Quarterly Updates

Attributable net income increased 60% to P4.1bn in 1Q21, but fell short of our full year estimates, owing primarily to net non-recurring gains from MPI and amortization of FV adjustments. Without these one-time items, core net income increased 19 percent to P3.38 billion, exceeding our estimates. The core segment delivered mixed results, as growth in MBT (+27 percent ) and automotive (+39 percent ) offset weakness in property (-13 percent ), insurance (-12 percent ), and core earnings from MPI (-26 percent ; reported net income +272 percent ).

Automative (Toyota Motors or TMP)

Net income increased 39% to P2 billion on the back of robust topline growth (+18% to P33.9 billion), fueled by stronger retail sales volume (+28 percent), outpacing the sector (+5.5 percent). Additionally, the overall market share (based on sales) increased to 44% from 40% by the end of 2020. (passenger car 56 percent from 51 percent ; commercial vehicle 40 percent from 37 percent ).

Outside Metro Manila, sales keep expanding (65% of sales in FY2020, up from 63%), providing a buffer against quarantine limitations. The company anticipates that the momentum from 1Q21 will continue.

Toyota will conduct a soft launch of its new logistics hub in Batangas (for pre-delivery inspection and post-production installation) in 3Q21 (full operation by 4Q21). This will add 160k inspection and post-production installation capacity, as well as 4,500 stockyard capacity. Earnings are expected to increase as a result of decreased logistical turnaround time and handling costs, implying that margins will continue to grow.

Federal Land’s profitability decreased to P327 million (-13 percent) as the company’s topline decreased (-26 percent to P2.4 billion) owing to constrained project building and equity payments as mobility remained constrained during the quarter. However, gross profit margin increased to 57% from 44% as a result of the booking of high margin projects (upscale and high-end segments).

Property (Federal Land)

Reservations also fell to P3.5 billion (-56 percent) due to the absence of fresh releases during the quarter. The organization is now doing research in order to launch new initiatives for the rest of the year.

Banking (MBT)

Net income increased 27 percent to P7.8 billion, due to reduced provisions (-50 percent ) and greater non-interest income (+28 percent ), partially offset by a decline in net interest income (-11 percent ) due to lower loan repricing rates, credit card interest rate caps, and a smaller loan portfolio (-17 percent ), among other factors, resulting in NIM contraction (-54bps).

The bank’s non-performing loan ratio remained constant (2.4 percent flat vs. 4Q20) while retaining solid capital (CAR19.9 percent; CET1 19 percent), allowing it to seize chances once the economy reopens.


After reporting non-recurring profits from its divestments in Global Business Power and Don Muang Tollways, company declared net income increased to P7 billion (+272 percent). Core income, on the other hand, fell 26% to P2.5 billion as mobility constraints impacted its core business divisions, resulting in decreased toll traffic, light rail services, and lower demand for water and electricity from commercial and industrial sectors.


GTCAP is still a LONG-TERM BUY, with an increased TP of P657/share based on a sum-of-parts valuation. We amended our profits prediction to account for better-than-expected vehicle sales (assumed to be maintained based on MoM trend last year despite the pandemic) and a low base impact, resulting in the group’s more than double profits growth prediction. Recovery of property operations and ownership stake in MPI will remain strongly contingent on mobility limitations being relaxed. At present prices, valuation is already appealing, with a massive 51 percent discount to historical P/E ratios (9x vs. 18x historical average).

Material in this article is obtained from sources we believe to be reliable, but its reliability or precision cannot be guaranteed. This is for the sole purpose of providing details and does not provide an offer from us to buy or sell securities mentioned in this document.


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