First Pacific Co Ord

Good day, everyone. Thank you for joining the online briefing to discuss the First Pacific 2025 Three-Year Financial and Operating Results. The resource presentation is available on First Pacific's website, www.firstpacific.com, under the Investor Relations Session presentation page. This resource briefing is being recorded and the webpage will be available on First Pacific website this evening in the Investor Relations Session. For participants from the media, please watch the Q&A session. These are open for investors and analysts only. If you would like to ask questions, please contact us when the briefing is finished. Today we have with us our Executive Director, Mr. Chris Yang, our CFO, Mr. Joseph Ng, Associate Director, Mr. John Ryan, and Mr. Stanley Yang, and other senior executives from the head office of the First Pacific. Over to you, John, for the presentation, please.

um thank you sarah we'll all just to go through very quickly the first specific part of this presentation then i'll move to the q a uh for you folks now uh let's begin on page three with a quick reminder of some of our major investments um all of which have done pretty well in the course of 2025 and we'll discuss this later on now on page four we've got the shape of our gross asset value on december 31st 2025 The gap was about $5.3 billion. Indufood, just over a third. MPIC values there at $1.3 billion. The U.S. dollar value of the pesos we paid for it when it was privatized back in the autumn of 2023. We own now about 49.9% of MPIC. You might see there that PLP's valuation has increased to $398 million, and that's because we've put some money into it to help finance the building of a new power plant, which our financial controller, Richard Chan, might discuss later, if that's of interest to you folks. And then, of course, there's PLDT, our 25% or so owned telephone company. And then there's the Philex group of companies, which make up just over 10% of our gross asset value. Now let's move on to the earnings for 2025 on page 5. Turnover was up 2%, a little over $10 billion, higher revenue at Indofood and MPIC. Decline at PLP, Pacific Light Power. Contribution from operations reached a record high. I believe, like the recurring profit, it's been about seven years in a row we've had increases than the previous five have been records. uh indofood pldt mpic highest ever revenues and um mpic delivered their highest ever earnings as well now recurring profit as i say it's up a good double digit 10 to 740 million dollars up from about 673 million in 2024. net profit was up the similar number 10 to another record buying 661 million dollars Now, to a matter that is dear to the heart of many shareholders, the directors approved a final distribution of 14 Hong Kong cents a share. You folks will vote on that at the AGM. And that brings the full year distribution to 27 Hong Kong cents a share. And that's the highest ever on a per share basis that we have ever paid out. And that, of course, fits under our progressive dividend policy where we're committed to increasing the per share amount of money we distribute to shareholders every year apart from special circumstances as you can see on the middle chart here on the right hand side the increase in recurring profit was driven mostly by mpic and indofood and there were little declines at pldt and plp head office cash flow as you can see we had about 311 million dollars of dividend income, and there are the distributions gone out to you folks. That's the biggest amount of money sent out. And then the net cash interest expense follows. And if you look deeper into this book or want to discuss it later, you'll see that our interest bill is declining along with the interest amount that we're paying. Over on page six, a little bit more detail on our cash flow and balance sheet. As you can see here, at the present day, we have no borrowings falling due until September 2027, when our only bond, $350 million, becomes due. $200 million that was due in 2026, as you can see, has been shifted over by five years to 2031. Our interest cost is around about 4.6% for the year, and the average maturity is about 3.2 years. And I would guess over the course of the next 12 to 18 months, that 3.2 is going to become a bigger number. Our CFO, Joseph Ng, will discuss that in the Q&A if you like. Dividend income there on the bottom left shows that we've been consistently over $300 million. in recent years. And very important to us is the interest coverage ratio, as you can see, was 4.5 times in 2025. That's up from 4x the previous year. And that is well above our comfort level. Though it must be said, we don't have any plans for that number changing anytime soon on account of additional borrowing by us. Now, I'll wind up the narrative part of this meeting with a quick look at a reason that many people are invested in First Pacific. As you can see, from 2018 to 2025, we've had over a doubling of our profit at First Pacific. I think in 2018 it was around 290 million in recurring profit, and we're up to 740 in 2025. As you can see, the exchange rates of the Rupiah and the Peso were down about 11% and 14% respectively over that time. And what this does is it illustrates quite vividly the hard currency security of putting your money in for a specific so that you can secure the gains to be had from the fastest growing economies in the world, which are described by the IMF over in that bottom right-hand chart, where you