{"id":323559,"date":"2023-06-08T00:01:00","date_gmt":"2023-06-07T16:01:00","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323559"},"modified":"2023-06-07T23:52:22","modified_gmt":"2023-06-07T15:52:22","slug":"stock-in-focus-semirara-mining-power-corp-scc-8-june-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-semirara-mining-power-corp-scc-8-june-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Semirara Mining & Power Corp. (SCC) – 8 June 2023 by AP 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 & Power Corp.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>8 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 37.40<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

As we expect sales from the company\u2019s power segment to outperform and partially offset the drop in coal sales, and considering SCC\u2019s very cheap valuation of 3.5x, we maintain our BUY rating on SCC based on consensus Target Price of P37.40.<\/p>\n\n\n\n

<\/div>\n\n\n\n

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

SCC turns to Japan to fill the gap left by China slowdown<\/strong><\/p>\n\n\n\n

Semirara Mining & Power Corp. (SCC) is set to ship out 50,000 metric tons (MT) of coal to Shikoku Electric Power Corp. in Japan this June. It will be SCC\u2019s second shipment to Asia\u2019s second largest economy this year after they sold 78,410 MT of coal to J-Power earlier this year. SCC President and COO Maria Cristina C. Gotianun said that China is still their main foreign buyer, but with China\u2019s industrial output growing slower than expected, the company wants to grow other Asian markets like Japan. To recall, SCC\u2019s export volume slumped by 51.6% to 1.5-Mn MT in Q1 2023. Lower shipments to China accounted for most of the difference as China sales drop 50.9% to 1.08-Mn MT.<\/p>\n\n\n\n

Targeting to export 30% of full-year sales<\/strong><\/p>\n\n\n\n

Gotianun added that SCC is aiming to ship out 30% of their full-year sales target of 15 to 16-Mn MT. This would amount to 4.5 to 4.8-Mn MT, continuing the downtrend in SCC\u2019s full-year exports for the past five years. Again, the drop in Chinese demand is expected to account for most of the difference, with coal stockpiles in the country surging to historic highs due to record domestic production and massive imports of discounted Russian coal.<\/p>\n\n\n\n

Is domestic demand enough to pick up the slack?<\/strong><\/p>\n\n\n\n

Based on company guidance that 30% of their sales target will be from exports, the implication is that domestic sales will have to reach 10.5-Mn MT to make up the balance. It is unclear if there is sufficient domestic demand for coal to achieve this. If domestic demand fails to pick up the slack in exports, we may see a bigger drop than expected in SCC\u2019s coal segment.<\/p>\n\n\n\n

<\/div>\n\n\n\n

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