{"id":323272,"date":"2023-05-22T23:21:26","date_gmt":"2023-05-22T15:21:26","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323272"},"modified":"2023-05-22T23:21:27","modified_gmt":"2023-05-22T15:21:27","slug":"stock-in-focus-manila-electric-co-meralco-mer-23-may-2023-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-electric-co-meralco-mer-23-may-2023-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: Manila Electric Co. – Meralco (MER) – 23 May 2023 by Regina Capital Development Corp."},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>MER<\/td><\/tr>
Company Name<\/strong><\/td>Manila Electric Co. (Meralco)<\/td><\/tr>
Broker<\/strong><\/td>Regina Capital Development Corp.<\/td><\/tr>
Opinion Issued on<\/strong><\/td>23 May 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 380.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

We maintain our BUY rating on MER with a Target Price of P380.00 per share.<\/p>\n\n\n\n

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

Manila Electric Company (MER) surprised the street with a 1Q 2023 Net Income (NI) of P8.07 billion, up by +26.48% year-on-year (y\/y), equivalent to 30% of our initial 2023 estimate. The strong feat came on the back of the double-digit expansion in revenues generated from its electricity (+22.98% y\/y to P102.36 billion) and non-electricity segments (+22.92% y\/y) as the pandemic takes the backseat.<\/p>\n\n\n\n

Focusing on the power segment, consolidated distribution utility energy sales inched relatively higher by roughly +2% y\/y to 11,287GWh, well in tandem with the +2.75% y\/y increase in its customer class to 7.67 million. The growth in energy sales volume during the quarter was seen to have stemmed from commercial segment, which grew by +11.43% y\/y to 4,213GWh, buoyed by higher demand from the real estate and education sectors due to the reimplementation of face-to-face setups. <\/p>\n\n\n\n

Additionally, the full ops of retail, restaurants, and hospitality sectors also contributed to the higher commercial sales volumes. In contrast, residential and industrial sales volumes declined by -2.81% y\/y to 3,701GWh and -3.11% y\/y to 3,336GWh, respectively. The reason for the easement in the resi segment was due to improved mobility, coupled with relatively cooler temperature. Meanwhile, the impact of global economic headwinds and inflation dragged the industrial segment.<\/p>\n\n\n\n

Recall that the ERC approved MER\u2019s DRTU application in Jan 2021. As of end-Mar, the power distributor has credited P38.3bn or 86% of the total amount of P44.6 billion to its customers. The balance is expected to be refunded until May 2023. Since MER already made the bulk of the provisions beforehand, the refund amount didn\u2019t dent its profitability. Note that the hearings on the case for MER\u2019s regulatory reset process
application are still ongoing. Hence, the ERC\u2019s final determination of the tariff
reset is likely to be pushed to the 2nd half of 2023.<\/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>