Financial Adviser: 5 Things to Know About Romeo Chan’s Axelum Resources After Its 1Q 2026 Financial Results and How to Profit from It

In periods of economic uncertainty, investors often focus heavily on domestic consumption and the direction of the local economy. But for export-oriented businesses, the movement of global commodity prices and foreign exchange rates can become just as important.

The global environment today remains uncertain. Tensions in the Middle East continue to affect energy prices and global trade, while movements in foreign exchange rates have started creating both risks and opportunities for export-oriented companies across Asia.

For Philippine exporters, peso weakness can sometimes provide an important earnings tailwind. Companies that generate substantial dollar-linked revenues while maintaining much of their operating costs in pesos may benefit from stronger export competitiveness and improved margin translation during periods of currency depreciation.

This becomes particularly important for food exporters and agricultural processors whose products are sold globally but sourced and processed locally.

At the same time, commodity-driven businesses often go through highly cyclical periods. Profitability can fluctuate sharply depending on raw material prices, supply conditions, and global demand trends.

Yet cyclical industries can also create opportunities when business conditions begin stabilizing after a prolonged downturn.

Historically, some of the strongest investment recoveries have emerged from companies that survived difficult commodity cycles.  One company that increasingly stands out within this context is Axelum Resources (PSE: AXLM), one of the country’s largest fully integrated manufacturers and exporters of premium coconut food products.

After several difficult years marked by commodity and supply chain pressures, the company’s recent financial results suggest that profitability and cash flow conditions may now be improving materially.

More importantly, AXLM today appears financially stronger than it was during the challenging post-pandemic industry cycle. The company has returned to solid profitability and continued to benefit from its export-oriented business model.

For investors, the key question now may no longer be whether AXLM can survive the industry downturn, but whether the market has become too anchored to the problems of the past while underestimating the company’s improving fundamentals today.

With that in mind, let’s examine several key fundamentals why Axelum is an attractive long-term opportunity at current levels:

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AXLM’s recent financial performance suggests that the company may now be entering a stronger recovery phase after several difficult years in the coconut industry cycle.

For full-year 2025, the company reported sales growth of 39 percent to approximately P10.19 billion from P7.34 billion in 2024, which reflects a strong recovery in global demand for coconut-based products. Coconut water sales surged 76 percent, coconut cream and milk products increased 23 percent, toasted coconut products rose 54 percent, while refined, bleached, and deodorized coconut oil sales more than doubled.

The recovery across multiple product categories is important because it indicates stronger demand across both higher-volume and value-added products, which may point to healthier global consumption trends for coconut-based food products.

As a result of strong sales recovery, AXLM’s net income increased 24 percent to about P850 million while operating income reached about P1.06 billion.

More importantly, margins also improved. Based on the company’s reported figures, AXLM generated a gross profit margin of about 17.7 percent in 2025 compared to 15.6 percent in 2024.

The margin expansion suggests that the company has regained some pricing power and operating efficiency after the difficult period marked by elevated coconut prices and supply chain pressures in the past.

AXLM’s momentum continued into the first quarter of 2026. Quarterly sales rose another seven percent year-on-year to about P2.33 billion while gross profit margin improved from 22.7 percent in the first quarter of 2025 to around 24.4 percent in the first quarter of 2026.

Operating income increased 63 percent year-on-year to P262 million while net income almost doubled to P267 million. This strong performance is important because earnings growth has significantly exceeded revenue growth, which indicates that the company has started to benefit from stronger operating leverage as utilization rates improve.

In cyclical manufacturing businesses, even moderate improvements in volumes and margins can produce much larger gains in profitability once fixed operating costs are absorbed more efficiently.

AXLM’s balance sheet today appears materially healthier compared with the more difficult post-pandemic years. As of March 2026, the company held about P3.38 billion in cash and cash equivalents, up from about P3.08 billion at the end of 2025.

The company’s cash balance, which comprises about 43.7 percent of its total current assets exceeds its outstanding interest-bearing debt by more than two times.

This is important because commodity-linked businesses often become financially vulnerable during industry downturns when leverage is high and cash flow weakens.

AXLM’s current balance sheet instead suggests that the company now possesses significantly more financial flexibility than it did during the difficult 2022–2023 period.

Based on current assets of P7.72 billion and current liabilities of about P1.84 billion, AXLM’s current ratio stands at around 4.2 times.

A current ratio at this level may indicate that the company has more than enough short-term assets to cover near-term obligations.

AXLM’s inventory position also improved during the first quarter of 2026. Merchandise inventories declined from approximately P2.37 billion at the end of 2025 to around P2.08 billion by March 2026.

This decline may suggest improving inventory management and stronger working capital discipline following the more volatile commodity conditions experienced in prior years.

The stronger balance sheet is consistent with improving profitability and capital efficiency metrics.

Using AXLM’s 2025 net income of approximately P850 million and average shareholders’ equity of roughly P11.0 billion, the company generated return on equity of approximately 7.7 percent.

While this remains below the levels achieved during stronger commodity cycles, the recovery is notable considering the difficult industry environment experienced over the past several years.

Return on invested capital, or ROIC, also improved materially. ROIC attempts to measure how efficiently the company generates after-tax operating profits relative to the capital invested into the business.

Using AXLM’s estimated 2025 after-tax operating profit and invested capital base, ROIC appears to have reached approximately 9.2 percent.

This level remains respectable for a commodity-linked food exporter recovering from a difficult industry cycle and supports a higher valuation than what the market currently assigns to the company.

