Negative Points

• First Pacific Co Ltd ( FPAFF )'s recurring profit declined 3% year-over-year, impacted by weaker Indonesian rupiah and Philippine peso exchange rates.

• Pacific Light Power (PLP) saw a 26% decline in core profit due to lower non-fuel margins on renewed retail contracts, and faces potential gas supply disruptions from Shell's force majeure.

• The company's head office other expenses rose significantly (about three times year-over-year) due to accruals for a new long-term incentive scheme.

• Indofood's foreign exchange losses were substantial, with a $51 million loss in the first half, largely due to unhedged USD bonds and rupiah depreciation.

• The potential regulatory change in the Philippines regarding system loss charges could negatively impact Meralco's profitability, though the company believes it won't be the one to bear the cost.

• The Padcal mine experienced lower tonnage and grades due to aging equipment, leading to a 9% decline in revenues, despite higher metal prices.

• The company's net asset value (NAV) discount remains a concern, though management argues it is overstated due to conservative accounting for MPIC.

• The refinancing of the $350 million bond due in September 2027 is subject to volatile market conditions, and the company is not in a rush to lock in terms.

• The new PLP power plant's commercial operation is not expected until mid-2029, and there is uncertainty about contract renewals and ramp-up to full capacity.

• Indofood's dividend payout ratio is relatively low at around 24%, and management has not indicated any plans to increase it, despite a large cash balance.

Q & A Highlights

Q: Can you provide an update on the potential merger of MPIC's toll roads with SMC Group's toll roads, and if it happens, would First Pacific consider changing how it accounts for MPIC's NAV? A: Executive Director Christopher Young confirmed that due diligence is ongoing and the intention is to merge the businesses at some stage. However, he noted that financial statements are prepared on a historical cost basis under general accounting principles, so there may always be a difference between book value and commercial valuation. CFO Joseph Ng added that S&P's recent credit rating upgrade to BBB was based on a "look-through" valuation of MPIC, which valued First Pacific's stake at $3.8 billion, double the previous $1.9 billion, reflecting the listed values of Meralco and Maynilad. John Ryan noted that these factors "would definitely militate for a revaluation of how we value MPIC."

Q: What is the plan for refinancing the $350 million bond maturing in September 2027, and what drove the spike in head office other expenses? A: CFO Joseph Ng stated that the company is monitoring the volatile interest rate market and has received proposals from banks, exploring both bond and bank market options without rushing into a decision. He emphasized that all head office activities through 2027 are focused on refinancing, with no plans for new debt. Regarding expenses, the increase was attributed to a full six-month accrual for a new long-term incentive scheme cycle that began in mid-2025, compared to only a partial provision in the prior year period.

Q: Can you provide details on the PLP new power plant's total budget, First Pacific's equity contribution, and the expected ramp-up to full capacity after commercial operation in 2029? A: CFO Joseph Ng explained that the project cost is approximately $1.2 billion, with an equity requirement of around $450 million. First Pacific's 42% share amounts to roughly $150 million, of which $44-45 million was contributed in the first half of 2026. He noted that the company continues to receive dividends from PLP while funding equity, maintaining financial discipline. Regarding ramp-up, Ng said it's "too early to tell" as customer contracts typically last 1-3 years, and signing contracts too early risks delays in construction. The company will assess contract procedures closer to the 2029 completion date.

Q: Has Shell triggered force majeure on gas supply to PLP, and will the non-fuel margin squeeze stabilize after current levels? A: CFO Joseph Ng confirmed that Shell did trigger force majeure provisions due to supply disruptions from Qatar, but commercial discussions have been ongoing. Shell is helping source alternative gas from other locations, with a timing difference where gas is supplied now and repaid over time. Ng stated the overall financial impact is "pretty much a wash" and "not as severe as expected," with better margins from other contracts offsetting the impact.

Q: Given Indofood's strong cash balance of around $3 billion, is there any consideration to raise the dividend payout ratio, and what are the plans for the cash? A: John Ryan noted that many investors are interested in the cash position, but declined to speculate on specific plans. Executive Director Christopher Young added that Indofood is "fairly conservative" in determining payout ratios and will consider 2026 performance and 2027 outlook before setting the dividend paid in 2027. He noted there are no specific plans for the cash at the moment, referencing the last major acquisition of noodle businesses in the Middle East and North Africa six years ago for $2.98 billion.

Q: How does Maya compare to GCash, and is there still a plan to list Maya in 2027? A: Executive Director Christopher Young explained that direct comparison is difficult as the businesses have different focuses. GCash's strength is its wallet, while Maya's strength is its fintech/banking platform, evidenced by robust deposit growth and high net interest margins. He noted that GCash's valuation is "helpful but not really going to drive the Maya valuation." While Maya cannot list as soon as GCash, Young confirmed "there would be an intention to list Maya at some stage in the not too distant future."

Q: Is there a chance of another impairment for the Pine Hill investment from Indofood given current Nigerian conditions? A: Executive Director Christopher Young responded that the answer is "no" for both Pine Hill and the Nigerian associate. The Pine Hill business continues to perform well, and the Nigerian naira has steadied rather than weakened in recent months. He clarified that the previous impairment was not due to underperformance but rather the sharp devaluation of the naira over time. John Ryan added that the Pine Hill businesses in Asia and Africa showed 15% sales growth in US dollar terms.

Q: Can you explain the $51 million foreign exchange loss detailed in the financials, and what is being hedged? A: CFO Joseph Ng explained that a large portion of the loss is attributable to Indofood's $2.75 billion bonds (a 10-year and 30-year tranche). With approximately 6% depreciation of the rupiah in the first half of 2026, this accounts for around $40 million of the loss. Indofood does not hedge this exposure but holds $800-900 million in dollar cash, making the net dollar exposure approximately $1.8-1.9 billion. John Ryan added that at the First Pacific head office level, the only hedging done is on dividend income.

Q: What is the status of the potential charges on distribution losses for Meralco, and are there any key dates to watch? A: John Ryan explained that President Marcos suggested the electricity industry should pay for system loss rather than customers, which impacted share prices of power companies including Meralco (down about 16% year-to-date at end of June). He stated there are "no key dates to look for" and the issue remains "up in the air." Ryan expressed his personal view that ultimately it won't be Meralco that pays, but acknowledged he cannot predict the future outcome.

Q: What is the renewal schedule for PLP's retail contracts, and how many years before another round of renewals? A: Eliza from PLP explained that the company has a range of contracts spanning one, two, and three years, with a "very good distribution amongst those three different tenors." She noted that PLP does not have the super long-dated contracts

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