The Philippine stock market is sending a troubling signal: profitability no longer commands a premium. Some of the country’s most profitable publicly listed companies — GT Capital, LT Group, DMCI Holdings, Aboitiz Equity Ventures, and Semirara Mining & Power — are generating tens of billions of pesos in annual earnings yet trade at valuation multiples that imply permanent decline. Discounted by conglomerate structure, cyclicality, ESG (Environmental, Social, and Governance) discomfort, or sheer narrative fatigue, these firms reveal a deeper market inefficiency: the Philippine Stock Exchange (PSE) is no longer rewarding cash flow, balance-sheet discipline, or dividend capacity. In sidelining companies that already deliver real, audited profits, the market is mistaking storytelling for value — and creating a widening gap between financial performance and stock price that long-term investors ignore at their own risk.

In efficient markets, profitability is supposed to be the ultimate referee. Cash flows validate strategy; earnings discipline excess. Yet the Philippine equity market has quietly inverted that logic. Today, some of the country’s most profitable publicly listed companies trade as if profits were incidental — nice to have, but not worth paying for. The result is a growing disconnect between corporate performance and market valuation that deserves closer scrutiny.

Consider LT Group, a company that quietly generated close to ₱29 billion in net income in 2024 across banking, distilled spirits, tobacco, and property. By any global standard, that is real money — recurring, diversified, and cash-generative. Yet, the stock trades at valuation multiples more typical of a distressed cyclical business. The market’s discount appears less about earnings durability and more about narrative fatigue: a conglomerate structure, regulatory exposure, and the absence of a fashionable growth story. What is missing in that narrative is that LT Group’s profits are not speculative — they are already realized, taxed, and available for dividends or reinvestment.

The same paradox defines GT Capital. With nearly ₱29 billion in attributable net income in 2024, GT Capital sits atop some of the most strategically important franchises in the country, from banking to automotive. Yet, it trades at a holding-company discount so steep that the market seems to be pricing in permanent stagnation. Investors talk endlessly about optionality and disruption, but ignore the embedded value of scale, capital discipline, and dominant market positions. The irony is that GT Capital’s earnings are precisely the kind that compound quietly over time — steady, resilient, and inflation-protective — but the market assigns them little premium. (READ: Toyota Motor Philippines sets new sales record as PH middle class expands)

DMCI Holdings offers another illustration of this profit paradox. In 2024, DMCI delivered about ₱19 billion in net income, underpinned by construction, power, mining, and property. The market, however, continues to treat DMCI as if its earnings are perpetually one downturn away from collapse. Commodity exposure and infrastructure cyclicality dominate investor perception, even as the company continues to throw off cash and pay generous dividends. Cyclicality is predictable patterns (ups and downs) that certain industries, stocks, and economic factors follow in sync with the overall business cycle.

What the market misses is that DMCI has already internalized cyclicality into its capital allocation model. Its profits are not accidental; they are engineered through conservative leverage, project discipline, and a willingness to sit out bad cycles.

Then there is Aboitiz Equity Ventures (AEV), a name synonymous with operational competence and long-term capital stewardship. With over ₱18 billion in net income in 2024, AEV remains a pillar of Philippine corporate profitability. Yet, its valuation suggests that investors are more focused on near-term capital expenditures and sector rotation than on normalized earnings power. Power generation transitions, banking exposure, and infrastructure investments are framed as risks rather than as platforms for durable cash flows. The market, in effect, is penalizing AEV for investing for the future — even though those investments are funded by existing profitability.

Finally, Semirara Mining & Power exemplifies how ideology can overwhelm arithmetic. Despite generating nearly ₱10 billion in net income in 2024, Semirara trades as though its profits are morally obsolete. ESG concerns, coal aversion, and energy-transition narratives dominate the discourse, pushing valuation multiples down, regardless of actual cash generation. Multiple is a valuation ratio comparing a company’s market value to a key financial metric (like earnings or sales) to assess if it’s overvalued or undervalued relative to peers.

What is often overlooked is that Semirara’s profits are financing dividends, balance-sheet strength, and — ironically — parts of the energy transition itself. Markets may dislike coal, but coal cash still spends.

Latest Stock Prices vs Hypothetical “Fair Value” Targets

How these hypothetical targets are constructed: These are illustrative, not precise price forecasts. They are meant to show what happens if the market ever starts to reward profitability the way it has historically. Disclaimer: Although illustrative, they are not investment advice. They don’t forecast share prices into the future based on company guidance or consensus earnings growth. They are based on simple valuation re-rating logic and publicly available market prices and multiples.

