First Pacific: A Conglomerate's Quietly Record-Breaking Half, Undervalued or Overlooked?
A Conglomerate's Resilient Performance
First Pacific's H1 2026 earnings call painted a picture of a diversified conglomerate humming along despite a challenging macro backdrop. “Our return profit, while it was down a little bit from 2025 first half, it was the second highest ever” — John Ryan · 2026-08-27, CFO John Ryan noted, attributing the dip to weak rupiah and peso depreciation. Yet the underlying operating companies delivered a cascade of record high results: Indofood's core profit rose 7% to a record, Metro Pacific posted record core profit, and PLDT hit record service revenues and EBITDA. This is a pattern that long-term shareholders have come to expect—the call was replete with core profit milestones across the portfolio.
The resilience is particularly notable because it is happening against a global backdrop dominated by tariff uncertainty and AI-related capital expenditure stories—themes largely absent from this conglomerate's playbook. Instead, First Pacific's moat lies in its diversified holdings in essential services: food, telecom, power, and mining. As John Ryan put it, “We expect fully for this sort of situation to continue that mismatch between exchange rates and our U.S. dollar profit number” — John Ryan · 2026-08-27, underscoring that currency volatility is a persistent but manageable headwind.
A Credit Upgrade and a Fortress Balance Sheet
Perhaps the most strategically significant development was the upgrade by S&P to BBB with a stable outlook. “Thanks to the sterling work of our finance and treasury people, Standard & Poor's, have upgraded our credit rating to BBB with a stable outlook” — John Ryan · 2026-08-27, Ryan said. This credit rating upgrade is not just a badge of honor; it directly affects the conglomerate's cost of borrowing as it prepares to refinance a $350 million bond maturing in September 2027. CFO Joseph Ng noted they are monitoring the market and have received “quite a number of good closes in the math” — Hon Pong Ng · 2026-08-27—a sign of healthy access to capital.
The balance sheet appears well-managed. The interest cover ratio stood at 4.8x, average blended interest cost around 4.5%, and average maturity at 3.4 years. Critically, Ng emphasized “We have no plan of taking on any new debt at the headquarters level” — Hon Pong Ng · 2026-08-27, suggesting that any incremental funding for growth—like the equity contributions to PacificLight’s new plant—will come from internal cash flows and dividends.
New Catalysts: Silangan and the Hydrogen-Ready Plant
Two projects stand out as forward-looking value drivers. Silangan, a copper and gold mine in Mindanao, is on track for commercial mining by end-2026. The ore grades are “far higher than what we've got at Padcal” — John Ryan · 2026-08-27, according to Ryan. Management expressed excitement, and even offered a mine tour to fund managers—a nod to the potential significance of this asset. Meanwhile, at PacificLight, construction has begun on a hydrogen-ready combined cycle gas turbine power plant, expected to operate by mid-2029. This positions the company for the energy transition while also addressing Singapore's growing power needs.
These catalysts are not yet captured in the current valuation, which management believes leaves the conglomerate undervalued. In closing remarks, Director Christopher Young said, “In comparison to our peers, I think we can continue to consider ourselves to be undervalued” — Christopher Young · 2026-08-27—a recurring theme in the call, particularly with respect to Metro Pacific’s stake. The analyst discussion around Toll Roads and a potential merger with FMC Group could unlock further value, and the S&P revaluation that doubled the value of the MPIC stake from $1.9B to $3B offers a concrete data point.
Payout Ratio and Shareholder Returns
Investors have been keenly focused on the payout ratio at Indofood, which is sitting on roughly $3 billion in cash. When asked about a potential increase, John Ryan was characteristically guarded: “There are many, many people who want to see what will be done with that around $3 billion in cash” — John Ryan · 2026-08-27, but he noted that the last large deployment was a $2.98 billion acquisition six years ago. The company appears inclined to maintain its conservative approach, with Director Chris Young adding that they will consider the full year's performance and outlook before setting the payout. For First Pacific's own shareholders, the interim distribution was unchanged at HKD 0.03 per share, and the group still yields around 5.4%—a stable return in a volatile environment.
Risks and the Road Ahead
Not everything is smooth. The retail contract margin squeeze at PacificLight weighed on core profit, down 26% in H1. The Shell force majeure situation, although being managed commercially, remains a source of uncertainty. Currency depreciation—especially the rupiah and peso—continues to eat into U.S.-dollar-reported earnings. And Maya, the digital banking arm, is growing fast but has yet to prove its profitability at scale; management hinted at a potential IPO but offered no specifics.
Still, the conglomerate's track record of consistent record-high profits from its core holdings suggests a well-oiled portfolio. The credit upgrade, the imminent Silangan mine, and the hydrogen project provide tangible upside. As the call demonstrated, First Pacific's story is less about flashy AI themes and more about disciplined execution across essential industries—a quieter but dependable value proposition.
For investors who appreciate the slow compounding of conglomerates, the key is to watch the currency moves, the bond refinancing, and the ramp-up of Silangan. The market may be underestimating the sum of these parts.