GT Capital Holdings, Inc.

MON 24 MAY 2021

1Q21 core earnings up 19% y/y;

meet estimates
Core earnings continue recovery in 1Q21. GTCAP booked Php3.38Bil in core profits
during the first quarter, up 19% y/y. The improvement resulted from strong bottom-line
numbers from Metrobank (+27% on lower provisions and higher trading gains) and Toyota
BUY
Motor Philippines (+39% on a 31% jump in wholesale volume) offsetting smaller declines TICKER: GTCAP
from Federal Land (-13%) and MPI (-26%). On a q/q basis, while 1Q21 core earnings ended
8.5% lower, this was largely driven by a lumpy gain from the sale of land (amounting to FAIR VALUE: 1,020
Php2Bil) in 4Q20. CURRENT PRICE: 539.00
UPSIDE: 89.24
Compared to estimates, GTCAP’s core net income ended in line with COL forecasts.
Specifically, outperformance from MBT and TMP offset weaker-than-expected results from
Federal Land and MPI.

TMP sustains recovery in 1Q21. TMP’s net income reached Php2.0Bil in 1Q21, up 39%
y/y. While the y/y jump is partly because of the low base set in 1Q20 (Taal Volcano eruption
+ the ECQ starting in mid-March), note that the 1Q21 earnings also marked its strongest
quarterly profit since 3Q19. Wholesale volume rose 31% y/y to 33,574 units while retail
volume climbed 29% y/y to 33,095 units. This led to a 44.4% market share during the
quarter, sustaining its increased market dominance seen during the last three quarters.
According to the company, demand for passenger cars was sustained from the previous
quarters as public transportation remain limited in some areas.

Maintaining BUY rating. We currently have a BUY rating on GTCAP with and FV estimate of
Php1020/sh. At its current price of Php539, it is trading at 9.5X 2021E earnings, significantly
below its historical average P/E of 15X. Current discount to NAV also remains near its
historical high at 51%. While the negative sentiment could keep prices depressed in the
short term, we believe that these challenges are transitory and that fundamentals remain
attractive over the long term.

FORECAST SUMMARY

Year to December 31 (Php Mil) 2017 2018 2019 2020 2021E 2022E
Revenue 239,811 205,831 222,940 134,420 181,876 218,694
% change y/y 18.6 -14.2 8.3 -39.7 35.3 20.2
Equity in Net Income of Associates 8,699 11,513 14,578 6,355 11,599 13,233
% change y/y 36.6 32.3 26.6 -56.4 82.5 14.1
EBIT 29,169 26,191 32,808 16,646 23,283 28,937
% change y/y 14.3 -10.2 25.3 -49.3 39.9 24.3
Net Income 14,182 13,156 20,309 6,546 12,770 16,193
% change y/y -3.1 -7.2 54.4 -67.8 95.1 26.8
EPS (in Php) 65.02 58.37 91.60 27.67 56.58 72.48
% change y/y 10.8 -10.2 56.9 -69.8 104.5 28.1

RELATIVE VALUE
P/E(X) 8.29 9.23 5.88 19.48 9.53 7.44
P/BV(X) 0.65 0.64 0.61 0.60 0.56 0.52
Charles William Ang, CFA
ROAE(%) 9.01 7.39 10.93 3.43 6.42 0.00 Deputy Head of Research
Dividend Yield (%) 0.93 0.56 0.56 1.11 0.65 0.65 charles.ang@colfinancial.com
*So urce: COL estimates

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of
the COL Financial website as these may be subject to tampering or unauthorized alterations.
 EARNINGS ANALYSIS I GTCAP: 1Q21 CORE EARNINGS UP 19% Y/Y; MEET ESTIMATES

MON 24 MAY 2021

Core earnings continue recovery in 1Q21

GTCAP booked Php3.38Bil in core profits during the first quarter, up 19% y/y. The
improvement resulted from strong bottom-line numbers from Metrobank (+27% on
lower provisions and higher trading gains) and Toyota Motor Philippines (+39% on a
31% jump in wholesale volume) offsetting smaller declines from Federal Land (-13%) and
MPI (-26%). On a q/q basis, while 1Q21 core earnings ended 8.5% lower, this was largely
driven by a lumpy gain from the sale of land (amounting to Php2Bil) in 4Q20.