can see there's a doubling over the 10 years to 2030 from 2020. Let me actually very quickly go through the main companies. Indofood had record sales, as I said. Core profit was up just 1% to a highest ever level. Many of you may have attended their investor briefing earlier today. If you haven't, we can discuss some more about their description of their earnings and predictions for the future, many of which we have put into the outlook for 2026. To speak briefly about that, there is an inference you can make that 2026 will be rather better than 2025. But of course, you know, we have that devil in the middle east conflict uh which we don't know how it will affect uh any of us going forward um we can discuss this later on if you like but there's pretty high confidence over at indo food now we're going to flip a few more pages to metro pacific looking at page 14. record high earnings as said before uh core profit up 15 and as you can see in the pie chart most of it was contributed by the power company moralco which is beginning to see a huge contribution from its still fairly new power generation business. They've gone into a very large LNG terminal accompanied by two natural gas fired power plants in Project Chromite. Stanley Yang, who worked on that transaction, can help discuss that later on. It just addresses that Generation is going to be a big part of earnings growth at Moralco going forward. The newly listed water company, Moralco, also was a very big contributor to the earnings there. And then the toll roads. Their contribution, as you can see, didn't grow so much, as illustrated in the bottom left. And that's because we owned, in part, it's because we owned a little bit less of it than we did earlier. Now, let's dash ahead. to PLDT, which is the biggest telecommunications firm in the Philippines. Service revenues record high, EBITDA at a record high, and the EBITDA margin still very strong at 52%. For-profit rose 1%, actually similar number to Indofoods. And it was helped for the first time ever by Maya, which is the 38%-owned fintech, which has – it's the only digital bank in the Philippines which is both owned by a telecommunications firm and has a banking license. It's a very interesting little company, and it moved into profit for the first time during the course of 2025 or so. And the falling column chart on the bottom right there shows you the usual story. It's data that has been driving earnings growth. And fixed line voice, too, in a kind of funny way. There's a big international element there. Now we'll skip past my end over to ELP. which had earnings slightly down. Sales were a little bit down as well. Market share steady at 9.6%. And as you can see, the monthly average electricity prices are down quite a bit from those powerful period of earnings we had in 2023. And that's really the main driver of how their earnings have gone over the past couple of years. Net debt is absolutely negligible at less than $40 million per Singapore dollars. Now, over to page 27, where PhilX Mining, which has been operating PadCal for six decades, I think, and it's still going strong for another few years until 2028, I believe. You can see that after six decades, the grades of gold and copper there in the blue box, they're rather lower than you might want to see. But if you want to see better, turn the page to the Solangan Project. uh which is accelerating towards the opening of commercial operations uh over in the next weeks and months and you can see that the grades there in the middle box are much much higher than what we've got going on at pad cal um we're very excited about the prospects for selenium and we think it's going to be a good solid contributor to first pacific uh going forward and to its parent philips now i'm going to end the introduction with a quick dash to page 52. where i would like us all to pay attention to the second line china securities depository and clearing um they're probably up at this day close towards 150 million shares we have now a third brokerage about to start uh equity research coverage of first pacific for mainland investors and this has been almost entirely due to the efforts of my colleague Sarah Chung, who's here two seats away. And these new mainland investors provide much-valued liquidity to the share trading and First Pacific, and we welcome them with open arms. That's it for the opening narrative. We can move over to Q&A.

If you have any questions, you can just put your questions in the chat box or just raise your hand.

Jeff, could you unmute and ask your question, please?

Thanks, John. So, yeah, thanks for taking my question, maybe starting with two from me. So it is all about dividends first. So just want to check the regular final dividends increase 3% year on year, which seems to be a little bit muted compared with what we saw in the past. But separately, you also pay a special dividend with respect to Medinet's subscription shares. So just trying to check whether the regular dividend growth this time is whether a sign of caution on the outlook or whether we are trying to smooth out the total DPS growth down the next few years, including the specials. So that's the first one. The second one would be about indoor food payout. I understand the dividend will be decided in the AGM in the next couple of weeks. So just trying to figure out from your perspective, are you seeing any particular resistance for INDF to raise the dividend payout ratio in the future? Thank you.

