The simplest way to read two of the Philippines’ biggest conglomerates is not through malls, banks or telecom towers, but through the parent company balance sheet — the top of the house where dividend income arrives, debt sits, and shareholder payouts are decided. On that score, SM Investments Corp. and Ayala Corp. ended 2025 in sharply different places: SM looked like the steadier cash-harvesting holdco, while Ayala looked like the more obvious deleveraging story.
Start with the parent-company balance sheet. Ayala’s standalone parent assets were ₱274.6 billion at end-2025, against liabilities of ₱96.2 billion and equity of ₱178.4 billion. SM Investments’ standalone parent assets were slightly smaller at ₱268.1 billion, but liabilities were lower at ₱82.0 billion, and equity was higher at ₱186.1 billion. That means Ayala was marginally bigger at the parent level by assets, but SM entered 2026 with the cleaner capital base — more equity and less liability drag.
Both companies are classic Philippine holding firms, meaning most of their parent-company assets are investments in subsidiaries and associates rather than operating assets. Ayala carried ₱252.0 billion of investments in subsidiaries, associates, and joint ventures at the parent level in 2025, equivalent to roughly 92% of its parent assets. SM carried ₱222.5 billion of such investments, or about 83% of parent assets. Ayala also held more parent-level cash — ₱12.3 billion versus SM’s ₱4.9 billion — suggesting somewhat more cash on hand even as SM maintained the sturdier overall capital structure.
The bigger divergence is in the income stream flowing up from the operating businesses below. SM’s parent company booked ₱33.8 billion in dividend income in 2025, up from ₱26.6 billion in 2024. Ayala’s parent booked ₱23.0 billion in dividend income, up from ₱19.3 billion a year earlier. That gap matters because dividend income is the oxygen of a holdco: it funds shareholder payouts, debt service and new investments. SM’s parent also reported ₱42.7 billion in total revenues and ₱31.9 billion in net income, while Ayala’s parent reported ₱23.5 billion in revenues and ₱11.4 billion in net income. If you are judging the parent company purely as a capital-allocation vehicle, SM’s earnings engine was significantly stronger in 2025.
That strength showed up in what each group returned to shareholders. SM paid ₱15.97 billion in parent-company cash dividends in 2025, including a regular ₱11-a-share dividend and a special ₱2-a-share payout. Ayala paid ₱8.11 billion to its shareholders in 2025. In other words, SM not only received more upstream cash from subsidiaries, but it also passed on materially more cash to investors. SM’s 2025 parent dividend payout amounted to about 73% of parent earnings, underscoring how much surplus cash the holdco could release without appearing to strain its balance sheet.
Ayala’s more interesting story was on leverage. At the parent level, Ayala cut debt to ₱85.5 billion in 2025 from ₱117.9 billion in 2024. Its debt-to-equity ratio improved to 0.48x from 0.75x, while net debt-to-equity improved to 0.41x from 0.69x. Its current ratio rose to 0.44x, still tight by conventional liquidity standards but clearly better than the prior year, while standalone return on equity improved to 6.4% and return on assets to about 4.2%. Ayala’s parent balance sheet, in short, looked like a holdco in the middle of a meaningful cleanup.
SM did not need as dramatic a repair. Its parent-company long-term debt fell to about ₱62.3 billion in 2025 from ₱79.5 billion in 2024, while gross gearing improved to 25% from 32% and net gearing to 24% from 30%. The filing also showed 100% of parent borrowings at fixed rates, a useful defensive feature in a still-volatile rate environment, even though 54.9% of parent borrowings were in foreign currency. In practical terms, SM ended the year not just less levered than before, but also better insulated against immediate rate shocks.
The broader enterprise picture reinforces that contrast. SM Investments generated ₱681.7 billion in consolidated revenue and ₱123.8 billion in net income in 2025, with group ROE of 13.5%, ROA of 7.1%, net profit margin of 18.2%, and interest cover of 8.6x. Ayala generated ₱383.6 billion in consolidated revenue and ₱86.9 billion in net income, with consolidated ROE of 13.6%, debt-to-equity of 87%, and a current ratio of 1.48. Those are not perfectly like-for-like with the parent ratios, but they point in the same direction: SM’s group remains the stronger earnings compounder, while Ayala’s group spent 2025 improving financial flexibility and monetizing assets more aggressively.
So the market takeaway is straightforward. SM Investments looks like the sturdier holdco for investors who care most about upstream cash generation, conservative parent leverage, and reliable dividend capacity. Ayala looks more like the restructuring-and-repair trade: a parent company that used 2025 to reduce debt, lift profitability and reset the balance sheet for the next phase. One is already operating like a highly efficient cash machine. The other is making visible progress toward becoming a more flexible one.
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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.
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