MANILA ELECTRIC Co.’s (Meralco) share price rose last week due to positive developments, including a planned acquisition of a larger stake in SP New Energy Corp. (SPNEC) and its 1,000-megawatt (MW) power supply bidding, according to analysts.
Data from the Philippine Stock Exchange showed 940,050 Meralco shares worth P396.19 million were traded from Aug. 19 to 22, making the listed power distributor the 16th most actively traded stock last week.
Local financial markets were closed on Aug. 23 due to a nonworking holiday.
Meralco shares closed at P418 each on Friday.
The stock price inched down by 1.6% from a week earlier. A year ago, the stock grew by 4.8%.
Meralco’s share price grew, as it was likely influenced by investor optimism, Rastine Mackie D. Mercado, research director at China Bank Securities Corp., said in an e-mail, adding that the sideways movement last week indicated some profit taking after the recent rally to a new all-time high.
He added that the share price of the listed power distributor grew due to investor optimism and was influenced by its strong first-semester performance and the central bank’s first rate cut in nearly four years or since November 2020, when it last delivered a 25-basis-point (bp) cut amid the coronavirus disease 2019 pandemic.
Similarly, Aniceto K. Pangan, a trader at Diversified Securities, said that the listed power distributor hit a new high of P425 per share, which led to profit taking due to the overbought condition.
In the latest Monetary Board meeting, the Bangko Sentral ng Pilipinas (BSP) reduced policy rates for the first time since 2020 by 25 bps to 6.25% from the over 17-year high of 6.5%.
For the second quarter, Meralco’s attributable net income rose 31.3% to P12.84 billion, while consolidated revenues grew 11.5% to P132.93 billion.
For the first half of the year, its bottom line rose 25.7% to reach P22.44 billion, while revenues amounted to P237.48 billion, 5.6% higher than a year ago.
Mr. Pangan said estimated earnings for Meralco are between P43 billion and P48 billion for the entire year, with the easing of interest rates likely to further boost economic activity, enhancing growth and contributing broadly to the company’s business components.
Last week, Meralco, through its subsidiary MGen Renewable Energy, Inc. (MGreen), was considering acquiring a larger stake in integrated solar developer SPNEC.
MGreen is the renewable energy development arm of Meralco unit Meralco Powergen Corp.
SPNEC, through its subsidiary Terra Solar Philippines, Inc., is currently developing a solar power project worth P200 billion, claimed to be the largest solar farm.
The project is located in Nueva Ecija and Bulacan, and it includes a 3,500-MW solar power plant along with a 4,000-megawatt-hour (MWh) energy storage system. The first phase is targeted to be completed by 2026, while the second phase is expected to be completed by 2027.
Earlier this year, MGreen raised its stake in SPNEC, with controlling interest of the company and its affiliates growing to 55.96% from 50.55% and acquisitions totaling P20.2 billion, allowing MGreen and its affiliates to hold 19.473 billion common shares of SPNEC, or 38.89% of the total outstanding common shares of the company.
For Mr. Pangan, the decision to acquire a larger stake in SPNEC will support the company’s sustained growth, particularly in the renewable solar energy sector.
China Bank’s Mr. Mercado said that a potential increase in Meralco’s stake in SPNEC is expected to have a positive impact, as it is expected to drive profit growth in its power generation business in the medium term.
“The company looking to sell up to 40% of its stake in Terra Solar to foreign investors should help raise cash for the development of the project,” he said.
Additionally, the power distributor will proceed with the bidding process for its 1,000-MW power supply requirement following the dismissal of an injunction petition.
In a statement, the company said that the Taguig Regional Trial Court has dismissed the petition and declared the 20-day temporary restraining order (TRO) as “without force and effect.”
Meralco said that all competitive selection processes (CSPs) for its supply needs “are strictly conducted in accordance with the existing rules of the Department of Energy and the Energy Regulatory Commission, which have primary jurisdiction over the CSPs.”
In June, Meralco invited bids for contract capacities of 600-MW baseload and 400-MW mid-merit supply, scheduled to take effect in August 2025.
Eight companies showed interest and participated in the pre-bid conference last month for Meralco’s 600-MW supply.
“The resumption of the bidding for MER’s 1,000-MW CSP is overall a positive for MER as this helps ensure stability of supply to its customers,” Mr. Mercado said.
He added that in terms of financial impact, this is also expected to support steady volume growth in its distribution business.
Mr. Mercado likewise said that investors may consider the listed power distributor given its attractive dividend prospects, the stable growth of its distribution, and the ongoing capacity development of its power generation business, which is expected to be the primary growth driver in the coming years.
“SPNEC’s Terra Solar project aims to develop a 3,500-MW solar power plant and a 4,000-MWh battery energy storage system,” he added.
He sees current support estimated at P400 to P406 while the resistance is projected at P425.
Meanwhile, Mr. Pangan pegged the initial support at P410 per share while resistance at P429 per share.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Abigail Marie P. Yraola
Meralco share price rises on developments
Philippines Pandemic
Post a Comment