Dividend Payout: HKD0.255 per share to shareholders. Interest Coverage Ratio: 4 times, above the comfort level of 3 times. Indofood Revenue: Record high revenues for the 11th consecutive year. Indofood EBIT Margin: Noodles division full-year margin at 25.9%, highest ever for the food group. MPIC Stake Increase: From 46.3% to 49.9%. MPIC Record Highs: Record high contribution and core profit driven by power, water, and roads. PLDT Record Highs: Record high sales and service revenues, record high EBITDA. PLDT Dividend Policy: Pays 60% of core profit to shareholders. Fintech Growth: Depositors more than doubled, deposit balances and loan dispersals up significantly. PacificLight Power Project: Awarded a 600 MW hydrogen-ready CCGT power project. Philex Mining Profitability: Remains profitable with extended mine life at Padcal through 2028.

Warning! GuruFocus has detected 7 Warning Signs with FPAFF.

Release Date: March 28, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

First Pacific Co Ltd (FPAFF) reported record high contributions, recurring profit, and full-year distribution to shareholders for 2024. Indofood achieved its 11th consecutive year of record high revenues, with the noodles division being a significant driver of profit. Metro Pacific saw record high contributions and core profit, driven by increased tariffs in water and roads, and higher sales in power. PLDT reported record high sales and service revenues, with strong growth in mobile data, SMS, and fixed line data. The company maintains a strong balance sheet with no borrowings due in 2025 and a comfortable interest coverage ratio of 4 times.

Negative Points

Dividend income was slightly down from the record high set in 2023. PacificLight Power experienced a more moderate pace of earnings in 2024 due to lower blended non-fuel margins. Philex Mining Corporation faces declining grades at the Padcal Mine, although it remains profitable. The company faces challenges in maintaining liquidity for potential share buybacks due to capital allocation needs. The future of Maya, PLDT's fintech venture, remains uncertain with discussions ongoing about potential strategic options.

Q & A Highlights

Q: Can you provide insights into the earnings trajectory for PacificLight Power in 2025 and 2026? A: Stanley Yang, Associate Director, Head of Corporate Development, explained that 2023 was an exceptional year due to unique market conditions. The non-fuel margin was over SGD100 per megawatt-hour, but it has since decreased to mid-80s. A gradual tapering is expected, with long-term marginal costs around $45 to $50 per megawatt-hour. The market growth is anticipated to be strong, with a 4% annual increase in generation demand. The new 600-megawatt project, expected to be completed in 2029, will enhance PLP's portfolio.

Story Continues

Q: What is the status of the Terra Solar Phase 2 project with Metro Pacific? A: Stanley Yang stated that the focus is currently on Terra Solar Phase 1, a 3,500-megawatt project to be delivered in two phases by 2027. Discussions about future solar projects are premature, but the government aims to increase renewable energy. The current focus is on the 3,500-megawatt project with a 20-year power supply agreement with Meralco.

Q: Can you elaborate on the valuation and considerations for the Maynilad spinoff? A: Stanley Yang noted that the valuation mentioned in the filing is a maximum price, with no minimum range set yet. The valuation will depend on strong performance, tariff increases, and operational efficiencies. The non-revenue water metric is targeted to decrease, which will improve revenues and earnings. The IPO timetable will determine the final price range.

Q: Is there a possibility of share buybacks given the current financial position? A: Hon Pong Ng, Chief Financial Officer, explained that share buybacks are part of a broader capital allocation strategy. The company has a free cash flow of around $200 million, with a significant portion allocated to shareholder distributions and reinvestments. The decision to prioritize the privatization of MPIC over buybacks in 2023 was due to strategic considerations. The company assesses liquidity and capital allocation annually.

Q: What is the financing plan for PLP's new power plant project, and how will it affect dividends? A: Stanley Yang stated that approximately 60% of the project cost will be financed through project financing, with 40% from equity contributions. PLP plans to continue paying dividends, which will be reinvested into the project to fund the equity portion. This approach is expected to support the project's development over the next few years.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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