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  • Maynilad’s PSE Debut Underscores Defensive Strength and Value Appeal; Dividend Yield Tops 7%

    Maynilad’s PSE Debut Underscores Defensive Strength and Value Appeal; Dividend Yield Tops 7%

    Maynilad Water Services Inc., newly listed on the Philippine Stock Exchange, is emerging as a standout defensive play despite its capital-intensive nature. The company’s latest financial results and dividend policy highlight its resilience, long-term value proposition, and income potential that rival those of top-performing REITs.

    Defensive Profile Backed by Strong Results

    Maynilad operates in the water and wastewater sector—an essential service with stable demand across economic cycles. Under its Revised Concession Agreement (RCA), the company earns a fixed nominal 12% return on approved expenditures, with cost recovery guaranteed through tariff adjustments. The concession term, extended to 2047, aligns with its legislative franchise, ensuring predictable cash flows for decades.

    Financial performance for the nine months ended September 30, 2025, reinforces this defensive positioning:

    • Operating revenue: ₱27.65 billion, up 9.5% year-on-year, driven by wastewater revenue growth of nearly 30% following the environmental charge increase to 25%.
    • Net income: ₱11.41 billion, up 18.1% YoY, despite heavy capital spending.
    • EBITDA: Approximately ₱19.9 billion, providing 9× interest coverage, even as debt rose to ₱93.6 billion to fund expansion.
    • Equity: ₱80.5 billion, with net-debt-to-equity at a manageable 1.08×.

    These figures show Maynilad can absorb large-scale investments without compromising financial stability—a hallmark of a defensive stock.

    Capex Recovery Guaranteed

    Unlike many capital-intensive businesses that face uncertainty in recouping investments, Maynilad’s model ensures full recovery of capital expenditures through regulated rate adjustments. Every five years, the rate-rebasing process allows the company to recover prudently incurred costs and earn its guaranteed return. This mechanism transforms heavy capex into a predictable earnings driver rather than a risk factor.

    Dividend Sustainability and Competitive Yield

    Maynilad declared ₱6.4 billion in cash dividends for 2025, or ₱1.14 per share, representing a 56% payout ratio and a dividend cover of 1.78×. At its recent closing price of ₱16.06, this translates to a dividend yield of about 7.1%—competitive with, and in some cases higher than, leading Philippine REITs, which typically offer 6%–7.5%.

    Unappropriated retained earnings of ₱25.98 billion and strong operating metrics provide additional cushion, signaling that Maynilad can sustain generous payouts even amid its ₱160-billion capex program through 2027.

    Value Proposition and Growth Drivers

    The ongoing rate-rebasing cycle (2023–2027) ensures incremental tariff hikes, including a ₱2.12/m³ adjustment effective January 2025, alongside the higher environmental charge. These measures, coupled with wastewater expansion and forex risk mitigation via FCDA mechanisms, underpin predictable earnings growth.

    Bottom Line

    Maynilad’s listing offers investors a unique proposition:

    • Defensive strength through essential services and regulated returns.
    • Guaranteed capex recovery via tariff adjustments, reducing investment risk.
    • Value appeal via sustainable dividends and a competitive yield of 7.1% at current prices.
    • Long-term visibility supported by a concession extended to 2047 and a tariff path locked in through 2027.

    For income-focused and value investors, Maynilad stands out as a stock that combines resilience with rewarding cash returns—an alternative to REITs with the added advantage of inflation-linked, regulated cash flows.

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  • Figaro Culinary Group Faces Operational Strains Amid Expansion Drive

    Figaro Culinary Group Faces Operational Strains Amid Expansion Drive

    Figaro Culinary Group, Inc. (FCG), the operator behind Angel’s Pizza and Figaro Coffee, reported steady revenues for fiscal year ending June 30, 2025, but its latest audited financial statements reveal mounting operational challenges that could weigh on future performance.

    Margins Under Pressure
    Despite a 4.1% revenue increase to ₱5.67 billion, gross margins slipped to 44.7% from 45.9% a year earlier. Rising delivery commissions—up 28% to ₱375.2 million—and higher store overhead costs contributed to the squeeze. Advertising spend was cut by nearly 29%, helping operating margins, but analysts warn that prolonged marketing pullbacks could hurt brand momentum.