Compared to estimates, GTCAP’s core net income ended in line with COL forecasts.
Specifically, outperformance from MBT and TMP offset weaker-than-expected results
from Federal Land and MPI.

Exhibit 1: Results Summary

Net Income Contributrion
Company 1Q20 1Q21 % Change % COL Notes
Metrobank 2,274 2,890 27.1 35.3 Provisions -50%; Trading gains +110%; Net int inc -
Toyota Motor Phil 730 1,014 39.0 27.1 Volume +31% (44% mkt share); GPM -60 bps to
Federal Land 375 327 -12.6 21.6 Real estate sales -31% y/y; reservation sales -56%
Metro Pacific Investments 548 406 -26.0 19.6 Power + Water in line; toll road + other businesses
missed
GT Capital core income 2,840 3,380 19.0 26.7
GT Capital net income 2,544 4,071 60.0

source: GTCAP, COL estimates

TMP sustains recovery in 1Q21

TMP’s net income reached Php2.0Bil in 1Q21, up 39% y/y. While the y/y jump is partly
because of the low base set in 1Q20 (Taal Volcano eruption + the ECQ starting in mid-
March), note that the 1Q21 earnings also marked its strongest quarterly profit since
3Q19. Wholesale volume rose 31% y/y to 33,574 units while retail volume climbed 29%
y/y to 33,095 units. This led to a 44.4% market share during the quarter, sustaining
its increased market dominance seen during the last three quarters. According to the
company, demand for passenger cars was sustained from the previous quarters as public
transportation remain limited in some areas.

The strong volume growth was slightly weighed down by lower a gross margin. Gross
margin declined ~60 bps to 12.4% due to unfavorable model mix. Nevertheless, we
believe that the higher volume also led to higher operating efficiency, with operating
margin declining less (-15 bps to 6.7%) and net margin even improving y/y (+90 bps to
5.9%). Although no details are given at this point, we believe that bottom-line numbers
in 1Q21 also benefited from lower tax provisions arising from the CREATE bill.

COL Financial Group, Inc. 2

 EARNINGS ANALYSIS I GTCAP: 1Q21 CORE EARNINGS UP 19% Y/Y; MEET ESTIMATES

MON 24 MAY 2021

While the volume recovery is certainly encouraging, we remain cautious of the volume
numbers going forward as we await the full impact of the safeguard duty. Recall that
TMP only started to collect a security deposit starting March 1, 2021. In addition, the
reimposition of stricter quarantine measure towards the end of 1Q21 also increases the
uncertainty for the rest of the year.

MBT earnings rise on lower provisions and strong trading

income

MBT’s first quarter net income rose 27% y/y to Php7.8Bil, driven by robust trading gains
and lower provisions. Trading and FX gains jumped to Php2.9Bil from the Php1.4Bil
booked in the same quarter last year as the bank realized some of the gains prior to the
reversal of yields. Meanwhile, provisions declined 50% y/y to Php2.5Bil, the lowest since
the beginning of the pandemic following the very aggressive provisioning in 2020. Note
that asset quality remains healthy with NPL ratio staying flat q/q at 2.4%.

The first quarter earnings outperformed our forecast, accounting for 35.3% of our full-
year target. The outperformance was driven by the stronger-than-expected trading gains
and fee income. On the other hand, lending operations during the first quarter weakened,
with net interest income declining 11% to Php19.0Bil. The first quarter results translate to
an annualized ROE of 9.5%.

MPI core earnings lag forecasts

MPI’s 1Q21 net income rose 272% to Php7Bil, mainly due to the booking of non-recurring
gains of Php4.6Bil from the sale of MPI’s stake in GBPC. Excluding one-offs, MPI’s 1Q21
core net income declined 27% to Php2.5Bil, below forecasts, representing 18.8% of
COL forecast and 18.6% of consensus forecast. Earnings trailed forecasts mainly due
to the weaker than expected performance of MPI’s toll road business. Overall earnings
contribution of subsidiaries declined 22.1% to Php3.8Bil, representing only 22.1% of
COL forecast, as all of MPI’s businesses were negatively by the Covid-19 pandemic as
well as the community quarantine restrictions imposed by the government. Earnings
contribution from the power and water businesses were in line with forecast, while the
toll road and other businesses disappointed.

