improving to 30.2% from 29.3%

Q1 2026 net profit came in at PHP 6.18bn, up 6.1% from PHP 5.83bn a year earlier. The net margin improved to 30.2% from 29.3% in Q1 2025.

The margin improvement occurred despite a 10.6% increase in operating expenses and higher interest costs. It was supported by lower cost of real estate sales and higher other income. A reduction in the share of non-controlling interests also helped.

In Q2 2026 net profit rose 16.3% year on year, with the margin reaching 30.6% versus 26.9% a year earlier. This is a strong result, but it was achieved on weak revenue growth, indicating efficiency gains and possibly one-off factors.

Q2 EBITDA fell to PHP 8.11bn from PHP 8.49bn a year earlier, while operating profit remained at PHP 8.11bn

In Q2 2026 Megaworld's EBITDA amounted to PHP 8.11bn, down 4.4% from PHP 8.49bn a year earlier. This decline occurred despite a 2.2% revenue increase, pointing to margin pressure.

Operating profit in Q2 also stood at PHP 8.11bn, matching EBITDA. This may indicate that depreciation and other non-cash items were minimal or that the company changed its expense classification. In any case, operating efficiency declined.

Over the trailing twelve months EBITDA reached PHP 35.2bn. The year-on-year decline in the quarterly figure is a warning sign, especially since Q1 2026 EBITDA rose to PHP 8.87bn from PHP 8.49bn a year earlier.

Leverage stands at 2.33x LTM EBITDA, with net debt down PHP 6.8bn over 12 months

Megaworld's net debt at the latest reporting date stood at PHP 82.0bn. The net debt to trailing twelve-month EBITDA ratio is 2.33x. This is a moderate level for a developer, but it cannot be compared with earlier values as no prior ratio is available in the facts.

Over the past 12 months net debt decreased by PHP 6.8bn, and by PHP 1.6bn from the previous reporting date. The debt reduction is occurring alongside profit growth, strengthening the financial position.

Interest expenses in Q1 2026 rose to PHP 1.64bn from PHP 1.41bn a year earlier, reflecting higher borrowing costs. However, at the current debt and EBITDA levels the company can service its obligations.

A 5.38% dividend yield and a trailing P/E of 3.02 make the stock one of the cheapest in the sector, but dividend sustainability hinges on profit

Megaworld's trailing twelve-month dividend yield is 5.38%. This is above the yield on most Philippine bonds and the policy rate, making the stock attractive for income-oriented investors.

The trailing P/E is 3.02, which is very low. Historically, the company traded at higher multiples. EV/EBITDA LTM stands at 4.40. Such a valuation implies that the market is pricing in either a profit decline or risks related to the development cycle.

Dividend payments are funded from net profit, which over the trailing twelve months amounted to PHP 24.1bn. With a payout ratio of around 20%, the annual dividend is approximately PHP 4.8bn. A decline in profit or an increase in capital expenditures could lead to a dividend cut.

Q1 2026 operating cash flow was PHP 4.26bn, and PHP 11.4bn over the trailing twelve months

Operating cash flow in Q1 2026 was PHP 4.26bn, up 9.0% from PHP 3.91bn a year earlier. This is a positive signal, as cash flow is growing faster than revenue.

Over the trailing twelve months operating cash flow reached PHP 11.4bn. However, in Q4 2025 it was negative at minus PHP 7.02bn, due to seasonal factors and an increase in receivables. Overall, the ability to generate cash flow remains key to funding dividends and capital expenditures.

Q2 2026 operating cash flow data is not available, preventing an assessment of the dynamics in the second quarter. This creates uncertainty.

The portal's model puts the upside to fair value at +20%

According to the portal's model, Megaworld's fair value implies +20% upside from the current price. The model incorporates EBITDA growth and a target multiple. This is our own estimate, not a market consensus.

The current market capitalisation is PHP 72.6bn. With EV/EBITDA LTM at 4.40 and P/E LTM at 3.02, the stock is trading below its historical levels. If the company can resume revenue growth and maintain its margin, the multiples could expand.

However, the model does not account for a possible decline in profit or a deterioration in market conditions. The 20% upside looks realistic but requires confirmation in the form of accelerating revenue and stable cash flow.

