First Pacific Co Reports Record Profits Amid Growth

First Pacific Co ((HK:0142)) has held its Q2 earnings call. Read on for the main highlights of the call.

The latest earnings call for First Pacific Co presented a generally positive outlook, marked by record recurring profits and strong performance in core holdings. The company highlighted significant growth in Maya Digital Banking and a new high in share price, despite facing challenges such as declining profit margins at Indofood and competitive pressures in the telecom market. Overall, the positive aspects, including reduced interest expenses, outweighed the negatives, creating an optimistic sentiment among stakeholders.

Record Recurring Profit

First Pacific Co achieved a remarkable milestone with its recurring profit increasing by 11% to over $375 million. This marks the sixth consecutive record high for the company’s first-half results, underscoring its robust financial health and strategic prowess.

Strong Performance in Core Holdings

Indofood, PLDT, and MPIC, the core holdings of First Pacific, delivered record-high revenues. Their success is attributed to their strategic presence in fast-growing regions and essential service industries, which continue to drive their financial performance.

Interest Expense Reduction

A notable highlight from the earnings call was the reduction in interest expenses by 10% to $35 million in the first half. This decrease positively impacted the company’s overall financial results, contributing to its strong performance.

Maya Digital Banking Growth

Maya Digital Banking demonstrated impressive growth, with bank depositors increasing sevenfold and loan disbursals growing twentyfold over the last few years. This significant expansion highlights the potential of digital banking within First Pacific’s portfolio.

Improved Dividend Income

For the first time in about 8 to 10 years, dividend income surpassed EUR 300 million in 2023 and 2024. This improvement reflects the company’s strategic focus on enhancing shareholder returns.

Increase in Share Price

The share price of First Pacific reached a new 10-year high of $6.51, reflecting positive market sentiment and a reduced discount to net asset value. This milestone indicates strong investor confidence in the company’s future prospects.

Decline in Core Profit Margins at Indofood

Despite the overall positive performance, Indofood faced a decline in core profit margins, with EBIT down 1% due to increased input prices affecting margins, particularly in the noodle segment.

Reduced Dividend Payout from MPIC

MPIC reduced its dividend payout from 30% to 25%, impacting the overall dividend income for First Pacific. This decision may affect shareholder returns but reflects a strategic approach to managing resources.

Competitive Pressure in the Philippine Telecom Market

PLDT’s core profit in the telecom sector was down due to intense competition in the Philippine market. This competitive pressure poses challenges but also opportunities for strategic adjustments.

FX Impact on Profit

Foreign exchange losses impacted First Pacific’s financial results, although they swung to a gain in the latest period. This volatility highlights the challenges of operating in diverse currency environments.

Forward-Looking Guidance

Looking ahead, First Pacific Co maintains a positive outlook for medium-term earnings growth, supported by strategic investments and operational efficiency. The company reported a gross asset value of approximately $5.6 billion as of June, with key holdings Indofood, MPIC, and PLDT being billion-dollar entities. The Board approved an interim distribution of HKD 0.13 per share, reflecting confidence in sustained growth.

In summary, First Pacific Co’s earnings call conveyed a generally positive sentiment, driven by record recurring profits and strong performance across its core holdings. While challenges such as competitive pressures and declining profit margins were noted, the company’s strategic initiatives and growth in digital banking provide a solid foundation for future success. Investors can remain optimistic about First Pacific’s potential for continued growth and value creation.