    Debt-Fueled Expansion Raises Financing Costs
    The company’s aggressive store rollout drove property and equipment assets up 54% to ₱3.89 billion. However, this expansion came at a cost: loans surged to ₱1.52 billion, pushing finance expenses to ₱105.2 million, more than double last year’s figure. Net income remained flat at ₱629.6 million, signaling that interest costs are eroding profitability gains.

    Cash Flow and Liquidity Concerns
    Operating cash flow fell 19% to ₱1.14 billion, while capital expenditures ballooned to ₱1.73 billion, resulting in negative free cash flow of roughly ₱743 million. The company relied on fresh borrowings to bridge the gap, raising questions about sustainability if expansion continues at the current pace.

    Franchise and Receivables Risks
    Royalty income plunged to ₱83.3 million from ₱162.6 million, and franchise deposits fell to zero, suggesting possible weakness in the franchising model. Trade receivables climbed 22% to ₱199.9 million, with ₱48.8 million overdue for more than 60 days, yet no impairment provision was recorded.

    Concentration and Lease Exposure
    Angel’s Pizza now accounts for over 70% of total sales, underscoring brand concentration risk. Meanwhile, prepaid rent soared to ₱47.7 million, and lease extensions remain non-binding, exposing the group to potential occupancy uncertainties.

    What’s Next?
    Industry observers suggest FCG must recalibrate its growth strategy, tighten credit controls, and renegotiate lease terms to safeguard liquidity. While its flagship pizza brand continues to dominate, diversification and operational discipline will be critical to sustaining long-term shareholder value.

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  • MERALCO’s Debt Surge Powers Strategic Growth, Not a Red Flag

    MERALCO’s Debt Surge Powers Strategic Growth, Not a Red Flag


    Manila Electric Company (MERALCO) reported a sharp increase in its consolidated debt to ₱213.4 billion as of September 30, 2025, more than double its year-end 2024 level of ₱94.8 billion. While the spike raised eyebrows among market watchers, the company emphasized that the borrowing spree is part of a deliberate strategy to fund income-generating assets and future-proof its energy portfolio.

    The surge stems primarily from a ₱75-billion term loan drawn in January 2025 and additional project financing at subsidiaries, including ₱25.2 billion for MTerra Solar’s 3.5-GWp solar and battery storage project. MERALCO also deployed significant capital for its ₱85.4-billion investment in Chromite Holdings, a joint venture that acquired stakes in the Ilijan and EERI gas-fired plants and the Linseed LNG terminal.

    “These are not idle investments,” the company noted. “They are already contributing to earnings and strengthening our generation footprint.” Indeed, equity income from associates surged 70% to ₱13.1 billion, driven by the newly acquired gas assets, while consolidated net income rose 10% to ₱38.1 billion despite flat electricity volumes and regulatory refunds.

    MERALCO’s core EBITDA climbed 14% to ₱67.2 billion, underscoring the accretive nature of these projects. The LNG terminal and EERI units achieved commercial operation earlier this year, providing stable returns and enhancing supply security. Meanwhile, renewable projects under MTerra Solar are expected to start contributing from 2026 onward, aligning with the country’s clean energy transition.

    Although leverage ratios have increased — debt-to-equity now stands at 1.29x — management assured investors that the balance sheet remains healthy, with strong operating cash flows and compliance with all loan covenants. “This is strategic debt, not distress,” the company stressed. “We are investing in assets that deliver long-term value.”

    Analysts agree that the debt build-up is not a concern given MERALCO’s regulated distribution business, predictable cash flows, and growing generation portfolio. The company’s dividend policy remains intact, with ₱25.1 billion in cash dividends declared in 2025, signaling confidence in sustained earnings.

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  • Metro Retail Stores Group Posts Modest Gains Amid Margin Pressure and Cash Strain

    Metro Retail Stores Group Posts Modest Gains Amid Margin Pressure and Cash Strain


    Cebu City, Philippines — Metro Retail Stores Group Inc. (MRSGI) reported a slight improvement in profitability for the nine months ended September 30, 2025, as revenue growth was tempered by rising operating costs and a sharp drop in cash reserves.

