Financial Adviser: 5 Things to Know About Sabin Abotiz’s Aboitz Equity Ventures After 1Q 2026 and How to Profit from It

In periods of market uncertainty, investors often become more selective about the companies they are willing to own. Growth stories may still attract attention, but markets usually place greater value on conglomerates that can withstand changing economic conditions and continue creating value across different cycles.

Conglomerates are not always easy to analyze because they operate across several industries. Some businesses may benefit from economic recovery, while others may face pressure from interest rates or higher operating costs. Their value is not always obvious from headline numbers because a conglomerate is often a collection of assets and operating businesses.

In the Philippine Stock Exchange, one company that stands out in this category is Aboitiz Equity Ventures, Inc. (PSE: AEV), one of the country’s major diversified conglomerates.

AEV has built a portfolio that spans power, banking, food and beverage, infrastructure, real estate, cement, and other investments. Through its different business units, the group has exposure to several important parts of the Philippine economy.

AEV’s share price has also gone through a difficult period. From levels near P50 in early 2024, the stock fell to around P24 to P25 in late 2025 before recovering to the P32 to P33 range. While the rebound shows that sentiment has improved, the stock remains far below its previous highs, which suggests that investors are still applying a cautious view toward the conglomerate.

This makes AEV an important company to study because its performance is not tied to only one sector. Its investment story depends on how its different businesses perform together and whether the value of its underlying assets is properly reflected in the market.

For long-term investors, AEV should be viewed less as a traditional holding company and more as a portfolio of operating businesses that must continue generating sustainable value despite a more challenging economic environment.

As always, investors should do their own research before buying any stock. With that in mind, here are five key things investors shoud know to understand about Aboitiz Equity Ventures:

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AEV’s latest earnings suggest the company may be moving past a weak transition period. On the surface, AEV’s 2025 results looked flat. Net income attributable to equity holders of AEV increased by only one percent to P18.3 billion from P18.1 billion in 2024. For a major conglomerate, this kind of growth does not immediately look exciting, but this number does not tell the full story.

AEV’s 2025 earnings were weighed down by non-recurring and cyclical pressures, especially in its Power segment. The Power Group’s contribution to net income fell 42 percent to P10.4 billion from P18.0 billion, mainly because of non-recurring losses related to the partial impairment of goodwill from AboitizPower’s investment in GMEC. Without that drag, the underlying operating picture would have looked better because generation margins improved as contracted capacity increased.

For the three months ended March 2026, AEV’s net income attributable to parent shareholders increased 99 percent to P6.3 billion. Revenues rose 27 percent to P86.4 billion, operating profit increased 51 percent to P13.4 billion, and EBITDA climbed 39 percent to P24.8 billion. Equity earnings from investees also increased 48 percent to P6.1 billion.

Power remained the biggest contributor, accounting for 56 percent of AEV’s income contribution in Q1 2026. The improvement was driven by higher margins in the generation business and higher equity earnings, including the full-quarter contribution from Chromite Gas Holdings, whose subsidiary Excellent Energy Resources began commercial operations in 2025.

UnionBank (PSE: UBP) also showed a sharp recovery. Its contribution to AEV increased 174 percent to P1.9 billion from P0.7 billion a year earlier due to higher net interest income, lower funding costs and lower credit costs. This is important because UnionBank had previously been affected by one-time costs and provisions after the Citi consumer business acquisition.

Food and Beverage’s contribution increased 43 percent to P2.1 billion from P1.4 billion, which is supported by strong volumes and better margins in Aboitiz Foods’ agribusiness, trading, and flour segments, as well as higher sales volumes and sustained market leadership from the Coca-Cola bottling business.

AEV is not yet a clean growth story because some businesses remain cyclical and leverage remains part of the investment risk. But the latest quarter suggests that AEV is no longer relying only on Power to carry the group. Banking is recovering, Food and Beverage is growing, and Power is benefiting from better margins and new contributions.

This earnings recovery can make AEV’s valuation look more attractive over the next few quarters. At AEV’s current P/E ratio of 8.5 times earnings, the stock is trading below its historical average P/E of around 10.5 times. If AEV were valued at that historical average, using the current EPS of ₱3.84, the implied share price would be about P40.50.

But the more interesting point is what happens if the earnings recovery continues. In the first quarter of 2026, AEV reported EPS of P1.14, double the P0.57 recorded in the same period last year. If this stronger quarterly run rate is sustained, annualized EPS would be about P4.56. Using the same historical average P/E of 10.5 times, an EPS base of P4.56 would imply a value of about P47.90 per share.

AEV’s current ratio declined from 1.6 times in 2024 to 1.1 times in 2025, while its net debt-to-equity ratio increased from 0.8 times to 1.0 times. For the first quarter of 2026, AEV’s current ratio normalized as it stood unchanged from end-2025.

