{"id":327741,"date":"2024-05-03T01:58:15","date_gmt":"2024-05-02T17:58:15","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=327741"},"modified":"2024-05-03T01:58:17","modified_gmt":"2024-05-02T17:58:17","slug":"stock-in-focus-aboitiz-power-corp-ap-3-may-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-aboitiz-power-corp-ap-3-may-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Aboitiz Power Corp. (AP) – 3 May 2024 by AP Securities"},"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>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>3 May 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 45.14<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
<\/div>\n\n\n\n

We expect AP\u2019s powergen to continue its upward trajectory, especially with the full energization and subsequent start of operations of three RE power in 2Q 2024. The projects are Cayanga Solar, Laoag Solar, and the binary geothermal facility within the Tiwi Geothermal complex. These three projects have a combined generation capacity of 270-MW and will help towards reaching the 2.0-GW target RE capacity by end of 2025. <\/p>\n\n\n\n

However, we maintain caution on the AP\u2019s cash flows considering the nearly three fold jump in capex to P73-Billion this year on the back of this aggressive RE roll-out. Despite this, we maintain our BUY rating on AP based on consensus Target Price of P45.14.<\/p>\n\n\n\n

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

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

AP earnings boosted by wider margins<\/h3>\n\n\n\n

AP\u2019s registered a flat growth of 1.0% in energy sales from 8,725 GWh in 1Q 2023 to 8,812 GWh this quarter, resulting in a 12.3% drop in revenue to P44.2-Billion. However, lower fuel costs allowed gross margins to widen to 34.8% from 26.7% in the same period last year. Even after factoring in higher interest and tax expenses, as well as higher depreciation and amortization, net income grew by 4.5% to 7.9-Billion.<\/p>\n\n\n\n

Powergen business EBITDA grew 7.5%<\/h3>\n\n\n\n

AP\u2019s powergen segment maintained its dominance of the business mix, accounting for 82.5% of the group\u2019s beneficial EBITDA. The company attributed this to higher portfolio margins and the implementation of the new reserves market. However, the ERC has ordered the temporary suspension of the reserves market and settlement of payments for March supply has been postponed pending investigations into the pricing mechanism.<\/p>\n\n\n\n

DU EBITDA dips on lower pass-through costs<\/h3>\n\n\n\n

The group\u2019s power distribution utilities in VisMin reported a 11.5% drop in beneficial EBITDA despite an 8.7% increase in energy sales, mainly due to recognition of lower pass-through costs against the same period last year. The DU\u2019s EBITDA is up 61.6% on a sequential basis.<\/p>\n\n\n\n

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

Check how many brokers recommend this stock<\/h2>\n\n\n\n
\n
All Stock Rankings<\/a><\/blockquote>