    Sales and Revenue Performance

    Net sales climbed 4.1% year-on-year to ₱28.70 billion, driven by a 4.6% increase in food retail and 2.8% growth in general merchandise. Rental income surged 10.8% to ₱307.2 million, boosting total revenue to ₱29.0 billion, despite a 0.9% decline in same-store sales. 

    Margins and Expenses

    Gross margin held steady at 21.7%, but operating margin slipped to 1.63% from 1.81% last year as operating expenses jumped 8.7% to ₱6.06 billion. Higher utilities, personnel costs, and depreciation from new store openings weighed on profitability. Net income edged up 4.2% to ₱213.3 million, while finance costs rose slightly to ₱381.0 million.

    Liquidity and Cash Flow

    Cash reserves fell 69% to ₱711.5 million, reflecting heavy capital spending of ₱1.21 billion, dividend payouts, and debt servicing. Although operating cash flow improved to ₱962.6 million, free cash flow remained negative. The current ratio stood at 1.47x, with the quick ratio at 0.35x, signaling tight liquidity. 

    Operational Metrics

    Inventory levels increased by ₱713.8 million, pushing days-in-inventory to 81 days, while payables averaged 66 days. The cash conversion cycle was approximately 25 days, underscoring working capital pressure ahead of the holiday season. 

    Debt and Lease Obligations

    Outstanding loans totaled ₱2.31 billion, down from ₱2.66 billion at year-end, while lease liabilities remained significant at ₱5.25 billion, despite recent space reductions that generated a ₱119.9 million gain.

    Valuation and Dividend Yield

    Metro Retail Stores Group trades at ₱1.14 per share on the Philippine Stock Exchange, giving it a market capitalization of about ₱3.7 billion. The stock’s price-to-earnings ratio (P/E) stands at 5.7x, well below sector averages, suggesting the market is pricing in modest growth and operational risks. The price-to-book ratio is approximately 0.39x, reinforcing its undervalued status relative to its assets. 

    For income investors, MRSGI offers an annual cash dividend of ₱0.06 per share, translating to a dividend yield of roughly 5.2% at current prices. The payout ratio is about 31%, leaving room for reinvestment while maintaining shareholder returns. The last ex-dividend date was April 23, 2025, with payment made in May. 

    Outlook

    Management faces the dual challenge of sustaining growth while curbing cost inflation and preserving liquidity. Analysts point to the need for tighter inventory control, cost optimization, and selective expansion to protect margins and cash flow. 

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  • Cebu Landmasters Powers Ahead: Strong Q3 Results Signal Sustained Growth

    Cebu Landmasters Powers Ahead: Strong Q3 Results Signal Sustained Growth


    Cebu City, Philippines – Cebu Landmasters, Inc. (CLI), the VisMin real estate leader, delivered another quarter of resilient growth, reinforcing its position as one of the country’s fastest-expanding developers. For the nine months ended September 30, 2025, CLI posted ₱14.34 billion in consolidated revenues, up 13% on a comparable basis, and a net income of ₱3.10 billion, marking a 6% year-on-year increase despite a challenging macro environment.

    The company’s recurring income streams surged, with hospitality revenues doubling (+101%) and leasing income climbing 49%, underscoring CLI’s successful diversification beyond residential projects. Its hotel portfolio now spans four operational properties, including the newly opened Citadines Bacolod City, with two more hotels set to launch before year-end and six under construction—solidifying CLI’s future REIT ambitions.

    Residential demand remains robust, with reservation sales soaring 27% to ₱19.33 billion and an impressive 93% sell-out rate across its portfolio. The mid-market Garden Series led growth with a 31% revenue jump, while the economic Casa Mira Series continued to dominate VisMin’s affordable housing segment.

    CLI’s balance sheet remains strong, with total assets up 18% to ₱128.72 billion and a current ratio of 1.51x, comfortably meeting all debt covenants. Strategic funding moves—including a ₱5 billion sustainability-linked bond issuance and ₱1.59 billion redeemable preferred shares—position the company to accelerate expansion while maintaining financial flexibility.