Jeff, you know our CFO, Joseph, and he'll deal with the first question, and I'll ask our Executive Director, Chris, to deal with the second.

Hi, Jeff. It's Joseph here. I think your three percent is only focused on the final, if I'm guessing your question correctly, because last year's final was 13.5, and this year's final is 14, but in aggregate, If you aggregate the interim and final, last year was 25 and a half cents. And this year, this all together, 27, as we paid 13 cents for the interim. So there's a 6% growth, which is not the 3% you mentioned, so it's not insignificant. But if you add back the so-called special distribution we make as a result of the mainland IPO, we pay a 91.5%. So I think we have almost 10% growth against last year's 25.5%. So that's broadly in line with the growth in in the so-called recurring earning line from last year's 673 million to this year's 740. So it's 10% growth in the recurring, which is a key KPI indicator for us. So broadly in line, regular dividend growth or distribution growth is 60%, but all in is 10% growth. Now, with that 27 cents altogether, I think we are paying all together about $150 million plus. And that also needs to tie to what we disclosed in the cash flow that for 2025, you have a $311 million dividend income. So you can see that it's more than half of the so-called gross dividend line that we are returning to the shareholders, even without including the so-called special distributions. And then you have to have office open and the like and remember jeff also starting from 2025 and more heavily in 2026 We we we need to kind of reinvest some of the money that we have from the dividend From from the units and then we invest those money back to plp to fund itself equity requirement for a new guest fund so, uh, we try to kind of strike a balance as to what we returned to shareholders which not not a small ratio which is quite a high ratio if you take out all of these expenses and interest we are returning more than 70 of fee cash to the shareholders and keep a little bit for our investment into the plp cash fund so um i think that's the kind of the kind of the kind of macro thinking behind kind of Fixing the final dividend at $0.14 per share and making a total of $0.27 regular and at 10% growth in aggregate, including a special dividend repaid to the shareholders as part of the mainland IPO. So that's on the dividend side. On the indoor food dividend side, maybe Chris could contribute and give us a bit of a comment on that.

Jeff, I think normally, as I think you're aware, it's a discussion with the management there at Indofood, and generally it's a fairly constructive discussion. I think we would take into account two elements in considering that dividend. So I think if you look at John's presentation or you see the Indofood results, the recurring profit growth last year for IndoFood was 1%. And the outlook at the moment looks reasonable without too much disruption from what's going on in the Middle East. But obviously there is a bit of uncertainty. So that would be the context to the discussion. What was the underlying growth? last year and what is the outlook. But as you yourself noted, that discussion will happen over the next couple of months. Thank you.

Okay, now we'll ask Timothy Chow to unmute and ask what he's got to ask.

Hello. Thank you, management, for giving me the chance to answer questions. I have a couple about Middle East first. First on Indo food. I understand just now management talked about how the Middle East impact seems to be minimal on Indo food. I'm just wondering if there will be any implications on the raw material cost because I think Over the past year, there's reportedly some kind of raw material price hike that affected the margin. So I'm just wondering if the middle is, if extended, kind of being an extended event, would that aggravate And the second question also about Middle East would be on PLP because if I remember correctly, the electricity price in Singapore could actually be moved as long as the gas price is up. So I'm just wondering if there will be any positive breakthrough from Middle East on PLP here. Okay. And my last question is on the PLP project. So I'm just wondering if there is a finalized budget on the potential CapEx spend on the project yet. And just now you mentioned about how we have always been investing some in PLP already on that particular project. Just wondering the timeline of the entire CapEx and how it will be in the coming two to three years. Thank you.

