{"id":323864,"date":"2023-06-27T11:24:28","date_gmt":"2023-06-27T03:24:28","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=323864"},"modified":"2023-06-27T11:24:30","modified_gmt":"2023-06-27T03:24:30","slug":"stock-in-focus-semirara-mining-power-corp-scc-27-june-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-semirara-mining-power-corp-scc-27-june-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Semirara Mining & Power Corp. (SCC) – 27 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>27 June 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 37.40<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

While we maintain our P37.40 Target Price for now, this may be subject to downward revision once SCC’s 2nd quarter (2Q) 2023 earnings come in. As such, we downgrade our rating on SCC from BUY to HOLD.<\/p>\n\n\n\n

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

Coal prices slide<\/strong><\/p>\n\n\n\n

Benchmark Newcastle coal prices have shed 1.9% to $124.15\/mt following China\u2019s 10 bps rate cut on Tuesday, which sent out the message that the People\u2019s Bank of China (PBOC) is not willing to go far to support China\u2019s sputtering growth. Coal miners have been banking on Chinese and Indian demand to underpin prices following a warmer-than-expected winter which led to a 20-Million metric ton (mt) overstock of coal in Europe. <\/p>\n\n\n\n

Coal has plunged by 38% since the onset of spring in April, and Newcastle coal prices are now 73% off its peak of $457.80 in September 2022. Australian thermal coal with energy content of 5,500 kcal\/kg, the grade most in demand in China and India, have dropped 70% from its $120.86 record high to $84.17\/mt, while low-calorie Indonesian coal (the price benchmark used by SCC) has shed 66% from its $154.21 peak to $52.40\/mt. In general, coal prices are now 48% lower than they were when Putin launched his invasion of Ukraine in Feb 2022, but still roughly double its pandemic trough in 2020.<\/p>\n\n\n\n

Party\u2019s over for SCC<\/strong><\/p>\n\n\n\n

Semirara Mining & Power Corp. (SCC) raked in massive profits when coal prices peaked in 2022. However, its average selling price (ASP) of coal in 1Q 2023 fell 14% YoY to P4,427\/mt. This is expected to drop by another 25-30% this quarter from a higher base last year, but higher production during the dry season should somewhat offset the drop in SCC\u2019s coal revenues. SCC\u2019s power segment was able to underpin its earnings in 1Q, but with the downtrend in WESM prices we expect weaker power revenues this quarter.<\/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>