    Investor confidence is high, buoyed by CLI’s consistent dividend payouts (₱0.18 per share in April) and a share price of ₱2.32, translating to an attractive ~7.8% yield. With recurring income scaling rapidly, a strong pipeline of projects, and VisMin market leadership reaffirmed by Colliers, CLI is poised for sustained growth and value creation.

    Bottom line: CLI’s Q3 performance signals a compelling growth story—anchored on robust residential demand, rising recurring income, and disciplined financial management. For investors seeking exposure to VisMin’s booming property market, CLI remains a standout pick.

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  • Ayala Land’s Share Price Finds Support From Recurring Income—But Financing Strain, Macro Risks Keep Valuation in Check

    Ayala Land’s Share Price Finds Support From Recurring Income—But Financing Strain, Macro Risks Keep Valuation in Check


    Makati City, Philippines (Nov. 23, 2025) — Ayala Land, Inc. (ALI) is navigating a delicate balance between strengthening recurring income and mounting financing pressures as investors reassess the stock’s valuation and dividend appeal heading into year‑end.

    Trading snapshot (latest PSE prints)

    ALI has traded in a tight band around ₱19–₱21 over the past week. Recent closes include ₱19.36 on Nov. 19, ₱20.05 on Nov. 20, and ₱21.00 on Nov. 21, reflecting choppy sentiment and heavier volumes around the company’s buyback executions. The 52‑week range now sits near ₱18.64–₱30.55, underscoring the stock’s de‑rating from 1H peaks as macro and sector headwinds intensified.

    On Nov. 20, ALI disclosed multiple buyback trades between ₱19.30 and ₱20.15 (3.0 million shares), a signal that management is willing to provide price support while executing its capital program. 

    Earnings and operating mix

    In its 9M 2025 filing, ALI posted ₱21.38B net income (+1% YoY) on ₱121.83B consolidated revenues (−3% YoY). A sturdier leasing & hospitality base (malls +4%, offices +6%, hotels +4%) and industrial real estate +39% helped offset softer services (construction −30%; property management & others −50%) and uneven property development.

     
    The company also acquired the 578‑room New World Makati Hotel on July 1, 2025, strengthening its hospitality footprint; and advanced property‑for‑share swaps with AREIT, including a ₱20.99B SEC‑approved infusion effective July 1 and a ₱19.5B mall infusion (Ayala Center Cebu, Ayala Malls Feliz) approved by the board on Oct. 29 pending final clearances—both intended to deepen recurring income and recycle capital. 

    Valuation: multiples tied to debt metrics

    While prime assets and estate strategy historically supported ALI’s premium, recent prints show the market applying mid‑single‑digit to low‑double‑digit P/E territory as financing costs rose and short‑term leverage increased. External trackers pegged ALI’s trailing valuation around ~9.4x–10.0x P/E in mid‑November, with P/B near ~0.9–1.0x, consistent with a cautious stance toward property names amid macro uncertainty. 

    The risk side of the ledger is visible in the interim numbers: interest & financing charges +11% YoY to ₱12.71B, “other charges” +75% (larger discounts on receivable sales), short‑term debt +152% to ₱52.10B, and a lower interest coverage of 4.92× alongside a current ratio of 1.51×. Investors typically reflect these in higher discount rates for DCFs and in multiple compression, unless recurring income growth and asset recycling demonstrably outpace the financing drag.

    Dividend yield: supportive, but tied to cash discipline

    ALI declared ₱0.2888/share (1H) and ₱0.2928/share (2H) for 2025. At recent prices, the indicated annual payout of ~₱0.58/share translates to yields of roughly 2.7%–3.1% depending on the day’s close (e.g., ₱21.00 vs. ₱19.36), positioning ALI as a defensive yield play if share price softness persists. However, the market remains focused on free‑cash‑flow coverage amid higher interest expense and the timing of AREIT transactions; several trackers show the dividend yield near ~3%–4.5% in mid‑November, reflecting differing price points and methodologies. 

    Macro overlay: BSP easing vs. growth and FX risks

    The Bangko Sentral ng Pilipinas cut the policy rate to 4.75% on Oct. 9, and another 25‑bp “baby step” cut is possible at the Dec. 11 meeting—constructive for funding costs across property developers. Still, Q3 GDP slowed to ~4%, and caution remains around peso volatility if easing outpaces U.S. policy, an overhang for imported inputs, and investor confidence.

