{"id":324297,"date":"2023-08-04T00:17:27","date_gmt":"2023-08-03T16:17:27","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324297"},"modified":"2023-08-04T01:17:35","modified_gmt":"2023-08-03T17:17:35","slug":"stock-in-focus-manila-electric-co-meralco-mer-4-aug-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-electric-co-meralco-mer-4-aug-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Manila Electric Co. – Meralco (MER) – 4 Aug 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>4 Aug 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 382.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Meralco Chairman Manny Pangilinan said during the investors’ briefing that MER will likely report earnings \u201cnorth of P30-Billion\u201d, driven by stable growth in its core business and fresh contributions from new business units. This would support our initial Target Price of P382.00 per share, which implies a 7.3% upside not including dividends. Factoring in the estimated 5.5% dividend yield would still make MER an attractive BUY.<\/p>\n\n\n\n

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

Who said utilities were boring?<\/strong><\/p>\n\n\n\n

Manila Electric Co. (MER) reported a net income of P9.8-Billion in 2Q23, up 21.2% quarter-on-quarter (QoQ) and 45.1% year-on-year (YoY), building upon its stellar 1Q 2023 and bringing 1H 2023 to P17.9-Billion. The core distribution utility (DU) business booked flat growth in terms of revenues, which came in at P15.3-Billion as a 2% increase in sales volume was offset by DRTU refunds. However, revenues should now grow with sales volume following the completion of DRTU refunds in May. The DU business contributed P10.9-Billion to MER\u2019s consolidated core net income (CCNI) in the first half, up by 2.6% from the same period last year on the back of well-managed OPEX. <\/p>\n\n\n\n

The real MVP this year was the power generation unit, which grew its CCNI by 168.5% to P6.5-Billion and boosted its CCNI contribution from 18% to 34%. The retail electricity supply (RES) business and other unregulated businesses also grew their contribution to CCNI from 3% to 9%.<\/p>\n\n\n\n

Drilling down on power generation<\/strong><\/p>\n\n\n\n

MER\u2019s Singapore affiliate, PacificLight Power Ltd. (PLP) grew its core net income by 59% to P8.9-Billion in 1H 2023 from the same period last year, but saw a 35.2% QoQ decline in core net income due to a scheduled preventive maintenance from April 29 to June 18. However, strong demand underpinned sales volume which only dropped by 2.4% QoQ. <\/p>\n\n\n\n

MER set for record year<\/strong><\/p>\n\n\n\n

MER\u2019s 2Q earnings came in mostly in line with our expectations, with the quarter contributing 28.5% to our full-year forecast of P34.4-Billion. This quarter typically accounts for 30.1% of the company\u2019s full year. However, the first half accounted for 52.0% of our forecasts, while the first half typically accounts for 53.3% of the full-year forecasts.<\/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>