{"id":324976,"date":"2023-09-21T00:01:38","date_gmt":"2023-09-20T16:01:38","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=324976"},"modified":"2023-09-21T00:47:47","modified_gmt":"2023-09-20T16:47:47","slug":"stock-in-focus-aboitiz-power-corp-ap-21-sept-2023-by-regina-capital-development-corp","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-aboitiz-power-corp-ap-21-sept-2023-by-regina-capital-development-corp\/","title":{"rendered":"Stock in Focus: Aboitiz Power Corp. (AP) – 21 Sept 2023 by Regina Capital Development Corp."},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>AP<\/td><\/tr>
Company Name<\/strong><\/td>Aboitiz Power Corp.<\/td><\/tr>
Broker<\/strong><\/td>Regina Capital Development Corp.<\/td><\/tr>
Opinion Issued on<\/strong><\/td>21 Sept 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 41.80<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Due to the better-than-expected performance of AP in the 1st half (1H) of 2023, we are revising our target price (TP) to P41.80\/share from the previous P39.50\/share. Meanwhile, BUY recommendation is reinforced as AP\u2019s last traded price still provides a significant upside potential to our valuation.<\/p>\n\n\n\n

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

Aboitiz Power Corporation (AP) reported higher earnings in the 2nd quarter (2Q) 2023 , up 46.59% year-on-year (y\/y) to P11.39 billion largely driven by fresh contributions from GNPD, higher availability across its portfolio, higher WESM sales volume and prices, as well as better margins from its distribution biz. <\/p>\n\n\n\n

Meanwhile, its topline edged +22.79% y\/y higher to P57.52bn. On a YTD basis, AP’s 1H 2023 earnings spiked by +84.58% y\/y to P19.70 billion \u2014 roughly 71% of our previous estimate.<\/p>\n\n\n\n

Total energy sold during the period reached 24,792 GWh, reflecting an increase of +3.44% y\/y. Note that 20.36% (+3.27pps) of which was sold to the spot market, taking advantage of the rise in WESM prices. Although, the lion\u2019s share of the energy sold still came from BCQ. <\/p>\n\n\n\n

The total energy sold figure for 1H 2023 captured the increase in demand both from the residential and commercial segments due to Summer and higher business activities as the public have more liberty to go outside given that the pandemic status had been lifted. However, operating profit margin still declined by -3.05pps y\/y to 15.81%, weighed by the double-digit expansion in cost of generated power and cost of purchased power.<\/p>\n\n\n\n

EBITDA contributions from AP\u2019s powergen and distribution businesses logged improvements during the period. The +32% y\/y (P30 billion) rise in the EBITDA contribution of AP\u2019s powergen biz stemmed from fresh GNPD contribution, higher capacity sales from the firm\u2019s coal plants, and favorable WESM prices.<\/p>\n\n\n\n

On the other hand, the power distribution biz of AP recorded a +86.2% y\/y increase in its EBITDA contribution at P5.04 billion on the back of the timing difference the recovery of fuel cost when the price of coal declined. The latter resulted to a wider gross margin\/kWh of DLPC (+1.68pps y\/y to 2.28) and VECO (+1.72pps y\/y to 2.12).<\/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>