I'm going to take a stab at the first one, then Stan will help you with the PLP. Indofood told us in their briefing this morning that as far as wheat goes, they've got three or four months of supply on hand. and they see that it looks like there's globally going to be a good crop of wheat better than the previous year in 2026 so they're not too worried about that um cpo prices are up a bit um after rising 10 in 2025 to about 14 100 rupiah they're around at the end of the first quarter 15 000 rupiah they are in some not feeling any particular pressure from raw material prices. And as far as the Pine Hill businesses in Middle East and North Africa, they have been able to secure their supplies up to now, and there is, as of yet, no particular concern. BLP, Stan?

Sure. Hi, Timothy. Just to address your questions on Pacific Light, first on the electricity prices and the impact of the Middle East fuel and For PLP, its gas comes from a global supplier, in this case Shell. And there is some impact in terms of some of the flow in terms of the LNG that's supplied into Singapore, some of the disruption. It's a relatively small portion, a minority. And I would say that at least for the next month plus, there's sufficient supply. But when you get beyond it, there will be some impact in terms of the supply coming in that would typically come from the Middle East. Alternate arrangements are being made. The company, as well as other generators who are affected in the market, are also in discussions on solutions that would help, including having some of the gas supplied by companies by EMA and being able to run, but also others in terms of the existing contractual arrangements that they can procure in terms of their global supply. And so we think in terms of certainly the near term, there will be less impact, but as the months go by and if this crisis continues, then some of these alternatives on how the balance of gas will be filled in light of their retail contracts for the company will need to be covered. When it comes to the project itself, the project itself is looking at starting in 2029, and so the heavy lifting in terms of the construction and so forth is still to come. And so within this year, there would be an expectation of the notice to proceed, which basically kicks off the formal development and projects, and from there, you know, the filing works, and then subsequently over the next couple of years, the balance of the tax. And so that CapEx, as we look at it, would be spread across the next few years up until the planned operation date in 2029. Okay.

Thank you for the color. On PLP, the rise in gas price, if I remember correctly, I think back in 2023 when the gas price is up, we actually have a higher profit because of the non-fuel margin being higher. So I'm just wondering if this case, given the case is not as bad as like the lack of supply, I guess, in the end. So I'm just wondering if there will be any positive for PLP in this case, or we are still cautious about that?

I think it's too early to make the call. I think the next couple of months will be critical. I think because the company has a strong position with respect to its retail customers for this year, then there is definitely visibility. but the impact of any supply disruption, not just for our company, PLP, but also for the entire market in Singapore. You know, the question will be the balance of any gas that comes from the affected markets, you know, for instance, Qatar. and how that would impact the entire supply. You know, as I mentioned before, that's not the majority of the supply. It's a minority, relatively small percentage, but it is one that we are monitoring because, you know, the supply in aggregate into the market has to balance with what the generation demands will be for running the plants.

Got it. Thank you. Thank you, Steph. Are there any more questions for us? I think Jeff has another question.

Jeff, please unmute and enter. Ask your question.

Yeah, thanks. Thanks, John. So maybe switching the key a little bit to MPI, just trying to figure out how should we think about maybe the water many that business in 2026. So just trying to if there's any tariff adjustment, can you remind us over there? But if not, just want to hear your maybe general assessment on that. MPI is 2026. That's my first question. The second would be just talking about the FP natural resources, which we usually do not really focus on. Just trying to understand why the loss contribution diminished in 2025, and is there any one-off events there? Thank you very much.

Ben? Sure. On the question of the – you were talking mostly on the water, was it?

Yeah. If we can expect some tariff increases in 2026 following the 10% last year.

This year, it's going to be more muted than last year's in terms of the tariff impact that had been following the revision of the revised concession agreement and a series of adjustments over a few years. you know, those have had the benefit in terms of the flow into Manilad and the system. This year, it would be 4%, though, is the expectation in terms of the the tariff adjustment. And the business itself will continue to grow. The supply of water and the management's efforts to improve that, I think they focused heavily on the non-revenue water, which is the losses in the system, and bringing that down to levels that the company has not seen ever since our existence in owning the business. And so for us, that's a big savings that helps improve the cost of the water supply and efficiency in the system. And then the management themselves are focused on continuing to improve that along with the continuation of of tariffs as part of their capex program which was agreed as part of the concession agreement that they revised those would be the the key uh imperatives to continue to uh to build on on that business okay thank you and second question

Jeff, will you remind us, please?

