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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.
By now, Philippine investors know what an ABS‑CBN moment looks like.
It is not the day the franchise expires.
It is the long, uneasy stretch before it—when the market slowly realizes that a business built on regulatory permission is approaching a political decision point it does not fully control.
That moment, quietly but unmistakably, has arrived for DMCI Holdings, Inc. (DMC).
Accuretti Systems has previously described DMC as facing an “ABS‑CBN dilemma”—a large, profitable enterprise whose most valuable cash‑generating asset rests on a government‑granted contract with a finite end date. Today, that analogy is no longer theoretical. It is fast becoming the dominant risk lens through which DMC should be viewed.
The Clock Is No Longer Abstract
At the heart of the issue is Semirara Mining and Power Corporation (SMPC), DMC’s crown jewel and historically its largest dividend engine. SMPC’s Coal Operating Contract (COC)—the legal foundation of coal mining on Semirara Island—expires in July 2027.
For years, that date felt distant, comfortably beyond the market’s typical valuation horizon. Today, it is close enough to matter.
Markets are forward‑looking, but politics is not always punctual. Renewal discussions do not begin when contracts expire; they begin when uncertainty becomes unavoidable. And in regulatory businesses, uncertainty itself is value‑destructive.
This is precisely what happened to ABS‑CBN. Long before the franchise formally lapsed, advertisers hesitated, counterparties hedged, and investors applied discounts. By the time Congress acted, the market had already passed judgment.
DMC now stands at a similar inflection point—not because non‑renewal is inevitable, but because the asymmetry of outcomes is no longer ignorable.
A Holding Company With a Single Regulatory Spine
DMC is often described as “diversified”—construction, real estate, water, power, mining. On paper, this is true. In cash flow reality, it is less so.
Over the past decade, SMPC has consistently carried the group’s earnings and dividends, especially during commodity upcycles. It has subsidized weaker years in construction and real estate and enabled DMC’s reputation as a dependable dividend stock.
This creates a structural truth investors must confront:
DMC’s dividend credibility is ultimately underwritten by a coal contract it does not control.
If the coal concession is renewed smoothly, DMC’s story continues with minor edits. If renewal is delayed, politicized, or conditioned unfavorably, the impact would cascade—first through SMPC’s valuation, then through DMC’s dividends, and finally through the holding company’s multiple.
This is not an operational risk. SMPC knows how to mine coal.
It is not a balance‑sheet risk. DMC is conservatively financed.
It is a sovereign permission risk—the hardest kind to model and the easiest to underestimate.
Why the ABS‑CBN Analogy Resonates
Critically, the ABS‑CBN parallel is not about industry, ideology, or scale. It is about dependency on legislative or executive grace.
ABS‑CBN was not shut down because it was unprofitable or mismanaged. It was shut down because a franchise renewal became entangled with politics.
Similarly, SMPC’s coal contract renewal will not be decided solely on operating excellence or economic contribution. It will be weighed against:
- The Philippines’ evolving energy transition narrative
- Environmental and ESG pressures
- Public sentiment toward coal
- Political capital and timing
None of these variables sit on DMC’s income statement. All of them sit inside its valuation.
This is why Accuretti Systems’ earlier warning—that DMC faces an ABS‑CBN‑type dilemma—deserves renewed attention. The risk is not that renewal will fail. The risk is that the market must price the possibility that it might.
The Market’s Silent Re‑Rating Phase
One of the least discussed phases of regulatory risk is the silent re‑rating.
Stocks rarely collapse at expiry. They grind lower—or stagnate—well before it, as long‑only investors reduce exposure and income‑focused holders demand higher yields as compensation.
DMC already trades less like a growth holding company and more like a regulated cash‑flow annuity with an expiry question mark. This is not accidental. It is the market adjusting, slowly, rationally, and without headlines.
By the time a formal renewal decision arrives, much of the valuation damage—or relief—will already be done.
This Is Not a Call to Panic—It Is a Call to Re‑Frame
To be clear: this is not a prediction of non‑renewal.
The Philippines still needs baseload power. Semirara remains strategically important. History suggests renewals are more likely than not.
But investing is not about betting on likelihood alone. It is about pricing risk correctly.
DMC’s ABS‑CBN moment is not the day the coal contract ends.
It is the moment investors realize that:
A holding company built for permanence is tethered to a permission that is temporary.
That realization is now unavoidable.
For long‑term investors, the right question is no longer “Will the contract be renewed?”
It is “Am I being paid enough today to bear the risk that it might not?”
That is the question ABS‑CBN investors learned too late.
DMC investors still have time—but the clock is no longer on pause.
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.
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