LT Group, Inc.: Lift PO by 34% to Php12.70, but profit trajectory negative; reiterate U/P

研报英文原文证据摘录

LT Group, Inc.: Lift PO by 34% to Php12.70, but profit trajectory negative; reiterate U/P

Outlook, cash dividends

Headwinds on demand and costs

We believe LTG’s food manufacturing and tobacco businesses may face headwinds in

FY26, namely: 1) weak demand for discretionary goods (food manufacturers) due to soft

Philippine macroeconomic outlook (Philippines Watch: Keep 2026E GDP growth at 2%;

raise inflation and policy rate estimates 07 May 2026); 2) price impact of oil shock to

fertilizers, resins and other oil-based packaging materials, shipping and delivery costs of

imported raw materials; and 3) weak peso which further raise input cost. We also expect

consumer downtrading to create a highly competitive environment, with an enhanced

focus on essential goods and pressure on gross profit margins.

PMFTC, TDI, ABI face challenges; PNB off a high base

The business units, including its packaging business, face macroeconomic, consumer

trend headwinds, oil shock, and extreme dry El Nino spell in 2026. PMFTC has been

losing market share as smokers down trade as price of tobacco rise due to annual 5%

excise tax increase. TDI’s earnings growth is driven mainly by gross margin expansion on

flat sales volume again due to 5% annual excise tax increase. ABI’s profitability is

declining on revenue decline. For FY26E, PNB’s FY26E earnings face high base effect,

which was driven mainly by ROPA sales, trading gains, and low provisions, in our view.

As such, LTG’s earnings growth sustainability is at risk. Oil shock and extreme dry spell

in mid-2026, raw/packaging materials of food and beverage units could pressure GPM.

FY26E cash dividend payout

We estimate FY26E DPS at Php1.52, 10% yield at 53% payout of previous year’s EPS.