Gross Asset Value (GAV): $4.9 billion as of June 2024. Recurring Profit: $340 million, up $40 million from the previous year. Recurring Earnings Per Share: $0.08, highest ever for the first half of the year. Interim Dividend Payout: Increased by $0.015 to $0.12 per share. Interest Coverage Ratio: 4.3 times as of the half-year mark. Dividend Income: Record high in 2023, with a significant contribution from PLP. Indofood Noodles Margin: 27.2%, near recent record high. ICBP EBIT Margin Target: 19% to 21% for 2024. Meralco Core Profit Target: PHP43 billion for full year 2024. PLDT Service Revenue: Record high, with data comprising 89% of revenues. PacificLight Power Revenue: Down 28% compared to the previous period. Philex Mining Profitability: Profitable despite lower volume milled and lower grades.

Warning! GuruFocus has detected 4 Warning Signs with FPAFF.

Release Date: August 23, 2024

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 recurring profit of $340 million, up $40 million from the previous year. The company achieved the highest ever recurring earnings per share of $0.08, leading to an increased interim payout of $0.12 per share. Indofood, a major asset, has shown consistent revenue growth for 14 consecutive years, with significant contributions from its noodles segment. The company maintains a strong balance sheet with no borrowings due until 2026 and investment-grade credit ratings from S&P and Moody's. First Pacific Co Ltd (FPAFF) is confident in continuing earnings growth in the medium term, driven by fast-growing economies in emerging Asia.

Negative Points

Net profit was negatively impacted by the weakening of the Rupiah against the US dollar, affecting Indofood's US dollar bonds. Interest costs have increased, with a blended interest cost of 5.6% over the first half of the year. PacificLight Power experienced a significant decline in revenues and core profit due to lower non-fuel margins compared to 2023. Philex Mining faced challenges with lower volume milled and lower grades, although it remains profitable. The company faces currency risks, as seen with the serious weakening of the Rupiah and Peso, which could impact financial performance.

Q & A Highlights

Q: What is the game plan for Metro Pacific in terms of acquisitions and dividend payouts? A: Manuel Pangilinan, CEO, explained that there are no plans to raise new debt for Metro Pacific Investments Corporation (MPIC) beyond what is currently on the books. The focus is on financing investments without incurring new debt. Regarding dividends, MPIC aims to maintain a payout ratio of 30% to 40% of core income, with potential for higher payouts after reviewing financials at year-end.

Q: Can you provide an update on PacificLight Power's (PLP) retail contracts and earnings outlook? A: Stanley Yang, Executive Director, stated that PLP has contracted its retail position for the year and secured significant portions for 2025. Despite a temporary unit shutdown, the business remains strong with margins above historical levels, although lower than the peak in 2023.

Q: What are the plans for partially monetizing Metro Pacific Tollways Corporation (MPTC)? A: Manuel Pangilinan, CEO, mentioned that JPMorgan has been engaged to raise equity for MPTC through private placement to address high debt levels. The company aims for satisfactory valuations and plans to consider making MPTC a public company after the private placement.

Q: Are there any substantial capital investments planned for First Pacific in the near future? A: Joseph Ng, CFO, indicated that there are no substantial capital investments planned for 2024, except for potential participation in a Singapore renewable energy project in 2025. The project involves exporting solar energy from Indonesia to Singapore, with funding details still under review.

Q: How is First Pacific planning to engage with investors and shareholders in the coming months? A: John Ryan, Associate Director, highlighted plans to visit North America and Europe to meet investors. The company is also focusing on increasing mainland investor engagement through Stock Connect, reflecting confidence in First Pacific's growth prospects.

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

This article first appeared on GuruFocus.