{"id":322877,"date":"2023-04-28T02:40:35","date_gmt":"2023-04-27T18:40:35","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=322877"},"modified":"2023-04-28T02:40:37","modified_gmt":"2023-04-27T18:40:37","slug":"stock-in-focus-semirara-mining-and-power-corporation-scc-28-apr-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-semirara-mining-and-power-corporation-scc-28-apr-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Semirara Mining and Power Corporation (SCC) – 28 Apr 2023 by RCBC Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>SCC<\/td><\/tr>
Company Name<\/strong><\/td>Semirara Mining and Power Corporation<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>28 Apr 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 33.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We reduced our target price (TP) for SCC from Php34.00 to Php33.00 as we cut our 2023 EPS forecast by 9.9% to Php7.27 to reflect lower coal prices and sales volume estimates. Our downgraded TP is based on the average of the stock\u2019s FY21 PE of 5.2x and our FY23F PE of 3.9x. It still offers a share price upside of 17.9% and a total return potential of 30.4% inclusive of our FY23 dividend yield estimate of 12.5%. We maintain our BUY recommendation.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Core net income soared 145% to Php38.9bn<\/strong><\/p>\n\n\n\n

Semirara Mining and Power Corp. (SCC) recorded FY22 net income of Php39.9bn. Excluding the Php1.0bn in FX gains, core net income soared 145% yoy to Php38.9bn. Revenues jumped 74% yoy to Php91.1bn. Coal revenues swerved 98% to Php70.5bn, boosted by a 91% hike in coal average selling price (ASP) to Php5,136\/MT, despite the 3% decline in sales volume to 14.8mn MTs. Power revenues advanced 23% to Php20.6bn, driven by a 31% climb in power ASP to Php5.47\/kwh. Coal gross profit spiked 170% yoy to Php49.4bn, with gross margin improving by 19ppts to 70%. On the other hand, gross profit from the power business climbed 52% to Php12.0bn, equivalent to a gross margin of 58% vs. 47% a year ago.<\/p>\n\n\n\n

Coal cooling down<\/strong><\/p>\n\n\n\n

SCC enjoyed hot coal prices, particularly in 1Q22, when it reached its all-time high in quarterly earnings of Php14.8bn but it has since spiralled down on a quarterly basis. 4Q22 coal revenues fell 13% qoq to Php13.1bn, as coal ASP slipped 6% qoq to Php4,851\/MT and sales volume slid by 3% to 3.0mn MTs. Exports were flat qoq but down 21% yoy to 1.1mn MTs on weaker China demand as they source cheaper coal from Russia.<\/p>\n\n\n\n

Unplanned outages drag profitability<\/strong><\/p>\n\n\n\n

Despite higher spot prices, 4Q22 power revenues dropped 13% yoy and 21% qoq to Php4.8bn primarily from SCPC Unit 1 and Unit 2\u2019s respective 86-day and 42-day power outages. On the other hand, SLPGC was able to offset the damage with an improved overall plant capacity of 91% from 75% in the previous period.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>