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Summary of Broker’s Recommendation
Stock Code | GTCAP |
Company Name | GT Capital Holdings, Inc. |
Broker | AP Securities |
Opinion Issued on | 28 March 2025 |
Recommendation | Buy |
1-Year Target Price | PHP 885.70 |
GTCAP remains our top big-cap conglo pick, as its businesses operate in key cyclical sectors and it offers significant value add through its exposure to unlisted businesses like Toyota Philippines and Metro Pacific Investments. It is also currently trading at 3.3x forward P/E, which is at a significant discount to the average forward P/E of 5.7x for big-cap conglos and more than 1.5-SD below GTCAPâs own 10-year historical average of 9.9x. With this in mind, we reiterate our STRONG BUY for GTCAP with a Target Price of P885.70/share.
Analysis and Opinion
Earnings in-line with consensus forecast
GTCAP reported a net income of P28.8-Billion for 2024, down slightly by 1.8% from the previous year. However, core net income for the year is up by 11.0% after excluding 2023 one-off gains worth P4.0-Billion from lot sales, government incentives, and other non-recurring items. GTCAPâs 2024 core earnings of P28.1-Billion is just slightly below the consensus forecast of P29.3-Billion, with the weakness coming mostly from the 4Q24 miss in earnings vs forecast of P7.7-Billion.
Banking, auto, and infra units report record earnings
Both Metrobank and Toyota Philippines reported record-high earnings of P48.1-Billion, up 14% year-on-year (YoY) and P15.9-Billion (+15% YoY), respectively, which grew their combined net income contribution to GTCAP to 80% from 78% in 2023. GTCAPâs share in now-delisted MPIâs core net income of P23.6-Billion (+21% YoY) also rose in line with its increased stake following the tender offer.
MBT posts robust net income growth despite NIM decline
In line with the broader industry trend, MBT saw its net interest margins (NIM) slip by 13bps YoY to 3.77%, with the sequential decline becoming more pronounced after the BSP cut rates in August of last year. However, net interest income was underpinned by strong 17.0% loan growth as the bankâs corporate, credit card, and auto loan books all grow by high-teens. ROE rose to 13.0% from 12.5% in 2023, with GTCAP giving guidance that they intend to get ROE up to 15.0% in the medium-term.
Toyota outpaces industry growth
Toyota Motors Philippines (TM)P sold 218,019 units in 2024 (+9.0% YoY), outpacing the industryâs growth of 8.0%. Toyotaâs market share dipped to 46.0% as of year-end 2024, from 46.2% in 2023, as Chinese brands make inroads into the Philippine market.
However, TMP is not yielding easily on the electrified vehicles (EV) front with its PHEV sales surging 95.2% YoY to 14,057 units and capturing 72% of the PHEV market. TMPâs gross profit margins also ticked higher to 15.1% as of 4Q24 from 12.4% in the same period last year on the back of price increases, stable forex rates, and favorable model mix.
GTCAP expects TMP to continue outpacing the industry this year with the launch of the next-generation Tamaraw, and this is evident in the first two months of the year with TMP sales volume growing by 10.7% YoY vs industryâs +6.0%.
Infra is still a strong contributor, insurance and property remain weak
MPIâs core earnings soared 16% YoY to a record high of P28.4-Billion, on the back of higher power, water, and toll road volumes, coupled with higher rates for water and toll.
On the other hand, GTCAPâs property business under Federal Land reflected the overall softness in the property market with a 27% decline in revenues to P12.0-Billion and a 64% drop in net income to P750-Mn. Excluding the lot sales from 2023, real estate sales would have grown by a modest 10%. Reservation sales were down by 28% YoY at P16.8-Billion due to depleted inventory in BGC, and cancellations for the year reached P2.2-Billion. However, the companyâs inventory remains manageable at around 2,700 units, equivalent to one year on sales.
GTCAP is also optimistic of a turnaround, on the back of Federal Landâs shift to horizontal projects outside NCR that also include commercial and industrial lots. On the insurance side of the business, AXA saw its net income decline by 6% YoY to P2.5-Billion despite gross premiums jumping by 19% to P30.4-Billion, due to higher claims and surrenders.
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