Skip to main content

Keepers’ Strong 9M, Softer Edges: When Growth Meets FX, Costs—and a Dividend Lens

 




We’ve been blogging for free. If you enjoy our content, consider supporting us!

Disclaimer: This is for informational purposes and is not investment advice. Figures are taken from company disclosures and exchange data; valuation ratios include the author’s calculations based on cited inputs.

A liquor distributor with momentum—at least in the numbers

The Keepers Holdings’ 9M 2025 report (ending Sept. 30, 2025) reads like a company still riding demand rather than being dragged by it: net sales rose 14.4% to ₱13.39B, and net income increased 12.0% to ₱2.43B. Management pins the growth on a 16% increase in cases sold, with Brandy doing the heavy lifting—about 80% of sales value and 84% of volume.

For investors who view KEEPR as a “steady compounder” in consumer staples distribution, those are the kinds of broad-based numbers that justify attention. But as always, the headline hides the seams—and this quarter’s seams show up in margin texture, cost creep, and FX noise. 

The first crack: margins slipped while volumes climbed

The story isn’t “weak,” but it is less clean than the topline suggests. Gross profit increased to ₱3.67B, yet gross margin eased to 27.4% from 28.2% a year earlier. Similarly, operating income rose to ₱2.62B, but operating margin dipped to 19.6% from 20.5%

Management points to product mix and the effect of higher foreign exchange rates during the period as contributors to cost behavior. In practical terms, this is what happens when a distributor grows but has to spend a little more—whether in procurement costs, logistics, or brand support—to keep the same pace. 


The second crack: operating expenses outpaced operating profit

Operating expenses rose 16.1% to ₱1.04B, faster than the 9.4% increase in operating income—classic negative operating leverage in a growth year. The breakdown shows higher spending in advertising and distribution, plus a jump in taxes and licenses. 

That isn’t necessarily bad—many consumer distributors “spend to defend” share during expansion—but it is a reminder that Keepers’ margin profile, however enviable, is not immune to the cost side of scale. The next key question is whether this spending produces durable volume gains or becomes a permanently higher cost base. 


Inventory: not ballooning—actually down—but the mix deserves monitoring

Concerns about “slowing alcohol sales” often show up first in inventory. Here, the numbers are reassuring: inventories were ₱5.20B as of Sept. 30, 2025, down 11.4% from ₱5.88B at end-2024. That’s the opposite of “stock piling up.” 

Yet composition matters. The inventory note shows spirits on-hand fell, while spirits in-transit rose versus end-2024—suggesting less warehouse stock but more goods moving through the pipeline at quarter-end. Add that the company states Q4 is peak season, and some pipeline build can simply be timing ahead of holiday demand. Still, if the market really slows, “in-transit” can become “on-hand” quickly—so this is a watch item, not a red flag. 


The market narrative: growth moderating doesn’t equal collapse

Outside the company, the alcohol market conversation is mixed: some industry research highlights challenging conditions and softer growth in imports in recent periods, implying the sector can face uneven demand. Meanwhile, other market outlooks still project continued growth for the Philippine alcoholic beverage market, albeit at more moderate rates over the medium term. 

This tension is important. A “slower market” doesn’t automatically punish the category leader—sometimes it benefits the best distributor, because brands consolidate with scale partners and retail networks favor reliable supply. But it does raise the bar on execution: when easy growth fades, cost discipline and mix management determine whether margins hold or drift. 


Balance sheet strength: the dividend’s quiet ally

If there’s a genuine comfort point in the filing, it’s financial flexibility. Keepers ended the period with ₱6.56B in cash and cash equivalents, up 33.8% versus end-2024, while loans payable were just ₱80M. Liquidity remains high with a 4.20x current ratio, and leverage modest per the company’s reported capital ratios. 

Cash flow also supports the narrative: net cash from operations was ₱3.67B for 9M 2025. That matters because dividends don’t come from accounting profits alone; they come from cash generated after working capital and taxes. 


Dividend and valuation: the stock as an “income plus” proposition

Keepers declared and paid a ₱0.12/share cash dividend in 2025 (ex-date May 5, 2025, payable May 30, 2025). Using the PSE Edge last traded price of ₱2.41 (mid‑Jan 2026), that implies a ~5.0% trailing yield (author’s calculation). 

Valuation looks “reasonable, not screaming cheap” for an earners-and-dividend name. With BVPS at ₱1.25, the stock trades around ~1.9x P/B at ₱2.41 (author’s calculation). Using the 9M EPS of ₱0.17 and a simple run-rate annualization, the market is effectively pricing KEEPR at around a low double-digit P/E range (author’s calculation)—in line with what a stable consumer distributor might command, especially with strong liquidity. 