AEV’s higher net debt-to-equity ratio shows that it is using significant leverage to support its portfolio. But the leverage still appears manageable. Its gearing ratio was 50.4 percent, only slightly higher than 49.7 percent at the end of 2025. Interest coverage was also 3.1 times, which means operating earnings still cover interest expense by more than three times, although this was slightly lower than 3.3 times at end-2025.

AEV disclosed that its policy is for not more than 25 percent of long-term borrowings to mature in any 12-month period. As of first quarter, only 8.96 percent of total long-term debt, including customers’ deposits, was due in less than one year.

AEV’s ROE is about 7.6 percent and ROA is about 3.6 percent. The low ROE explains why AEV trades at only 0.6 times book value. A low price-to-book ratio is not automatically a bargain if the company is earning a low return on equity. The market is effectively saying that AEV’s equity base is not yet producing enough profit to deserve a valuation closer to book value.

The same point can be seen in ROIC. AEV reported operating profit of P50.9 billion in 2025. If we apply a 25 percent tax rate, after-tax operating profit would be roughly P38.2 billion. Against estimated invested capital of about P806 billion, based on total equity plus net debt, AEV’s rough ROIC is only around 4.7 percent.

This ratio shows that AEV’s portfolio is capital-intensive and still needs stronger earnings recovery to generate better returns. But the first quarter of 2026 points in the right direction.

If the first-quarter momentum continues, AEV’s return ratios should improve. Annualizing the first-quarter net income attributable to parent shareholders would imply around P25.2 billion in earnings. Against parent equity of about P289.7 billion, this would translate to an annualized ROE of around 8.7 percent. While this is still not exceptional, it would be a big improvement from the current ROE of 7.6 percent.

AEV also trades at about 5.4 times EV/EBITDA, which is relatively low compared to other conglomerates because the market is not giving as its returns on equity and invested capital remain modest.

For a leveraged conglomerate, AEV’s reported earnings are important, but cash flow is even more important because it shows whether the group can fund dividends and new investments without relying entirely on new borrowings.

In 2025, AEV generated P58.5 billion in net cash flows from operating activities, which went up by six percent from P55.1 billion in 2024. This operating cash flow was about 3.2 times its reported net income attributable to parent shareholders. Even if we compare operating cash flow against AEV’s P25.5 billion core net income, operating cash flow was still about 2.3 times core earnings.

This suggests AEV’s earnings quality was better than the reported profit number implied. The company was not merely reporting accounting income. It was converting the operations of the group into actual cash.

Another useful ratio we can use here is the operating cash flow to EBITDA. In 2025, AEV generated P58.5 billion in operating cash flow against P95.6 billion in EBITDA. This gives an operating cash flow-to-EBITDA ratio of about 61 percent.

AEV’s cash flow covered its capital spending. AEV reported capital expenditures of about P21.9 billion in 2025. Compared with operating cash flow of P58.5 billion, this shows its operating cash flow covered capital expenditures by about 2.7 times. After deducting capital expenditures, AEV still had an estimated operating free cash flow of around P36.6 billion.

A company that cannot generate enough operating cash flow would have to rely more heavily on debt to fund expansion. AEV’s 2025 cash flow shows that the group still has meaningful internal funding capacity.

AEV declared P8.54 billion in regular cash dividends in 2025. Compared with operating cash flow of P58.5 billion, dividends were covered about 6.9 times by operating cash flow. Even after capital expenditures, the estimated operating free cash flow of P36.6 billion still covered dividends by about 4.3 times.

For first quarter of 2026, AEV generated P15.4 billion in operating cash flow, lower than the P18.8 billion generated in Q1 2025 because of higher working capital requirements despite higher operating income. Still, Q1 operating cash flow was about 1.4 times consolidated net income of P10.9 billion, and about 2.4 times net income attributable to parent shareholders of P6.3 billion.

While AEV is still not without risk, especially because debt remains high and some businesses are cyclical, its cash flow numbers suggest that the underlying businesses continue to generate enough cash to support the balance sheet.

Conglomerates often trade at a holding company discount. Investors usually apply this discount because the structure is complex, some assets are private, parent-level debt must be considered, and value may take time to unlock. But when the market capitalization of the parent company falls too far below the value of its underlying assets, the discount can become too wide.

Based on the latest market values, AboitizPower (PSE: AP) has a market capitalization of about P288.2 billion. Since AEV owns about 53.09 percent of AboitizPower, AEV’s stake in AP is worth roughly P153.0 billion. UnionBank (PSE: UBP) has a market capitalization of about P80.59 billion. Since AEV owns about 49.99 percent of UnionBank, its stake in the bank is worth about P40.3 billion.