Oh, yeah. The natural resources, just trying to figure out why did the loss diminish in 2025 compared with 2024, and just trying to check if there's any one-off events driving the narrow losses or anything happened there. That would be helpful. Thank you. Chris?

Actually, maybe I could back that up for a second. Yeah, I mean, that operation, the sugar operation last week, And basically, we are laying off all the staff and we're trying to basically sell the residual assets owned by the operation. I mean, previously, the alcohol operation, and then we have been discussing of selling this kind of final set of operating assets, refinery assets with certain investors and certain buyers. So, with that, actually, the scale of the operation basically stopped. So, that's the reason why you see the recurring product line has not been noticed without any significant amount there. But we do make some impairment provision as a result of selling those refinery as I mentioned, because now we have identified buyer, we find a discussion with the buyer. So, we know that the final sacrifice of the refinery part is lower than the book value so there shouldn't impairment provision make below the line under the sort of the normal but about the line is basically no no operation anymore so uh no significant operation that's why you see that it's very little impact it is occurring properly

Thanks, Joseph, and thanks, Stanley. I just want to take the chance to just have one more quick follow-up or just other question. So just I want to hear our plan for refinancing the head office borrowings. So John mentioned we have refinanced the borrowings. repayable loan in 2026 and just trying to figure out how do we think about the current maybe the head office net debt cash interest coverage ratio and also our maturity schedule down the next maybe two years. Thank you very much.

Yeah. As mentioned by John, we finished the refinancing of the January 2026 band loan. We actually signed up the commitment before the end of last year so we just draw the facility and pay off the bank loan in early January so that's all done as far as 2026 liability management initiative is concerned so the next one coming up from this bar chart is the board the 15 million board during September 2027 now we still have as of today maybe 18 months to go so it is still early but follow our usual prudent financial management. We're actively looking into that and talking to a number of banks. We're getting proposals on, say, refinancing the bond with another bond. So we have received quite a number of proposals with different quotes. Now, we are not in a rush, per se, because the whole market is so volatile. You probably understand from the market that actually both the foreign investors and many issues are actually waiting on the sideline to see how all these Middle East crises will turn out and how that would affect the interest rate environment in the next six to nine months. And for us, I think the plan is that We have 18 months to go, but we should get ourselves ready. Probably when we get into the second half of this year, we'll probably kind of accelerate a little bit on the preparation process and see what will really be wise, the kind of terms and pricing that we could get from the different banks. And in parallel, of course, we'll try to explore other alternatives like syndicate a band loan if, well, we think that those band loan terms and pricing are more attractive. Of course, the bank will not give you the tenor that we could get from the bond market for seven or ten years. As you can see from the Demo Trader profile here, if you get another five years, probably you get into the 2021-2022 phase, which will be a bit clouded. So our preference will be still a bond. For one, the tenor, too, is to diversify the credit resources so that we don't 100% rely on the bank financing. So that's the initial thinking because we always try to strike a better balance between the bank credit resources and the bond credit resources. So the preference is to go for a bond if the market is there and if the terms and pricing are palatable to us. But we never say never. We just wait until the whole market comes down a bit and the whole bond market becomes active again. Okay.

Thank you very much.

Thanks, Joseph. Maybe can I have a real quick follow-up? You may. This is my real point. So just as of the end of 2025, I think you disclosed 54% of the debt is on fixed rate basis at the head office level. So is this split some sort of optimal, in your opinion, or should we be targeting more fixed rate borrowings, as we think, for the next maybe three to five years, given the volatile interest rate environment? Sometimes the expectations just bounce around. So I do figure out the thinking here.

Yeah, Jeff, it's a difficult question because the interest rate arrival is actually shifting back and forth, and sometimes they say, I mean, there will be, what, one interest rate cut this year and followed by two next year, and now they'll be shifting a little bit, even the threat will be shifting the position, maybe not two rate cuts in 2021, a seven, maybe one. I mean, all these are subject to changes since the whole market is so volatile. So with that sort of volatile situation, it's really difficult to say that we should increase the hedge ratio to a higher level or reduce it. As of now, I think we are quite comfortable with what we have. We're probably quick to descend there because you can't win all and you will not lose all as of now. That's what I can say for now.