Perhaps more importantly, AXLM improved profitability while reducing net invested capital. The company increased cash balances, lowered debt levels, and generated higher operating profits without requiring substantial additional capital investment.

As a result, incremental return on invested capital, or RROIC, improved significantly from prior years. While the traditional mathematical calculation becomes distorted because invested capital actually declined year-on-year, the economic interpretation remains favorable.

AXLM generated approximately P208 million in additional after-tax operating profit in 2025 despite a reduction in net invested capital.

This may suggest that the company’s recovery no longer depends purely on aggressive capital expansion. Instead, improving utilization rates, better operating leverage, and stronger efficiency may now contribute more meaningfully to earnings growth.

Another interesting way to evaluate AXLM today is through its net current asset value, a conservative valuation framework that focuses heavily on liquidity and balance sheet strength.

Using AXLM’s March 2026 balance sheet, the company reported current assets of approximately P7.72 billion against total liabilities of roughly P2.01 billion.  This produces an estimated net current asset value, or net-net value, of approximately P5.71 billion.

Using approximately 3.8 billion shares outstanding, AXLM’s estimated net-net value stands at around P1.50 per share.

This is important because net-net value attempts to estimate how much shareholders would theoretically receive if the company liquidated its current assets and fully paid off all liabilities.

In AXLM’s case, the computation suggests that approximately P1.50 per share is backed purely by current assets such as cash, receivables, inventories, and other short-term assets after deducting all obligations of the company.

In other words, investors buying AXLM at current levels are paying only a relatively modest premium above the company’s liquidation-style working capital value despite the business continuing to operate profitably.

What makes the valuation particularly interesting is that the net-net framework largely ignores much of the company’s long-term strategic value. Very little value appears assigned to AXLM’s integrated coconut processing facilities, export infrastructure, international distribution operations, supplier relationships, customer network and future earnings capacity.

At the current share price of around P2.83, the stock trades at only about 1.89 times its net-net value.

Globally, profitable exporters and manufacturing businesses with stable operations and positive operating cash flow often trade at around 3x to 4x their net current asset value because investors typically assign additional value to future earnings capacity, operating infrastructure and export networks.

If AXLM were valued conservatively at only 2.5 times its net-net value, the implied valuation would already approach around ₱3.75 per share. If this is raised to 3x net-net value, AXLM’s target price would imply a value of P4.50 per share.

These valuation levels are conservative relative to many global exporters considering that AXLM is highly profitable and has strong net cash position.

Another useful metric that reinforces how inexpensively AXLM currently trades is its operating earnings yield, a framework commonly used by value investors to measure how much operating profit a company generates relative to the total value of the business.

Using AXLM’s 2025 operating income of approximately P1.06 billion and adjusting for its market capitalization, debt, and large cash balance, the company’s enterprise value currently stands at roughly P8.23 billion.

Based on this figure, AXLM currently generates an operating earnings yield of approximately 12.9 percent.

This is relatively high compared with many global food processors and export-oriented manufacturers, where operating earnings yields often fall closer to the mid-single-digit to high-single-digit range during more normalized valuation conditions.

In practical terms, a higher earnings yield generally means that investors pay less for every peso of operating profit generated by the business. AXLM therefore still trades at a relatively inexpensive valuation relative to the operating earnings already produced by the company despite the substantial recovery in profitability over the past year.

The valuation gap becomes more interesting when compared with global coconut-focused and export-oriented food companies. The Vita Coco Company, one of the more recognizable coconut-focused consumer businesses globally, currently trades at substantially richer valuation levels, with earnings multiples exceeding 40 times and EV/EBITDA multiples above 30 times.

Meanwhile, many export-oriented agricultural processors and food ingredient manufacturers globally often trade at materially higher valuation ranges during more normalized operating conditions.

By contrast, AXLM still trades at only around 11.4 times earnings, less than 1x book value, and about 5x EV/EBITDA despite stronger margins and improving profitability.

The current valuation shows a relatively cautious view toward AXLM’s long-term earnings capacity despite the company’s improving fundamentals.

If AXLM eventually trades closer to around 15 times earnings, which still remains below many global export-oriented food businesses, the implied valuation based on current earnings would approach around P3.75 per share.

The same valuation range also appears broadly consistent using EV/EBITDA assumptions. If AXLM eventually trades closer to around 7x EV/EBITDA, the implied enterprise valuation would also move toward a similar equity valuation range.

From a Wave perspective, AXLM appears to be attempting a medium-term trend reversal after what looks like a prolonged corrective structure from the 2023 highs down to the late-2025 lows around the P1.68 area.

The decline from above P3.00 toward the P1.70 zone appears to have unfolded in a broad three-wave corrective pattern rather than a clean impulsive collapse.

The recent breakout above the P2.30 congestion zone is important because that area acted as repeated resistance during the entire consolidation phase of 2024–2025. In wave terms, this may suggest that AXLM has already completed a Wave 1 advance from the lows and is now entering either: an extended Wave 3 upward, or the latter part of a larger degree Wave C recovery.

Under Wave behavior, Wave 3 is usually the strongest and fastest portion of the move. The sudden expansion candle toward P2.85 resembles the type of momentum burst often seen during early Wave 3 acceleration.

A key confirmation level now is the P2.55 area. As long as pullbacks remain above this zone, the bullish structure remains intact. If the stock consolidates above that region and volume stays elevated, the next resistance zones may appear around P3.00 psychological resistance and if a full extended Wave 3 develops, next target would be P3.80.

The P3.00 level is especially important because it represents both psychological resistance and a prior breakdown zone from 2023. A decisive breakout above P3.00 could trigger a larger revaluation phase.

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.