    What moves the stock from here

    • Upside case: Accelerated industrial/logistics roll‑outs, continued mall reinvention with high lease‑out rates (malls ~91%; offices ~90%), and AREIT monetizations that lift recurring income and lower net leverage—helping defend multiples and add support to the dividend. 
    • Watch‑items: Execution risk in reinvention works; receivable sale discounting impacting “other charges”; Core residential softness and foreign buyer pullback (Chinese sales down −81%) that can prolong the de‑rating unless premium NCR verticals maintain momentum; and the short‑term debt bulge that keeps the spotlight on interest coverage.

    Investor takeaway

    With the stock hovering around ₱19–₱21 and the 52‑week floor near ₱18.64, ALI’s valuation and yield are increasingly tied to tangible progress in scaling recurring income and managing the financing load. The buyback activity around ₱19–₱20 indicates management’s conviction, but consensus sentiment will likely hinge on debt metrics trending better, cash from AREIT asset rotations landing on time, and leasing metrics staying ahead of sector averages.

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  • Jollibee Foods Corporation: A Mature Giant Wearing a Growth Mask

    Jollibee Foods Corporation: A Mature Giant Wearing a Growth Mask

    From the Trading Desk. Shares the trading desk is selling, avoiding, and waiting to see if it corrects.

    Jollibee Foods Corporation (JFC) is the undisputed leader in Philippine quick-service dining. With over 3,400 stores locally and decades of dominance, JFC is a mature company by every textbook measure:

    • High market penetration in its home market
    • Stable cash flows from a loyal customer base
    • Ability to pay consistent dividends—a hallmark of maturity

    In fact, one defining trait of mature firms is a high dividend yield, reflecting limited reinvestment opportunities and a shift toward rewarding shareholders. Yet JFC’s current strategy tells a different story.

    The Growth Narrative

    Instead of leaning into its maturity, JFC is chasing a growth-company image through aggressive acquisitions and international expansion. Tim Ho Wan (premium dim sum), Compose Coffee (South Korea), CBTL, Highlands Coffee, Smashburger—the list is long and expensive. These deals inflate goodwill (₱78.7B as of Q3 2025) and create headlines, but they don’t guarantee earnings accretion.

    Tim Ho Wan, acquired for ₱10.7B in January 2025, posted a ₱86.9M net loss in its first nine months under JFC. Older acquisitions like CBTL and Smashburger were loss-making for years. Even with Compose Coffee’s success (₱1.59B net income in 9M 2025), the overall picture is clear: acquisition losses and financing costs are eating into the profits of JFC’s core Philippine business.

    The Cost of Pretending

    Despite a 14% revenue surge in 9M 2025, net income grew only 1.6%. Why? Debt-funded acquisitions and integration costs. JFC issued senior notes and ramped up short-term borrowings to finance these deals, adding interest expense that drags on earnings.

    This raises a critical question: Should JFC embrace its maturity instead of masking it? A pivot toward higher dividends—even a REIT-like yield—could unlock value for investors seeking income stability rather than speculative growth.

    A Dividend-Focused Strategy

    If JFC accepted its mature status, here’s what it could do:

    1. Reframe capital allocation
      • Pause high-risk acquisitions and focus on optimizing existing brands.
      • Use free cash flow to pay down debt and reduce interest drag.
    2. Target a REIT-like dividend yield
      • Aim for 4–6% annual yield, with a 60–70% payout ratio of normalized net income.
      • Commit to quarterly dividends for predictability.
      • At a hypothetical ₱200 share price, a ₱8–₱12 annual dividend would rival REITs.
    3. Build an income investor narrative
      • Position JFC as a stable cash generator, not a speculative growth stock.
      • Highlight recurring cash flows from franchising and royalties.
    4. Enhance shareholder returns
      • Consider special dividends from divesting underperforming brands.
      • Deploy share buybacks when valuation dips below intrinsic value.

