{"id":327222,"date":"2024-03-22T00:52:59","date_gmt":"2024-03-21T16:52:59","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327222"},"modified":"2024-03-22T00:53:01","modified_gmt":"2024-03-21T16:53:01","slug":"stock-in-focus-manila-electric-co-meralco-mer-22-march-2024-by-rcbc-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-electric-co-meralco-mer-22-march-2024-by-rcbc-securities\/","title":{"rendered":"Stock in Focus: Manila Electric Co. – Meralco (MER) – 22 March 2024 by RCBC 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>RCBC Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>22 March 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 427.00<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We revised our target price (TP) for Manila Electric Company (MER) to Php427.00 from Php432.00 as we lowered our 2024 net income estimates by 5% for conservatism on PacificLight\u2019s earnings this year, which may not be sustained due to plant availability. Nevertheless, we still expect FY24\/25 net income to grow by 4%\/10% on the back of sustained volumes from its distribution business as the economy further opens up and its growing powergen business. We reiterate our BUY rating as our new TP still offers a decent upside of 18% and 2024 dividend yield forecast of 5.5%.<\/p>\n\n\n\n

We believe the firm will be able to continue to grow with expected energy sold given the onset of El Ni\u00f1o and the continued improvement of its power generation business with PacificLight leading the charge as it enjoys improved fuel margins in Singapore. We recommend a BUY.<\/p>\n\n\n\n

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

Earnings recap<\/h3>\n\n\n\n

MER reported 2023 core net income of Php37.1 billion, 37% higher year-on-year (y\/y) and in line with our and consensus estimates. Gross revenues were 4% higher y\/y due to the 4.4% increase in energy sold at 51,044 GWh. Costs and expenses were flat as higher purchasing power cost was offset by lower coal and fuel power plant O&M. MER\u2019s power generation business grew to Php9.7 billion, led by PacificLight\u2019s 34% jump in earnings from improved plant availability and higher margins from newly secured contracts.<\/p>\n\n\n\n

Record high energy sold<\/h3>\n\n\n\n

Meralco recorded its all-time high in energy sold at 51,044GWh, 4.4% higher y\/y. This was primarily boosted by the commercial segment, which saw its volumes rise by 9.2% with the recovery in businesses and improved foot traffic and attendance. Residential volumes saw 3.7% growth from El Nino. On the industrial side, MER\u2019s volumes slid by 0.8%.<\/p>\n\n\n\n

PowerGen business kicking<\/h3>\n\n\n\n

MGen\u2019s core net income soared 78% y\/y to Php9.7 billion on the back of PacificLight\u2019s improved margins from newly secured contracts. San Buenaventura posted a net income of Php2.5bn, 30% lower y\/y from a 15% decline in energy sold at 2,360GWh due to its unplanned outage in June and scheduled maintenance shutdown last December.<\/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>