{"id":325713,"date":"2023-11-15T22:11:35","date_gmt":"2023-11-15T14:11:35","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325713"},"modified":"2023-11-15T22:11:37","modified_gmt":"2023-11-15T14:11:37","slug":"stock-in-focus-semirara-mining-and-power-corporation-scc-15-nov-2023-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-semirara-mining-and-power-corporation-scc-15-nov-2023-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Semirara Mining and Power Corporation (SCC) – 15 Nov 2023 by RCBC 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 and Power Corporation<\/td><\/tr>
Broker<\/strong><\/td>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>15 Nov 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 33.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
<\/div>\n\n\n\n

Following our adjusted earnings, we downgrade our target price (TP) by 8% from Php36.00 to Php33.00. Our Target Price still provides an attractive upside of 10.2% and a total return potential of 21.9% including a 2024 dividend yield of 11.7%. We maintain our Buy rating.<\/p>\n\n\n\n

<\/div>\n\n\n\n

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

Earnings results<\/h3>\n\n\n\n

Semirara Mining and Power Corp. (SCC) recorded a 9-month (9M) 2023 net income of Php22.6 billion, 37% down year-on-year (y\/y), falling below our and consensus estimates. Consolidated revenues declined by 23% y\/y to Php56.2 billion primarily driven by the 23% drop in coal average selling prices (ASPs) at Php4,042\/MT and the 12% slide in coal sales volume from lower exports with China and South Korea
shipments falling by 15%. <\/p>\n\n\n\n

This was slightly tempered by the 23% increase in
power revenues due to improved plant availability with the return of SCPC Unit
2\u2019s operations last October 9, 2022. Cost of sales inched 4% higher y\/y due to
higher power sales volume while operating expenses plunged by 36% to
Php10.3 billion from lower government royalties as coal sales also fell.<\/p>\n\n\n\n

Weaker ASPs and sales volume hammer results<\/h3>\n\n\n\n

In the 3rd quarter (3Q) 2023, SCC\u2019s consolidated revenues contracted by 45% y\/y to Php11.6 billion as both coal and power revenues shrunk by 58% and 12%, respectively, primarily due to the fall of coal and power ASPs. For the coal segment, ASPs dropped by a whopping 36% to Php3,315\/MT due to the high base experienced in the previous year. <\/p>\n\n\n\n

Furthermore, coal sales volume declined by 22% with lower shipments to South Korea (SCC\u2019s top export market) due to insufficient commercial-grade inventory. For the power segment, SCPC and SLPGC\u2019s ASPs fell by 36% and 7%, respectively, due to lower spot market prices from the higher energy supply in the grid compared to last year. Power revenues also fell due to SLPGC\u2019s lower plant availability at 59% from higher plant outages.<\/p>\n\n\n\n

Forecast changes<\/h3>\n\n\n\n

SCC\u2019s earnings cooled down following the normalization of coal prices and spot
market prices. We trimmed our revenue forecasts for 2023\/2024 by 8%\/7% to Php75.9 billion\/ Php68.4 billion. <\/p>\n\n\n\n

2023 coal revenues forecast was dragged by 3% as we lowered our sales volume target to the lower end of SCC\u2019s 15-16mn\/MT target. On the other hand, FY23\/FY24 power revenues were also cut by 16\/17% due to the lower plant sales with SLPGC taking a hit from its lower plant availability and lower spot market prices from the improved power supply in the grid vs. last year. <\/p>\n\n\n\n

We lowered our net income forecasts for 2023 and 2024 by 10%\/ 14% to Php30.3 billion and Php23.9 billion, respectively.<\/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>