    The Verdict

    JFC is not “pretending” in a deceptive sense—it genuinely wants global scale. But the reality is stark: its domestic engine is mature, and its growth bets are risky and uneven. Until acquisitions deliver consistent profits, JFC looks less like a growth stock and more like a cash-rich incumbent stretching for relevance.

    If the market recalibrates expectations, JFC’s share price could correct to reflect a high-yield, income-oriented profile, rewarding investors who value stability over uncertain expansion.

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  • SSI Group’s Nine-Month Profit Plunges 49% Amid Rising Operating Costs

    SSI Group’s Nine-Month Profit Plunges 49% Amid Rising Operating Costs

    SSI Group, Inc. reported a sharp decline in profitability for the nine months ended September 30, 2025, as operating expenses surged despite flat revenue growth.

    The specialty retailer posted ₱639.8 million in net income, down 49.3% from ₱1.26 billion in the same period last year. Third-quarter earnings fell even steeper, dropping 65% to ₱188.1 million.

    Sales remained largely unchanged, inching up 0.7% to ₱20.32 billion, while gross profit improved slightly to ₱9.08 billion, with margins rising to 44.7% from 44.2%. However, operating income plunged 44.9% to ₱914 million as expenses ballooned.

    “The increase in costs was driven by store network expansion and technology investments,” SSI said in its quarterly filing.

    Operating expenses climbed 12.4% to ₱8.18 billion, fueled by higher rent, depreciation, and personnel costs linked to a 13.6% increase in selling space and the rollout of SAP and ETP enterprise systems. Selling and distribution costs rose to ₱6.58 billion, while general and administrative expenses jumped 17.4% to ₁.60 billion.

    The company opened 17 new stores during the quarter, bringing its total to 613 outlets nationwide, and expanded its brand portfolio to 103 names. E-commerce contributed ₱1.57 billion, or 7.7% of total sales.

    SSI ended the period with ₱2.78 billion in cash, down from ₱5.14 billion at year-end 2024, after spending ₱1.20 billion on capital expenditures, paying ₱503.6 million in dividends, and repurchasing shares worth ₱50.4 million.

    Despite the earnings slump, SSI maintained a net cash position of ₱1.39 billion and a current ratio of 2.11, signaling adequate liquidity ahead of the holiday season, traditionally its strongest quarter.

    Outlook / Investor Takeaway

    • Holiday Quarter Critical: SSI’s inventory build to ₱13.15 billion positions it for peak season sales, but execution risk is high. Strong sell-through and markdown discipline will be key to converting stock into cash.
    • Margin Recovery Hinges on Cost Control: ERP transition costs and store expansion drove operating margin down to 4.5%. Normalization of G&A and leveraging new stores will determine if margins rebound in Q4.
    • Liquidity Cushion Intact: Net cash and low leverage (Debt/Equity at 0.08) provide breathing room, but free cash flow needs improvement after negative operating cash flow in 9M25.
    • Watch Luxury Segment: Luxury and Bridge sales fell 3.8%, signaling discretionary weakness. Performance in this category during the holidays will be a bellwether for 2026.
    • Valuation Implication: With EPS at ₱0.19 (vs ₱0.38 last year), investors may reassess growth expectations. Near-term upside depends on holiday performance and cost discipline.
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  • STI Holdings Posts Strong Earnings Despite Enrollment Dip; Stock Seen as Undervalued

    STI Holdings Posts Strong Earnings Despite Enrollment Dip; Stock Seen as Undervalued

    STI Education Systems Holdings, Inc. (PSE: STI) delivered a robust financial performance for the quarter ended September 30, 2025, defying a slight decline in student headcount with a higher revenue mix and improved operating leverage.

    The listed education group reported ₱1.44 billion in revenues, up 39% year-on-year, driven by strong tuition collections and a shift toward higher-yield tertiary programs. Net income surged 135% to ₱619 million, while earnings per share doubled to ₱0.06 from ₱0.03 in the same period last year.

    Operating income soared to ₱657.5 million, driven by tight cost control and a 75% gross margin. EBITDA climbed to ₱878 million, translating to an EBITDA margin of 61%, underscoring the group’s efficiency gains.