COL Financial Group, Inc. 3

 EARNINGS ANALYSIS I GTCAP: 1Q21 CORE EARNINGS UP 19% Y/Y; MEET ESTIMATES

MON 24 MAY 2021

Federal Land drops 13% in 1Q21

Federal Land booked Php327Mil in earnings during the first quarter, down 13% y/y.
Booked real estate sales dropped 31% compared to the pre-pandemic peak level in
1Q20. Nevertheless, contractor manpower deployment continued to recover, reaching
up to 80% in February (from 75% in December) before easing back to 75% in April amidst
the reimposition of tighter restrictions. Meanwhile, reservation sales dropped 56% y/y,
weighed down by the absence of new project launches during the period. Going forward,
GTCAP did note that it is considering new project launches for the third and fourth
quarters.

Maintaining BUY rating

We currently have a BUY rating on GTCAP with and FV estimate of Php1020/sh. At its
current price of Php539, it is trading at 9.5X 2021E earnings, significantly below its
historical average P/E of 15X. Current discount to NAV also remains near its historical
high at 51%. While the negative sentiment could keep prices depressed in the short term,
we believe that these challenges are transitory and that fundamentals remain attractive
over the long term.

COL Financial Group, Inc. 4

 EARNINGS ANALYSIS I GTCAP: 1Q21 CORE EARNINGS UP 19% Y/Y; MEET ESTIMATES

MON 24 MAY 2021

GT Capital Holdings, INCOME STATEMENT (PHPMIL)

Inc. (GTCAP) Revenues

2017
239,811
2018
205,831
2019
222,940
2020
134,420
2021E
181,876
2022E
218,694
% Growth 18.6% -14.2% 8.3% -39.7% 35.3% 20.2%
COMPANY BACKGROUND EBITDA 31,090 28,287 35,225 19,163 26,052 31,983
% Growth 10.1% -9.0% 24.5% -45.6% 35.9% 22.8%
GTCAP is the primary vehicle for the
Operating Profit 29,169 26,191 32,808 16,646 23,283 28,937
holding and management of the diversified % Growth 14.3% -10.2% 25.3% -49.3% 39.9% 24.3%
business interest of the Ty family. It holds Interest Expense (3394.0) (5401.0) (6453.0) (6323.0) (4074.0) (4074.0)
interest in banking through Metrobank Other Income/Expense 1,607 2,124 2,529 2,123 - -
(MBT) - the country’s second largest bank Pretax Income 25,775 20,790 26,355 10,323 19,209 24,863
in terms of assets, loans, and branches - Tax Expense (4524) (3886) (5057) (1986) (2827) (3739)
Net Income 14,182 13,156 20,309 6,546 12,770 16,193
and automotive assembly and distribution
% Growth -3.1% -7.2% 54.4% -67.8% 95.1% 26.8%
through Toyoto Motor Phil - the leading
EPS 70.30 58.38 91.60 27.67 56.58 72.48
automotive company in the Philippines. % Growth 20.5% -17.0% 56.9% -69.8% 104.5% 28.1%
In addition, it also has a stake in propery
developement (Federal Land), infrastructure
BALANCE SHEET (IN PHPMIL)
and utilities (MPI), and insurance (AXA).
2017 2018 2019 2020 2021E 2022E
Cash & Equivalents 22,432 17,599 16,831 20,823 28,174 33,878
Trade Receivables 24,374 15,153 13,382 18,833 25,482 30,640
INCOME BREAKDOWN Inventories 56,594 77,469 72,189 74,735 101,120 121,590
Other Current Assets 10,583 18,785 15,720 18,765 25,390 30,530
PPE and Inv Properties 136,563 177,377 191,218 196,369 212,079 229,045
5% Other Non-Current Assets 57,145 53,367 48,314 55,455 58,831 62,466
13% 5% Total Assets 307,691 359,750 357,654 384,980 451,075 508,149
13% Accounts Payable 25,983 25,411 25,234 29,998 40,589 48,805
ST Debts 8,500 14,314 21,763 38,014 47,902 55,573
10% 46% Other Current Liabilities 8,307 12,612 8,584 7,529 9,976 11,874
10% 46%
LT Debts 78,898 113,262 102,189 105,494 134,358 156,060
Other Non-Current Liabilities 12,312 11,864 10,564 11,760 12,524 13,353
Total Liabilities 134,000 177,463 168,334 192,795 245,348 285,665
Total Equity 173,691 182,287 189,320 192,185 205,727 222,484
26%
26%
Total Liabilities & Equity 307,691 359,750 357,654 384,980 451,075 508,149
BVPS 830.94 846.73 879.39 892.70 955.61 1,033.44

