{"id":323312,"date":"2023-05-23T00:57:39","date_gmt":"2023-05-22T16:57:39","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323312"},"modified":"2023-05-23T00:57:41","modified_gmt":"2023-05-22T16:57:41","slug":"stock-in-focus-semirara-mining-and-power-corporation-scc-23-may-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-semirara-mining-and-power-corporation-scc-23-may-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Semirara Mining and Power Corporation (SCC) – 23 May 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>23 May 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 retain our target price (TP) for SCC at Php33.00 and reiterate our BUY rating as we have already factored in the lower coal prices and the improved performance from the power business. Our Target Price still offers a share price upside of 16.6% and a total return potential of 29.0% inclusive of our 2023 dividend yield estimate of 12.4%.<\/p>\n\n\n\n

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

Second best 1Q performance of all time<\/strong><\/p>\n\n\n\n

Semirara Mining and Power Corp. (SCC) booked a 1st quarter (1Q) 2023 net income of Php9.0 billion, 40% down year-on-year (y\/y). Excluding FX loss of Php146.3 milliion, SCC\u2019s core net income stood at Php9.2 billion, 38% lower y\/y. Nevertheless, this was in line with our expectations. <\/p>\n\n\n\n

Revenues declined by 29% y\/y to Php20.7 billion. Coal revenues dropped by 46% y\/y to Php13.0 billion largely due to the 31% decline in sales volume to 3.5mn MTs and the 14% fall in average selling price (ASP) to Php4.42\/kWh. This was slightly offset by power revenues, which rose by 59% to Php7.7 billion, boosted by a 16% jump in power ASP to Php6.22\/kwh. Coal gross profit (GP) declined 53% y\/y to Php9.0 billion, with GP margin (GPM) falling by 10ppts to 70%. Meanwhile, GP from the power business surged 80% to Php5.3 billion, translating to a GPM of 69%, 8ppts higher y\/y. <\/p>\n\n\n\n

The bump from the power business resulted into SCC landing its second best 1Q consolidated net income performance of all time despite dropping on a y\/y basis.<\/p>\n\n\n\n

Coal continues to slide but is tempered by improved sales volume<\/strong><\/p>\n\n\n\n

Coming from its all-time 1Q 2022 earnings results from sky-high coal prices, SCC\u2019s coal revenues declined 46% y\/y in 1Q 2023. Sequentially, 1Q 2023 coal revenues slid by 1% quarter-on-quarter (q\/q) to Php13.0 billion as coal average selling price (ASP) fell by 15% q\/q to Php3,709\/MT. This was tempered by the 17% growth q\/q in sales volume at 3.5mn MTs. Exports were up 36% q\/q but down 21% y\/y to 1.5mn MTs on weaker China demand as they source cheaper coal from Russia. Hence, management guided that they will be reducing their 2023 exports target to ~Php4.5 billion, 58% lower y\/y and will focus more on the domestic market.<\/p>\n\n\n\n

Power: Positive momentum<\/strong><\/p>\n\n\n\n

Recall that 4Q 2022 power revenues dropped y\/y and q\/q primarily from unplanned power plant outages. However, 1Q23 results were the opposite. Power revenues surged by 59% y\/y and 60% q\/q to Php7.7bn on the back of SCPC Unit 1 and 2\u2019s improved availability to 100% and 99%, respectively. In addition, power ASP grew by 22% to Php6.22\/kWh, fuelled by the reopening of the economy and tight power supply in the grid. Management expects SCC\u2019s power business to continue its run with the looming El Nino season in June, which will drive prices up.<\/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>