{"id":324888,"date":"2023-09-14T02:37:53","date_gmt":"2023-09-13T18:37:53","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324888"},"modified":"2023-09-14T02:37:55","modified_gmt":"2023-09-13T18:37:55","slug":"stock-in-focus-manila-electric-co-meralco-mer-14-sept-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-electric-co-meralco-mer-14-sept-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: Manila Electric Co. – Meralco (MER) – 14 Sept 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>14 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 392.31<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

No revision to Target Price, MER still a buy. Despite having almost no effect on our Target Price, we reiterate our BUY call on MER as the last traded price of P349.20 still offers a 12.3% upside potential to our Target Price of P392.31. We also remain partial to MER as our main defensive play amidst the backdrop of renewed inflation concerns and slowing economic growth.<\/p>\n\n\n\n

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

MER hikes September rates by P0.50\/kWh<\/strong><\/p>\n\n\n\n

After three months of declining power rates, MER is raising rates anew on the back of higher generation charges. Generation charges from power supply agreements (PSAs) went up by P1.0362\/kWh on higher fuel prices and weaker peso, while independent power producers (IPPs) charged an additional P0.4776\/kWh as Malampaya supply constraints forced natural gas power plants to use a blend of local gas and more expensive imported LNG. <\/p>\n\n\n\n

The increase in generation charges was somewhat offset by a P0.0018\/kWh reduction in transmission charges as the National Grid Corporation of the Philippines (NGCP, controlled by listed company SGP) stopped passing on its 3% franchise tax to consumers as mandated by the Energy Regulatory Commission (ERC). The increase in generation charges from PSAs and IPPs were also tempered by a P0.5034\/kWh decrease in spot market charges due to reductions in adjustments and other charges.<\/p>\n\n\n\n

Increase is mostly pass-through<\/strong><\/p>\n\n\n\n

Both generation and transmission charges are passed on by MER to its customers, so while the higher rates will result in a slight bump of 0.6% to our estimates for MER\u2019s revenues from P481-Billion to P484-Billion, our bottom line forecast remains virtually unchanged at P34.2-Billion. The only benefit MER would get from higher generation charges would be through San Buenaventura Power Ltd. (SBPL), which is 60%-owned by MER. SBPL has a PSA with MER supplies around 7-8% of MER\u2019s energy requirements at a variable selling price.<\/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>