Banking Auto Property Infra Insurance

Banking Auto Property Infra Insurance KEY RATIOS (IN PHPMIL)
2017 2018 2019 2020 2021E 2022E
EBITDA Margin (%) 13.0% 13.7% 15.8% 14.3% 14.3% 14.6%
OPM (%) 12.2% 12.7% 14.7% 12.4% 12.8% 13.2%
NPM (%) 5.9% 6.4% 9.1% 4.9% 7.0% 7.4%
Times Interest Earned (X) 8.59 4.85 5.08 2.63 5.71 7.10
Current Ratio (X) 2.66 2.46 2.13 1.76 1.83 1.86
Net D/E Ratio (X) 0.41 0.69 0.58 0.63 0.75 0.80
Days Receivable 37.1 26.9 21.9 51.1 51.1 51.1
Days Inventory 104.7 167.8 149.6 261.9 248.1 247.9
Days Payable 46.97 48.98 53.92 102.62 84.58 89.30
Asset T/O (%) 0.84 0.62 0.62 0.36 0.44 0.46
ROAE (%) 9.0% 7.4% 10.9% 3.4% 6.4% 7.6%

COL Financial Group, Inc. 5

 EARNINGS ANALYSIS I GTCAP: 1Q21 CORE EARNINGS UP 19% Y/Y; MEET ESTIMATES

MON 24 MAY 2021

INVESTMENT THESIS: MAJOR CORPORATE DEVELOPMENTS (5-YEARS)

Well positioned to capitalize on favorable
economic outlook
GTCAP is well positioned to capitalize on
the country’s positive economic outlook.
With its large interests in cyclical industries
such as banking, automotive, property, and
insurance, GTCAP is expected to benefit
from the continued rise in per capita GDP.
Its stake in MPI also allows the company to
participate in the governement’s aggressive
infrastructure program.
GTCAP exchanges 51% stake in Pro-Friends for Php20Bil worth of land 05/10/2019
GTCAP increases stake in MBT from 26.5% to 36.1%; Issues 18.3Mil primary
04/18/2017
common shares to Grand Titan for Php21.7Bil.
Grand Titan sells 5.2Mil secondary shares for Php8.1Bil. 08/11/2016
GTCAP increases stake in Pro-Friends from 22.7% to 51.0%; Purchase price
06/30/2016
at Php8.8Bil.
GTCAP sells its 51.3% direct stake in Global Business Power to Beacon; Buys
05/27/2016
15.6% stake in MPI for Php22.0Bil.

TMP continues to lead the motorization GTCAP sells 100% direct stake in Charter Ping An to Phil AXA Life Insurance
04/04/2016
phase Corp.
TMP remains the dominant automotive
GTCAP acquires 22.7% stake in Pro-Friends for Php7.2Bil, with option to
company in the Philippines, consistently increase stake to 51% within 3 years.
08/20/2015
posting the highest sales figures in the
industry since 2002. Given its market
Grand Titan sells 8.7Mil secondary shares for Php9.8Bil. 02/04/2015
leading position, it stands to benefit
from the continued motorization of the
GTCAP increases stake in Charter Ping An from 66.7% to 100%; Purchase
country. Based on the experiences of other 01/28/2014
price at Php712Mil.
neighboring country, the Philippines is said
to be undergoing a motorization phase as
GDP per capita continues to move past the
USD2,500 level (first breached in 2012).

MBT to benefit from the growing

demand for loans
Metrobank is expected to be one of the
major beneficiaries of growing demand
for loans given its position as the second
largest bank in terms of assets, loans,
and branches. Aside from the advantage
brought about by its size, Metrobank has
a strong balance sheet, with an NPL ratio
of only 0.9% and and NPL cover of 113%.
Its CET 1 ratio is also high at 15.3% as of
June 2018, above the the BSP’s minimum
requirement of 11%.