Got it. Thank you.

Okay, and I believe Timothy, please unmute and ask your question.

Oh, yeah, sorry, man, it's me again. Thank you for giving me the chance to ask the second round. Just a really quick one on potential corporate events. I think this year a lot of different conglomerates have been. The theme has been, you know, capital recycling, unlocking asset values. I'm just wondering, given our, you know, very diverse and broad portfolio, we do have similar stuff that the management is looking to maybe divest some kind of non-core or at least partially divest like an IPO, for example, like a mainly led kind of thinking to really unlock the asset value and maybe pocket some kind of funds as well. Especially, I think I've read somewhere in the news about potential IPO or private placement for Maya. and like back in the days i think we there were there were also some market chatters about the you know um private placement for uh mptc back then to help relieve the financing finance financial issues but uh for for for the total assets uh so i'm just wondering if there are any anything uh regarding corporate events that are the the company's thinking about now thank you certainly as a holding company we look at a span of initiatives both

on the M&A side, which you've seen over the last few years, and also in terms of capital markets. You raised the example of the Nelaz IPO. When it comes to, as you pointed out, Maya, it's a business that has improved quite a bit. The growth of both the wallet and then subsequently after that, taking the leadership both in the merchant acquiring and now in the digital banking side has really pivoted that platform from what was quite small a few years ago to now the leader and continuing to grow rapidly. Whether this is the year that at this time a listing can be done, I think we would – management and shareholders are always reviewing the strategic options – I think, you know, actually an interesting similar case was there was the Japanese fintech recently, Pepe, that just listed earlier this month. And despite the challenges of the market around and so forth, actually the price held up quite well. So I think it's fair to say that we will continue to monitor if there is an opportunity. Of course, Maya is much smaller than the one that listed in Japan, but its growth and its trajectory are moving in a very positive direction. And so we would see this as a potential as it continues to grow. Really, the question is in terms of timing. And I would say with respect to other portfolio companies and across the group, I think we continue to evaluate how we can improve the positions of them in their respective sectors and and, you know, as and when decisions are undertaken to pursue things more formally than, of course, we would, you know, provide more guidance at that point in time.

MPTC?

I think MPTC, you know, at the moment, the business has continued to focus on delivering this year its projects. They have quite a number of projects within the Philippines that are looking to complete, and so that's really been the focus. Also, some of the deleveraging efforts of management because of the acquisitions that they've undertaken in the last few years. Those are the principal initiatives looking at partners and some capital into the business to help in terms of the debt reduction of the overall roads. And then, you know, with that, we continue to also consider whatever strategic opportunities are to further enhance our position as a platform and the shareholders of of our own business.

Thank you very much, Stan. As there are no more questions and time is getting on, we'll wind up now, beginning with a reminder that we will be visiting fund managers in Europe and North America. uh after easter holidays uh if you would like to see us please get in touch with me or sarah or my colleague fjorn ing at firstpacific.com um these meetings uh have historically been quite worthwhile for the fund managers who see us because we cannot hide our feelings on our face you'll see us coming in and we'll be feeling really really good and that will be important to your perspective uh towards our company And now to summarize how we feel and where we think we're going, I turn now to Chris Young, Executive Director.

Thank you, John, and thank you for joining us on the call today. The results, as you've seen, for 2025 were good and a continuation of a trend that we've seen over the last seven years or so. However, clearly the outlook in the short to the medium term is somewhat uncertain. However, I think we remain cautiously optimistic that given the nature of our businesses, which I think are quite defensive, given their consumer-facing nature of them, that we will be able to shelter the group really from these uncertainties over the next few months or so. So we look forward to updating you again on the half-year results, which I think are at the end of August 28th. So until then, we will keep you informed on a regular basis. And as John and Stan will be visiting Europe and the U.S., hopefully you'll get a chance to meet with them face-to-face before then. So I'll turn you back to Sam.

Thanks again for joining today's online vision. We may disconnect now. Thank you.

Bye.