Profits don’t matter

Viewed together, these companies expose a deeper issue in Philippine equities: profitability has lost its signaling power. The market is not asking, “How much money does this company make?” but rather, “Does this story fit the current investment fashion?” Conglomerates are dismissed as inefficient by default. Cyclicals are treated as uninvestable. Transition industries are discounted before transitions are even completed. In that environment, earnings — actual, audited, distributable earnings — are treated as backward-looking trivia.

Vantage Point views this not merely a valuation anomaly; it is a behavioral one. Investors have become so conditioned to chase growth narratives and thematic purity that they undervalue what profitability truly represents: proof of execution. Profits mean a business has survived competition, regulation, labor costs, and capital constraints —and still delivered surplus value. Ignoring that is not sophistication; it is selective blindness.

For long-term investors, this disconnect may be precisely where opportunity lies. Markets can stay enamored with stories longer than expected, but they rarely ignore cash forever. When sentiment eventually rotates — toward dividends, balance-sheet strength, or simple earnings yield — the companies already doing the hard work of generating profits will not need to reinvent themselves. They will simply be re-rated.

In the end, the Philippine market’s greatest inefficiency today may not be mispricing risk. It may be mispricing success.

Math doesn’t lie

Below is Vantage Point’s tight, investor-grade “Ignored Value” league table that formalizes what I’ve been arguing narratively. 

Methodology (simple, transparent): Each company is scored 1–5 (best) across four dimensions, then ranked by Total Score (max 20).

• Profit Scale – absolute FY2024 net income (size, not growth)
• Valuation Discount – P/E, P/B vs market norms
• Dividend Yield / Cash Return – history of payouts, not promises
• Balance-Sheet Risk – leverage, cyclicality, capital discipline

This is absolutely a market-mispricing table — measuring how much profitability the market is failing to reward.

PSE “Ignored Value” League Table (FY2024)

Why this ranking holds up

1) GT Capital — The market’s cleanest blind spot

GT Capital ranks #1 not because it is the fastest grower, but because it combines scale with the deepest valuation discount. A sub-5x earnings multiple for a holding company anchored on systemically important banking and dominant automotive franchises is plainly dismissal. This is the purest example of profit without prestige, and therefore the most mispriced.

2) LT Group — Large, real, and persistently ignored

LTG earns almost as much as GT Capital but trades like a regulatory accident waiting to happen. The market conflates complexity with fragility. Banking, alcohol, and tobacco are treated as permanent overhangs, even though they are precisely the sources of LTG’s stable cash flow. The result: profits that are recognized in financial statements but discounted in share price.

3) DMCI — Dividend reality vs narrative risk

DMCI’s valuation reflects a market that refuses to believe that cyclicals can be well-run. Its high-dividend yield props up its score, even as investors insist on treating the company as ex-growth. The irony is that DMCI has institutionalized cyclicality into its business model — yet still gets priced as if every cycle is terminal.

4) Aboitiz Equity Ventures — Penalized for investing

AEV is not cheap in the crude sense, but it is cheap relative to the earnings it already produces. Power transition risk, capital expenditure (CapEx) cycles, and banking exposure weigh on sentiment. The market is effectively discounting future profits before they even arrive — despite the fact that those investments are funded by current profitability.

5) Semirara — Profits that offend the narrative

Semirara scores lower on balance-sheet risk, not because it is weak, but because its earnings are politically and ideologically inconvenient. Coal exposure ensures a structural discount regardless of payout strength. Yet, from a pure capital-return standpoint, Semirara is one of the most shareholder-friendly names on the PSE.

What the league table reveals

Across all five companies, the pattern is unmistakable:

• Profitability is not being rewarded.
• Cash flow is being discounted.
• Narratives now matter more than earnings.
• Conglomerates and cyclicals are priced as liabilities, not assets.

I believe that this is no longer stock-picking anomaly, but rather a market-wide valuation bias. In mature markets, companies this profitable would anchor pension portfolios. In the Philippines, they are treated as intellectually unfashionable. That disconnect is precisely what long-term capital is supposed to exploit.

If and when the PSE rediscovers the basic principle that earnings are not optional, this “ignored value” basket will not need better stories. It will only need the market to remember how to count. – Rappler.com

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