For decades, the investment story of Roxas & Company, Inc. (PSE: RCI) revolved around one issue: the Comprehensive Agrarian Reform Program (CARP). Investors knew the company owned one of the country’s largest private landholdings, but uncertainty over how much land it would ultimately retain and how much compensation it would receive made it difficult to assess the company’s true value.
That uncertainty has now largely been resolved.
In 2025, RCI completed one of the most significant transactions in its history after receiving approximately ₱9.6 billion in compensation for land acquired under CARP. The compensation consisted of approximately ₱4.9 billion in cash and ₱4.7 billion in Agrarian Reform Bonds issued by the Land Bank of the Philippines. At the same time, the company retained approximately 1,322 hectares of land, giving it both substantial financial resources and a sizeable remaining property portfolio.
Receiving billions of pesos, however, was only the first part. The more important question today is what management intends to do with those resources.
Strengthening the Balance Sheet
The financials of the company show that management did not simply leave the proceeds sitting in the bank.
Instead, a substantial portion of the compensation was immediately used to strengthen the company’s balance sheet. Total borrowings fell sharply from approximately ₱3.9 billion at the end of 2024 to around ₱1.0 billion by the end of 2025, significantly reducing financial leverage and improving the company’s financial flexibility.
As of December 31, 2025, RCI reported:
Cash and cash equivalents of approximately ₱726 million
Current portion of investment in bonds of approximately ₱469 million
Noncurrent investment in bonds of approximately ₱4.22 billion
The balance sheet therefore reflects a company that has largely repaired its finances following the long-running land dispute.
The Overlooked Asset
While investors naturally focus on the cash received, the Agrarian Reform Bonds may ultimately prove just as important.
According to the financials of the company, the bonds earn interest based on the prevailing 91-day Treasury Bill rate, averaging approximately 5.36% during 2025. More importantly, they are repayable in 10 equal annual installments through 2035.
This means RCI is expected to receive approximately ₱469 million of principal every year, in addition to the interest income generated by the bonds.
Unlike a one-time windfall, the company has effectively secured a predictable stream of government-backed cash inflows over the next decade.
A Question of Capital Allocation
For years, investors focused on the uncertainty surrounding the CARP dispute. Today, the more important issue is capital allocation.
How should management deploy billions of pesos of financial resources?
Broadly speaking, there are several possible paths.
Option One: Reinvest for Growth
The first option is to reinvest the proceeds into expanding the business.
The company still owns approximately 1,322 hectares of land, creating opportunities for residential developments, tourism projects, industrial estates, renewable energy ventures, or joint developments with strategic partners.
If management believes these investments can generate attractive long-term returns, reinvesting the capital may produce greater shareholder value than distributing it.
Ultimately, management’s objective should not simply be to spend the money, but to invest it at returns that exceed the company’s cost of capital.
Option Two: Return Capital to Shareholders
This is another possibility.
Following the significant reduction in debt, RCI’s operating businesses remain relatively modest in size. Annual revenue is only about ₱500 million, while several operating segments, particularly hospitality, continue to face profitability challenges.
This naturally raises an important question: Does the company actually need to retain such a large amount of financial assets if there is no immediate multi-billion peso investment program?
One way to unlock shareholder value would be through higher dividends.
Using only the company’s immediately available liquidity, RCI has approximately:
₱726 million in cash, and
₱469 million representing the first annual bond installment due in 2026.
Together, this amounts to approximately ₱1.2 billion of near-term financial resources.
For illustration purposes only, if management were to distribute 50% of this amount, shareholders would receive approximately ₱598 million, equivalent to roughly ₱0.21 per share. Based on the current share price of around ₱2.56, this would translate into a dividend yield of approximately 8.3%.
If management were to distribute 75% of the available liquidity, the dividend would increase to approximately ₱0.32 per share, which implies a dividend yield of roughly 12.5%.
These scenarios, of course, would depend on the availability of unrestricted retained earnings, board approval, and management’s assessment of future capital requirements.
Nevertheless, they demonstrate that the company’s improved financial position has created options that did not exist before.
The CARP settlement strengthened Roxas’ balance sheet and provided management with resources that were unavailable just a few years ago.
The next test is no longer whether the company can unlock the value of its land. It is whether it can allocate that capital in a way that maximizes shareholder returns.
Investors will be watching closely. A successful investment program could justify retaining the proceeds for future growth. But if attractive opportunities remain limited, shareholders may increasingly expect management to return more capital through dividends or other means.
In the end, the value of the settlement will not be measured by the billions received. It will be measured by what those billions eventually earn.
