{"id":323856,"date":"2023-06-27T00:42:35","date_gmt":"2023-06-26T16:42:35","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323856"},"modified":"2023-06-27T00:42:36","modified_gmt":"2023-06-26T16:42:36","slug":"stock-in-focus-manila-electric-co-meralco-mer-27-june-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-electric-co-meralco-mer-27-june-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Manila Electric Co. – Meralco (MER) – 27 June 2023 by AP Securities"},"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>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>27 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 376.40<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Even if the application for adjustment is reduced or even outright denied, we remain optimistic that continued recovery in the commercial and industrial segments, as well as increasing contributions from power generation, would continue to generate value for MER shareholders in the coming years. ERC\u2019s approval of the true-up adjustment would be cashflow positive for MER, but as they say, it would only be the cherry on top. Reiterating a BUY on MER with Target Price of P376.40 per share.<\/p>\n\n\n\n

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

MER completes last tranche of DRTU refund in May<\/strong><\/p>\n\n\n\n

Manila Electric Co. (MER) has finished refunding to consumers a total of P48.3-Billion in over-recovery of pass-through charges. Starting June, there will no longer be a deduction of P0.8656\/kWh from consumers\u2019 electric bills, which will improve MER\u2019s distribution revenues from P0.1147\/kWh to P0.9803\/kWh for the average household consuming 101-200 kWh\/month. The effect on consumers\u2019 bills will be somewhat offset by lower generation and transmission charges, resulting in a P0.4183\/kWh net increase in overall retail rates in June. This translates to around P1.2-Bn of additional distribution revenues for MER in June alone.<\/p>\n\n\n\n

Seeking ERC approval to charge for under-recoveries<\/strong><\/p>\n\n\n\n

MER, along with 48 other Luzon-based power distributors, filed an application to collect distribution rate true-up (DRTU) recoveries amounting to P7.9-Billion. Once approved, consumers will be charged an additional P0.22\/kWh for the next 12 months to compensate MER for under-recovery of pass-through charges from 2020 to 2022. Since MER has already paid the generation and transmission companies for these pass-through charges but failed to collect the same from consumers, the DRTU recovery charges would now be part of MER\u2019s distribution revenues.<\/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>