For dividend-oriented investors, the key is not just the yield but the room to sustain it: retained earnings are still sizable (₱12.0B), and the period saw meaningful operating cash flow. 


So—is there weakness? Yes, but it’s the “edges,” not the core

If you’re hunting for weakness, it’s here: margins slipped, opex ran ahead of operating profit, and FX dynamics turned into a headwind in “other income.” Add a strategic vulnerability: the company’s sales are highly concentrated in brandy, which is great when the category is hot—and riskier if consumer preference shifts. 

But the core still looks intact: sales volumes rose, inventory did not balloon, cash increased, and the dividend remains supported by liquidity and cash generation. In other words, Keepers’ 9M report is less a warning siren than a reminder that even “defensive growth” has moving parts—especially when FX, logistics, and marketing intensity are in play. 

We’ve been blogging for free. If you enjoy our content, consider supporting us!


Comments

  1. Annualizing 9m eps is probably the wrong approach; KEEPR's earnings are highly seasonal with 4Q earnings typically >70% higher than other quarters. That would bring your trailing P/E closer to 8-9 and your forward P/E closer to 7-8.

    The company is a cash cow. The challenge is convincing management to pay out more. This has always been the disease with Lucio Co companies. Nevertheless, ~5.7% yield with 10% normalized growth is not too bad at all.

    ReplyDelete
  2. This comment has been removed by the author.

    ReplyDelete
  3. Correct you can't annualize 9m EPS in a seasonal company. This isn't your normal company though - this is the only alcohol company with supply chain and distribution superiority.

    The two sectors that have not been touched (but are profitable in other countries are): Alcopops and Premium beer. Heineken does have a significant foothold in S.E. Asia (just not here).

    ReplyDelete

Post a Comment

Popular posts from this blog

The Ayalas didn’t “lose” Alabang Town Center—They cashed out like disciplined capital allocators

We’ve been blogging for free. If you enjoy our content, consider supporting us! If you only read the headline—Ayala Land exits Alabang Town Center (ATC)—you might mistake it for a retreat, or worse, a concession to the Madrigal–Bayot clan. But the paper trail tells a more nuanced story: the Ayalas weren’t unwilling to buy out the Madrigals; they simply didn’t need to—and didn’t want to at that price, at that point in the cycle. And that’s exactly where the contrast with the Lopezes begins. In late December 2025, Lopez-controlled Rockwell Land stepped in to buy a controlling 74.8% stake in the ATC-owning company for ₱21.6 billion—explicitly pitching long-term redevelopment upside as the prize. A week earlier, Ayala Land (ALI) signed an agreement to sell its 50% stake for ₱13.5 billion after an unsolicited premium offer —and said it would redeploy proceeds into its leasing growth pipeline and return of capital to stakeholders. Same asset. Two mindsets. 1) Why buy what you already co...

From Meralco to Rockwell: How the Lopezes Restructured to Put Rockwell Land Under FPH’s Control

  The Big Picture In the span of just a few years, the Lopez family executed a complex corporate restructuring that shifted Rockwell Land Corporation firmly under First Philippine Holdings Corporation (FPH) —even as they parted with “precious” equity in Manila Electric Company (Meralco) to make it happen. The strategy wove together property dividends, special block sales, and the monetization of legacy assets, ultimately consolidating one of the Philippines’ most admired property brands inside the Lopezes’ flagship holding company.  Laying the Groundwork (1996–2009) Rockwell began as First Philippine Realty and Development Corporation and was rebranded Rockwell Land in 1995. A pivotal capital infusion in September 1996 brought in three major shareholders— Meralco , FPH , and Benpres (now Lopez Holdings) —setting up a tripartite structure that would endure for more than a decade.  By August 2009 , the Lopezes made a decisive move: Benpres sold its 24.5% Rockwell stake...

From Gas Cash to Mall Control: Will the ₱50B Windfall Backstop Rockwell?

We’ve been blogging for free. If you enjoy our content, consider supporting us! There’s a certain poetic symmetry to the Lopez group’s year: on one hand, First Gen’s landmark ₱50‑billion sale of a controlling stake in its gas platform to Enrique Razon’s Prime Infra has been framed as a strategic pivot—cashing out of mature gas assets to fund a cleaner, geothermal-heavy future. On the other, Rockwell Land’s ₱21.6‑billion acquisition of control over Alabang Town Center reads like a bold bet on premium retail scale and long-horizon redevelopment. Put them side by side and a provocative question practically writes itself: Is this where the “₱50B windfall” will ultimately go—straight into a mega-mall acquisition that Rockwell can’t comfortably carry on its own?   To be clear, the ₱50B is not Rockwell’s money . It’s First Gen’s proceeds from a transaction involving gas plants and an LNG terminal, with First Gen explicitly pointing to renewable energy expansion (notably geothermal) as ...