Together, AEV’s listed stakes in AboitizPower and UnionBank are worth around P193.3 billion. This is already slightly higher than AEV’s own market capitalization of about P182.4 billion. In simple terms, the market is valuing the whole of AEV at less than the combined value of just its two major listed holdings.

This is just the starting point of the NAV argument. Investors buying AEV at the current price are effectively paying less than the look-through value of AboitizPower and UnionBank alone, before assigning any value to the rest of the portfolio.

The NAV becomes more interesting when Aboitiz InfraCapital is included. AEV signed a deal to sell a 40 percent stake in Aboitiz InfraCapital to Global Infrastructure Partners, part of BlackRock, while retaining a 60 percent controlling interest in the business.

If the 40 percent stake was valued at P13.7 billion, then the implied value of 100 percent of Aboitiz InfraCapital is about P34.25 billion. AEV’s retained 60 percent stake would therefore be worth about P20.6 billion.

Adding AEV’s stakes in AboitizPower, UnionBank and Aboitiz InfraCapital gives a partial NAV of about P213.9 billion. Dividing this by AEV’s 5.553 billion shares gives a partial NAV of about P38.50 per share.

Compared with AEV’s current price of around P32.70, the stock is trading at about a 15 percent discount to this partial NAV. Another way to look at it is that AEV would need to rise by around 18 percent just to reach the estimated value of these three assets alone, and this still excludes several meaningful businesses.

AEV’s Food and Beverage platform is already becoming a larger contributor to earnings. In the first quarter of 2026, Food and Beverage contribution increased 43 percent to P2.1 billion, supported by strong volumes and margins in Aboitiz Foods and higher sales volumes from the Coca-Cola bottling business.

If that P2.1 billion quarterly contribution is annualized, it implies about P8.4 billion in annual earnings contribution. Applying a conservative 8 times earnings multiple would value the Food and Beverage platform at around P67.2 billion.

If this estimated Food and Beverage value is added, AEV’s illustrative NAV rises to about P281.1 billion. On a per-share basis, that translates to around P50.60 per share.

Compared with the current price of P32.70, this implies that AEV is trading at about a 35 percent discount to illustrative NAV. In upside terms, the share price would have to rise by roughly 55 percent to reach this estimated NAV.

This does not mean AEV should immediately trade at P50.60. Holding companies normally deserve some discount because of capital allocation risk and the complexity of managing several businesses. But the NAV exercise shows why AEV may be undervalued.

If AEV’s earnings recovery continues and investors begin to give more credit to the value of its underlying businesses, this discount could narrow over time.

AEV appears to be completing a lengthy corrective phase after peaking near P38.00 in early 2025. The decline initially unfolded as Wave 1, which brought the stock from around P38.00 to the P31.00 area. This was followed by a corrective Wave 2 rebound toward approximately P36.50, which failed to exceed the previous high.

The strongest leg of the decline then developed as Wave 3, which saw the stock fall to its major low near P24.00, accompanied by strong downside momentum and heavy selling pressure. A recovery toward the P33.50–P34.00 area subsequently formed Wave 4, before another decline to around P27.80 completed what appears to be Wave 5.

The fact that the second low remained well above the previous bottom while momentum weakened suggests the selling pressure has been largely exhausted, which increases the probability that the major corrective cycle has already ended.

Since establishing that higher low near P27.80, AEV has developed a constructive recovery pattern characterized by higher highs and higher lows. The rally toward P34.00 can be viewed as the first impulsive wave of a new bullish cycle. If this wave count is correct, the next advance should carry the stock above P34.00, which confirms the development of a larger Wave 3 within the new bullish sequence. The initial upside objective would be around P36.50.

The recent improvement in price behavior further reinforces the bullish interpretation. AEV’s recovery has been characterized by higher lows and repeated tests of resistance without collapsing back to previous lows. These are typical characteristics of institutional accumulation, which indicate that investors may gradually be rebuilding positions after the prolonged correction.

AEV has likely completed its major corrective phase and is transitioning into a new medium-term uptrend. A convincing sustained move above P38.00 would confirm a much larger bullish reversal. From a longer-term wave perspective, clearing the previous high would open the possibility of an advance toward P43.00, with an extended bullish target of P47.00 over the next major market cycle.

Conversely, a sustained decline below P30.00 would weaken the current bullish wave count, while a break below P27.80 would invalidate the recovery scenario and indicate that the corrective trend has resumed. At present, however, AEV's technical structure favors continued accumulation and a gradual recovery rather than a return to its previous downtrend.

Henry Ong, RFP, is an entrepreneur, financial planning advocate and business advisor. Email Henry for business advice [email protected] or follow him on X (Twitter) @henryong888.