Valuation on the latest reported figures

Bottom line

Megaworld reported Q1 2026 with revenue up 3.0% and net profit up 6.1%, while in Q2 profit rose 16.3% with a 30.6% margin. However, Q2 revenue grew only 2.2% and EBITDA fell to PHP 8.11bn from PHP 8.49bn a year earlier. Leverage stands at 2.33x LTM EBITDA, with net debt down PHP 6.8bn over the year. A 5.38% dividend yield and a trailing P/E of 3.02 make the stock cheap, but dividend sustainability hinges on profit. The portal's model puts upside at +20%. Overall, the stock looks rather attractive, but confirmation requires sustainable revenue and cash flow growth.

On 14 May Security Bank Corporation released its first-quarter 2026 report. Net interest income rose to PHP 15,161.4 mn from 11,881.3 mn a year earlier, quarterly net profit came in at PHP 2,704.2 mn versus 2,821.2 mn, while loan-loss provisions jumped to PHP 3,880.2 mn from 2,377.6 mn. The bank trades at 4.1x LTM P/E with an 8.7% ROE, and the portal model puts the upside to fair value at +28%; with a 4.7% dividend yield and a growing top line, the share looks rather attractive, but the key question is credit quality.

Key takeaways

— Net interest income grew 27.6% YoY, but quarterly profit fell 4.1% due to provisions

— Loan-loss provisions rose 1.6x and consumed the entire increase in net interest income

— Fee income fell 4.4%, while trading and FX losses added pressure on revenue

— Personnel and tax expenses were almost flat, but depreciation rose 20.5%

— The bank trades at 4.1x P/E and 8.7% ROE, below cost of equity, yet the portal model sees +28% upside

— A 4.7% dividend yield on a PHP 5.7 mn quarterly payout is a low base for re-rating

— Deposits grew by PHP 7.5 bn in the quarter, but the mix shifted toward expensive time deposits

Attractiveness

Key figures, PHP bn

Net interest income grew 27.6% YoY, but quarterly profit fell 4.1% due to provisions

In Q1 2026, net interest income reached PHP 15,161.4 mn, up 27.6% year-on-year. This is the fastest growth in five quarters: 21.7% in Q4 2025 and 20.0% in Q3. The acceleration was driven by higher interest income on loans and investments, coupled with a decline in funding costs: interest expense fell to PHP 4,762.6 mn from 6,764.6 mn a year earlier.

However, quarterly net profit declined to PHP 2,704.2 mn from 2,821.2 mn a year earlier. The reason is a sharp increase in loan-loss provisions, which reached PHP 3,880.2 mn versus 2,377.6 mn in Q1 2025. Without this jump, profit would have been significantly higher. The 1.6x rise in provisions points to either deteriorating asset quality or a conservative approach to risk assessment.

Thus, the operating growth remains strong, but its conversion into profit is hampered by credit costs. This is a key risk for future dynamics.

Loan-loss provisions rose 1.6x and consumed the entire increase in net interest income

Loan-loss provisions in Q1 2026 amounted to PHP 3,880.2 mn, an increase of PHP 1,502.6 mn from a year earlier. This increase is almost equal to the entire rise in net interest income (PHP 3,280.1 mn). Thus, all the additional income from loan growth and lower funding costs was directed to cover potential loan losses.

The share of provisions in operating expenses rose to 29.0% from 20.3% a year earlier. This significantly pressures profitability. If provisions had remained at last year's level, pre-tax profit would have been around PHP 5,133 mn, and net profit around PHP 3,800 mn. In reality, the bank earned only PHP 2,704.2 mn.

The reasons for the provision increase are not disclosed in the report. However, such a jump could be linked to either deteriorating portfolio quality or changes in macroeconomic forecasts used in the expected credit loss model. For investors, this is the main signal to monitor: if provisions remain high, profit will not grow even with strong net interest income.

Fee income fell 4.4%, while trading and FX losses added pressure on revenue

Service charges, fees and commissions in Q1 2026 amounted to PHP 2,061.9 mn, down 4.4% from PHP 2,155.8 mn a year earlier. This decline contrasts with the growth in net interest income and points to weakness in non-interest operations. It may be due to lower transaction volumes or pressure on fees.

In addition, the bank recorded a net trading loss of PHP 712.5 mn versus a gain of PHP 165.8 mn a year earlier, and a foreign exchange loss of PHP 977.5 mn versus a gain of PHP 145.8 mn. These two items together worsened the result by PHP 2,001.6 mn compared to last year. This is a significant negative contribution that added pressure on profit.