COL Financial Group, Inc. 6

 EARNINGS ANALYSIS I GTCAP: 1Q21 CORE EARNINGS UP 19% Y/Y; MEET ESTIMATES

MON 24 MAY 2021

Valuation NAV COMPUTATION

Methodology Metrobank
Value (PhpMil) Value (Php/Sh) % of GAV
152,376 708 47.8%
% of NAV Valuation Methodology
63.8% P/BV
Metro Pacific Investments 39,691 184 12.4% 16.6% NAV
Toyota Motor Philippines 71,630 333 22.5% 30.0% DCF
Federal Land 26,236 122 8.2% 11.0%
Land 18,000 84 5.6% 7.5% NAV
Others 10,969 51 3.4% 4.6%
318,901 1,481 100.0% 133.4%
Less: Net Debt+Preferreds -79,900 -371 -25.1% -33.4%
Equity Value 239,001 1,110 74.9% 100.0%
Less: Holding Company Discount
10% of MBT and MPI
FV Estimate 219,795 1,020
source: COL estimates

RELATIVE VALUATION

P/E EPS Growth

2020E 2021E 2020E 2021E
AC 26.5 19.0 -50.1% 39.3%
AEV 15.9 10.5 -41.0% 51.4%
AGI 10.4 7.5 -47.0% 39.2%
COSCO 6.3 5.4 2.8% 17.6%
DMC 10.4 6.5 -45.2% 59.9%
JGS 14.1 9.7 -1.7% 45.6%
LTG 6.8 5.9 3.4% 14.9%
MPI 10.0 8.3 -26.6% 20.9%
SM 48.8 35.2 -47.1% 38.6%
SMC n/a 42.1 -102.5% n/a
GTCAP 19.5 9.5 -69.8% 104.5%
Average ex-GTCAP 16.6 15.0 -35.5% 36.4%
Median ex-GTCAP 10.4 9.0 -43.1% 39.2%

COL Financial Group, Inc. 7

 EARNINGS ANALYSIS I GTCAP: 1Q21 CORE EARNINGS UP 19% Y/Y; MEET ESTIMATES

MON 24 MAY 2021

IMPORTANT RATING DEFINITIONS

BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the next six to
12 months.

HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook might be poor
or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the market in the next six to twelve
months.

SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.

IMPORTANT DISCLAIMER
Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal amount invested.
Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy and said information may be
incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of the date of the report and are subject to change
without prior notice. This report is for informational purposes only and is not intended as an offer or solicitation for the purchase or sale of a security. COL Financial and/
or its employees not involved in the preparation of this report may have investments in securities of derivatives of the companies mentioned in this report and may trade
them in ways different from those discussed in this report.

COL RESEARCH TEAM

APRIL LYNN TAN, CFA

VP & HEAD OF RESEARCH
april.tan@colfinancial.com

CHARLES WILLIAM ANG, CFA GEORGE CHING RICHARD LAÑEDA, CFA

DEPUTY HEAD OF RESEARCH SENIOR RESEARCH MANAGER SENIOR RESEARCH MANAGER
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com

JOHN MARTIN LUCIANO, CFA FRANCES ROLFA NICOLAS JUSTIN RICHMOND CHENG
SENIOR RESEARCH ANALYST RESEARCH ANALYST RESEARCH ANALYST
john.luciano@colfinancial.com rolfa.nicolas@colfinancial.com justin.cheng@colfinancial.com

ADRIAN ALEXANDER YU KERWIN MALCOLM CHAN

RESEARCH ANALYST RESEARCH ANALYST
adrian.yu@colfinancial.com kerwin.chan@colfinancial.com

COL FINANCIAL GROUP, INC.

2402-D EAST TOWER, PHILIPPINE STOCK EXCHANGE CENTRE,
EXCHANGE ROAD, ORTIGAS CENTER, PASIG CITY
PHILIPPINES 1605
TEL NO. +632 636-5411
FAX NO. +632 635-4632
WEBSITE: www.colfinancial.com

COL Financial Group, Inc. 8