Core revenues excluding gains on deconsolidation of GADC increased by 3% to P51.9bn in Q1 25. Total group revenues increased 9% y/y to P55.3bn, driven by an 11% rise in revenue from Megaworld to P20.8bn. Group EBITDA rose 11% to P15.4bn, with margins expanding by 220bp to 29.8%. Attributable core profit therefore surged 18% to P5bn.

Alliance Global Group, Inc.in was corporated in the Philippines in 1993. It is primarily a holding company, one of the largest conglomerates in the country with business interests in real estate, tourism, infrastructure development, spirits and QSRs. The group’s subsidiaries include Megaworld Corporation (MEG), a leading property developer; Emperador Inc. (EMI), Philippines’ biggest liquor company and the world’s largest brandy manufacturer; Travellers International Hotel Group, Inc. (TRAV), developer of Newport World Resorts; Infracorp Development Inc., group’s foray into infrastructure development.

In Q1 25, MEG contributed 50% of the group’s revenue share, followed by EMI at 32%, and TRAV at 18%.

Focus on capex and shareholder return

The group has consistently and steadily increased its capex investments over FY 20-24 across key subsidiaries. As a result, capex rose at a CAGR of 17.2% over the same period, reaching P68bn in FY 24. In addition, management has allocated a budget of P59bn to capex for FY 25, out of which 20% has already been spent in Q1 25. MEG continues to attract the majority of capex investments, with P50bn budget for FY 25.

In addition, Alliance Global has embarked on a share buyback program encompassing a period of 51 months from October 2021 to December 2025. As of 16 May 2025, P8.6bn (96%) of the amount has been utilized, with 773m shares bought at an average price of P11.15 per share.

Megaworld driving group’s performance

Megaworld Corporation, the mainstay business of the group, posted solid growth in profits in Q1 25, helped by healthy top-line performance and stable operating margins. Residential business grew by 8%, benefitting from robust demand in key townships, while mall revenues increased by 11%, influenced by favorable tenant mix and higher occupancy. The hotels business saw increased traction with a growth of 27%, amid higher average daily rates (ADRs) and capacity expansions. In addition, the office segment reported a surge of 17% in revenues, driven by high tenant retention rates, rent escalations, positive rental reversions, and the addition of new tenants.

Emperador Inc., the second highest revenue contributor of the group, reported a flat increase of 1% in revenues, supported by improved brandy sales, and offset by softer demand for whisky amid ongoing global macro challenges brought about by the US tariff issues.

Positive top-line growth over long term

Alliance Global posted a revenue CAGR of 15.2% over FY 21-24, reaching PHP219bn. Operating income recorded a CAGR of 8.8% to PHP45.9bn in FY 24, with margins contracting by 392bp to 21%. However, net income remained almost flat with a CAGR of 0.8% over the same period, reaching PHP17.4bn in FY 24, impacted by higher interest expenses and goodwill impairment.

Cash and short-term investments moderated from PHP95.9bn as of end-FY 21 to PHP76.2bn as of end-FY 24, owing to high capex activities over the period, and repayment of debt obligations. As a result, debt-to-equity decreased slightly, down from 69.7% at end-FY 21 to 65.2% at end-FY 24.

In comparison, Thoresen, a regional peer, reported a higher revenue CAGR of 13.3% over FY 21-24, reaching THB32.2bn. However, operating income declined at a CAGR of 19.6% to THB1.9bn in FY 24, with margins declining by 10.6% to 5.9%.

Analysts estimate decent stock upside

The company's stock has delivered muted returns, falling about 26% over the past year. In comparison, Thoresen’s stock has fallen more steeply over this period, with returns of -45.8%.

Alliance Global is trading lower compared to its historical average and Thoresen. The stock is currently trading at a P/E of 3.4x, based on FY 25 estimated EPS of PHP2.1, which is lower than its 3-year historical average of 5.4x and that of Thoresen (9.9x).

In terms of EV/EBITDA, the stock is currently trading at 3.9x, based on the FY 25 estimated EBITDA of PHP60.1bn, which is higher than its 3-year historical average of 3.8x. Alliance Global is monitored by four analysts; two have ‘Buy’ ratings and one has a ‘Hold’ rating, with an average target price of PHP10.7, implying big upside potential of 53% from its current price.

The analysts’ views are further supported by an anticipated EBITDA CAGR of 5.4% over FY 24-26, reaching PHP63.8bn, with margins of 24.9% in FY 26. In addition, analysts estimate a net profit CAGR of 8.5%, reaching PHP20.4bn with margins of 8% in FY 26, with EPS expected to increase to PHP2.3 in FY 26 from PHP2 in FY 24. In contrast, analysts estimate EBITDA CAGR of 26.4% and net profit CAGR of negative 6.8% for Thoresen.

Overall, the group has a diversified business model with presence across several key sectors which provides cushion to the top-line. Alliance Global started 2025 on a positive note, with double-digit earnings, supported by real estate, leasing and hospitality segments, and further complemented by higher contribution from international spirits brands. However, the company remains cautiously optimistic for the rest of the year, due to macro challenges. In addition, the group is exposed to risks including inflation, margin pressure, and change in consumer preferences.