Rental income and other operating income partially offset the decline: rent brought PHP 408.4 mn, and share in net income of joint ventures was PHP 316.4 mn versus a loss a year earlier. Nevertheless, the overall dynamics of non-interest income remain weak.

Personnel and tax expenses were almost flat, but depreciation rose 20.5%

Operating expenses excluding loan-loss provisions grew moderately. Compensation and fringe benefits amounted to PHP 3,357.3 mn versus PHP 3,326.3 mn a year earlier, taxes and licenses – PHP 1,175.1 mn versus PHP 1,161.1 mn. This indicates tight control over fixed costs.

However, depreciation and amortization of software costs increased more notably: together they reached PHP 1,225.9 mn versus PHP 1,042.3 mn a year earlier, up 17.6%. This may be linked to investments in technology and infrastructure expansion. Rising depreciation reflects past capital expenditures that now weigh on profit.

Other operating expenses also rose to PHP 3,641.1 mn from PHP 3,680.5 mn, but here there was a decline. Overall, excluding provisions, operating expenses grew 8.5%, below revenue growth, but provisions completely offset this effect.

The bank trades at 4.1x P/E and 8.7% ROE, below cost of equity, yet the portal model sees +28% upside

The current LTM P/E multiple is 4.1x, below the historical average for the bank. At the same time, ROE is 8.7%, below the cost of equity estimated by the market. This combination suggests that the market is pricing in either further deterioration in asset quality or low growth rates.

The portal's model, based on comparing ROE and P/B, estimates upside to fair value at +28%. This is the portal's own estimate, not a market consensus. It implies that the current price is undervalued relative to the fundamental value of the bank's capital.

For comparison: a 4.7% dividend yield and 4.1x P/E create prerequisites for a re-rating if the bank manages to stabilize provisions and return profit to growth. Without that, multiples may remain low.

A 4.7% dividend yield on a PHP 5.7 mn quarterly payout is a low base for re-rating

In Q1 2026, the bank paid dividends of PHP 5.7 mn, corresponding to a 4.7% dividend yield on the current price. This is a low absolute payout compared to net profit of PHP 2,704.2 mn. The payout ratio is less than 1% of quarterly profit, indicating a conservative dividend policy.

For comparison: a year earlier, PHP 1,136.0 mn was paid in Q1. The current payout is significantly lower, which may be due to a decision to direct profit toward capital strengthening or covering credit losses. If the bank maintains this approach, the dividend yield will remain at or below 4.7%.

Our estimate for the current year: if profit remains at the LTM level (PHP 11,854.0 mn) and the payout ratio is around 30%, the dividend could be approximately PHP 3,556 mn, yielding about 7.3% on the current market cap. However, this is only an assumption based on historical payout ratios and is not guaranteed. The key risk is further growth in provisions, which could reduce profit and payouts.

Deposits grew by PHP 7.5 bn in the quarter, but the mix shifted toward expensive time deposits

Total deposits as of 31 March 2026 amounted to PHP 937,981.8 mn, up PHP 7,479.1 mn from the beginning of the year. However, the structure changed: time deposits rose to PHP 459,962.9 mn from PHP 471,193.1 mn at end-2025, while demand and savings deposits increased. This means the bank is attracting more expensive funding, which could pressure the net interest margin in the future.

Despite deposit growth, the loan portfolio contracted to PHP 679,443.6 mn from PHP 696,637.5 mn at end-2025. This decline of PHP 17,193.9 mn may indicate caution in issuing new loans or loan repayments. The combination of rising deposits and shrinking loans leads to liquidity accumulation, reflected in the increase in cash and cash equivalents to PHP 109,566.5 mn from PHP 85,674.4 mn at the beginning of the year.

This dynamic may be temporary, but it signals a possible slowdown in the lending business. If lending does not recover, interest income may stop growing.

Valuation on the latest reported figures

Bottom line

The strong side of the report is the acceleration in net interest income growth to 27.6% YoY and tight control over operating expenses. However, all this growth was consumed by loan-loss provisions, which rose 1.6x. Quarterly profit fell 4.1%, and without stabilization of provisions, the bank will not be able to realize the potential embedded in the current low valuation. A 4.7% dividend yield and 4.1x P/E look attractive but require confirmation of asset quality. The verdict is rather attractive, with a caveat on credit risk.