    The upbeat results came despite a 4% drop in total enrollment to 132,941 students for School Year 2025–2026. Management attributed the decline to an earlier start of classes in public schools, which affected Senior High School intake. However, CHED-regulated programs grew to 77% of total enrollment, up from 73% last year. These programs generate significantly higher revenue per student compared to DepEd-regulated levels, helping offset the impact of fewer Senior High School enrollees.

    Liquidity remained strong with ₱3.2 billion in cash, while interest-bearing debt fell to ₱1.44 billion, improving the debt-to-equity ratio to 0.30x. STI also booked ₱955 million in operating cash flow, reinforcing its ability to fund ongoing campus expansion projects, including new academic centers in Meycauayan, Tanauan, and Alabang.

    Stock Price and Valuation

    STI shares closed at ₱1.42 on November 17, 2025, giving the company a market capitalization of about ₱14.06 billion. The stock has traded between ₱1.17 and ₱1.81 over the past 52 weeks and is up roughly 18–22% year-on-year, outperforming the broader PSE index. [edge.pse.com.ph], [dragonfi.ph], [bing.com]

    Valuation metrics suggest STI remains undervalued relative to peers:

    • Price-to-Earnings (P/E): ~6.1x vs peer average of ~9x (FEU: 9.4x, CEU: 9.7x, iPeople: 5.8x). [simplywall.st]
    • Price-to-Book (P/B): ~1.1x, below sector norms. [stockanalysis.com]
    • Fair Value Estimate: Independent models peg STI’s intrinsic value at ₱3.48, implying a ~59% upside from current levels. [simplywall.st]

    The company also offers a 3.1% dividend yield, supported by a policy to distribute at least 25% of prior year core income.

    Investor Takeaway

    With strong quarterly earnings, a favorable enrollment mix, and a healthy balance sheet, STI Holdings appears positioned for sustained profitability. At current levels, the stock trades at a discount to both its estimated fair value and sector multiples, making it an attractive option for investors seeking exposure to the Philippine education sector.

  • First Gen’s ₱50-Billion Gas Asset Sale Could Boost Dividends While Reshaping Balance Sheet and Debt Profile

    First Gen’s ₱50-Billion Gas Asset Sale Could Boost Dividends While Reshaping Balance Sheet and Debt Profile

    First Gen Corporation has completed the sale of a 60% stake in its natural gas business to Prime Infrastructure Capital Inc. for ₱50 billion, a landmark transaction that significantly strengthens the company’s financial position.

    Under the deal, Prime Infra acquired controlling interests in the Santa Rita, San Lorenzo, San Gabriel, and Avion power plants, the proposed Santa Maria project, and the Batangas LNG Terminal. First Gen retains a 40% stake, ensuring continued participation in the gas platform while unlocking substantial liquidity.

    Impact on Balance Sheet
    The ₱50-billion inflow will boost First Gen’s cash reserves, making the parent company effectively debt-free after having prepaid its ₱20-billion loans earlier this year. The transaction also positions First Gen with a strong net cash position, enhancing flexibility for future investments in renewable energy projects.

    Potential for Higher Shareholder Returns

    With a debt-free parent and substantial cash inflows, First Gen is in a position to return more capital to shareholders. This could come in the form of higher dividends or even special payouts, subject to board approval and regulatory requirements. The transaction provides financial headroom for the company to balance reinvestment in renewables with rewarding its investors.

    Debt Profile Transformation
    Before the sale, First Gen’s consolidated long-term debt stood at $2.106 billion, largely concentrated in subsidiaries such as EDC and the gas plants. With the deconsolidation of 60% of gas-related loans (about $159 million) and LNG lease liabilities, consolidated leverage will drop significantly.

    • Debt-to-equity ratio, previously at 0.86x, is expected to improve markedly.
    • Interest-bearing debt obligations will decline, reducing financing costs and strengthening solvency metrics.

    Strategic Outlook
    First Gen will continue to report earnings from the gas business under the equity method, while redeploying capital toward geothermal, hydro, wind, and solar projects. “This partnership strengthens energy security and accelerates our transition to clean energy,” said First Gen Chairman and CEO Federico R. Lopez.

    The deal underscores a strategic pivot: from heavy capital exposure in gas infrastructure to a more balanced portfolio focused on renewables, backed by a robust cash position and lower debt burden.