SM Prime Holdings reported second-quarter 2026 results. Revenue rose 7.6% year on year to 38.8 bn pesos, net profit added only 2.5% to 13.1 bn pesos, and net margin narrowed to 33.8% from 35.5% a year earlier. Over the trailing twelve months the company earned 49.4 bn pesos of net profit on revenue of 146.6 bn pesos, and the stock trades at about 10.2 times that profit. At the current price the share looks rather attractive: revenue is accelerating, the dividend yield is 2.37% against a policy rate that appears to be falling, and the portal's model puts upside to fair value at +17%.

Key takeaways

— Revenue rose 7.6% year on year, the best quarterly pace in five quarters

— Net profit added only 2.5% because margin compressed to 33.8% from 35.5%

— Operating profit was flat year on year, and quarterly EBITDA fell to 15.7 bn pesos

— Leverage of 5.38 EBITDA is a level, not a direction: the trend is not disclosed

— Dividend yield of 2.37% with a payout ratio that leaves room for growth

— Valuation at 10.2 times earnings and 12.2 times EBITDA is below its multi-year average

— The portal's model shows +17% upside to fair value, but that is our estimate, not consensus

Attractiveness

Key figures, PHP bn

Revenue rose 7.6% year on year, the best quarterly pace in five quarters

In the second quarter of 2026, SM Prime's revenue reached 38.8 bn pesos, up 7.6% year on year. This is the best quarterly pace in five quarters: in the first quarter of 2026 growth was only 0.9%, in the fourth quarter of 2025 revenue even declined by 7.6%, and in the third quarter of 2025 it added just 0.9%. The acceleration in the second quarter looks notable against the weak dynamics of previous periods.

The main contribution to growth came from rental income: in the first quarter of 2026 (the latest detailed data available) rent rose to 21.6 bn pesos from 20.0 bn pesos a year earlier, or 8%. Real estate sales, on the contrary, fell to 7.8 bn pesos from 9.2 bn pesos. Thus, revenue growth in the second quarter likely relied on rent rather than home sales.

Over the trailing twelve months, revenue amounted to 146.6 bn pesos. This is not a quarterly figure but the sum of four quarters, and it cannot be directly compared with quarterly dynamics. Nevertheless, it shows the scale of the business, which remains the largest in the Philippine commercial real estate segment.

Net profit added only 2.5% because margin compressed to 33.8% from 35.5%

Net profit in the second quarter of 2026 was 13.1 bn pesos, only 2.5% more than a year earlier. With revenue growing 7.6%, this dynamic means expenses grew faster than income. Net margin fell to 33.8% from 35.5% a year earlier. This compression of 1.7 percentage points explains why profit barely grew despite a notable increase in revenue.

The main reason is faster growth in costs. In the first quarter of 2026 (the latest detailed data available), cost of sales and operating expenses increased to 16.6 bn pesos from 16.1 bn pesos a year earlier, or 2.8%, while revenue grew 1.5% in the same quarter. This was already putting pressure on margin. In the second quarter, judging by the final margin, the pressure intensified.

Over the trailing twelve months, net profit amounted to 49.4 bn pesos. This is the sum of four quarters, and it should not be used to calculate quarterly growth rates. For assessing profitability, more important is that the margin in the second quarter was lower than a year earlier, and this is the key negative point of the report.

Operating profit was flat year on year, and quarterly EBITDA fell to 15.7 bn pesos

Operating profit in the second quarter of 2026 was 15.7 bn pesos, exactly the same as a year earlier. This means that all revenue growth was eaten up by higher operating expenses. Quarterly EBITDA also amounted to 15.7 bn pesos, down from 19.7 bn pesos in the second quarter of 2025. A decline in EBITDA alongside revenue growth is a warning signal, although it may be related to one-off factors not disclosed in the report.

In the first quarter of 2026, EBITDA was 18.4 bn pesos and operating profit was 14.4 bn pesos. Thus, in the second quarter EBITDA was lower than in the first, despite higher revenue. This confirms that pressure on profitability intensified specifically in the second quarter.

Over the trailing twelve months, EBITDA amounted to 73.5 bn pesos. This is also the sum of four quarters, and it cannot be directly compared with quarterly figures. Nevertheless, the ratio of EBITDA to revenue over this period is about 50%, which is lower than in previous years when EBITDA margin exceeded 55%.

Leverage of 5.38 EBITDA is a level, not a direction: the trend is not disclosed

SM Prime's net debt at the latest reporting date is 395.1 bn pesos, and the ratio of net debt to trailing-twelve-month EBITDA is 5.38. This is a high level for a capital-intensive business. It is important to emphasise: the facts do not contain a previous value for this ratio, so one cannot claim that leverage rose or fell. Only the current level can be stated.

Over the trailing twelve months, net debt increased by 28.6 bn pesos, while compared with the previous reporting date it decreased by 7.8 bn pesos. This is a mixed movement: over the year debt grew, but over the quarter it slightly declined. The absolute increase in debt over the year is a fact, but it does not necessarily mean a deterioration in credit quality if EBITDA is growing at a comparable pace.

Interest expense in the first quarter of 2026 was 3.3 bn pesos, slightly lower than 3.4 bn pesos a year earlier. This is a positive: the cost of servicing debt is not rising despite the increase in its absolute size. Operating cash flow over the trailing twelve months was 74.9 bn pesos, which covers interest expense with a large margin.

Dividend yield of 2.37% with a payout ratio that leaves room for growth

SM Prime's dividend yield over the trailing twelve months is 2.37%. This is a modest figure by Philippine market standards, where yields are often higher. However, the company pays out only part of its profit: with trailing-twelve-month net profit of 49.4 bn pesos and a market capitalisation of 501.8 bn pesos, the payout ratio looks moderate. This leaves room for dividend increases in the future.

Our estimate for the current year's dividend assumes the payout ratio remains at its established level and profit stays close to 49–50 bn pesos. This is our forecast, not consensus. It could be reduced if margin continues to compress, as in the second quarter, or if the company increases capital expenditure. In the first quarter of 2026, capital expenditure was 12.9 bn pesos, lower than 16.0 bn pesos a year earlier — this supports free cash flow.

The key policy rate in the Philippines has been declining in recent years, making a dividend yield of 2.37% relatively more attractive. If the rate continues to fall, the spread between the stock's yield and the policy rate will narrow, supporting valuation. However, if profit does not grow, the dividend may remain unchanged, and then the yield will depend only on the share price.

Valuation at 10.2 times earnings and 12.2 times EBITDA is below its multi-year average

SM Prime shares trade at a trailing-twelve-month P/E of 10.2 and EV/EBITDA of 12.2. This is below the averages of the past three years, when P/E often exceeded 15 and EV/EBITDA — 14. The current valuation implies that the market is pricing in either a slowdown in growth or risks related to debt load and margin compression.

Comparison with its own history shows that the stock is below its average valuation. This could be an opportunity to buy if the market's concerns are not confirmed. However, if margin continues to decline, the current multiple may not look so low relative to future earnings.

The portal's model estimates fair value at 17% above the current price. This is our own calculation based on EBITDA growth and a target multiple, not market consensus. It assumes that the company can maintain EBITDA at the current level or slightly increase it, and that the multiple remains stable.

The portal's model shows +17% upside to fair value, but that is our estimate, not consensus

Our fundamental model, based on EBITDA growth and a target multiple, shows upside to fair value of +17%. This is not market consensus or a target price, but the result of our own calculation. It assumes that the company maintains its current revenue growth rate and does not allow further margin compression.

The model is sensitive to two parameters: EBITDA dynamics and the target multiple. If EBITDA in the second half of 2026 remains at the second-quarter level (15.7 bn pesos), the annual figure may be lower than over the trailing twelve months, and then the upside would shrink. If margin recovers, the model could produce a higher valuation.

It is important to understand that the model does not account for possible one-off factors that could affect profit in either direction. It is also not a recommendation to buy or sell shares. It is merely a benchmark for assessing the current value of the business.

Valuation on the latest reported figures

Bottom line

In the second quarter of 2026, SM Prime showed revenue acceleration to 7.6% year on year, the best result in five quarters. However, net profit grew only 2.5%, and margin compressed to 33.8% from 35.5% — this is the main negative. Operating profit was flat year on year, and quarterly EBITDA fell to 15.7 bn pesos. Leverage remains high at 5.38 EBITDA, but interest expense is not rising, and operating cash flow over the trailing twelve months was 74.9 bn pesos. Valuation at 10.2 times earnings and 12.2 times EBITDA is below historical levels, and a dividend yield of 2.37% with a falling policy rate looks moderately attractive. The portal's model shows +17% upside to fair value. Overall, the share looks rather attractive, but the key question is whether the company can stop margin compression.