{"id":328104,"date":"2024-05-28T12:58:40","date_gmt":"2024-05-28T04:58:40","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=328104"},"modified":"2024-05-28T12:58:42","modified_gmt":"2024-05-28T04:58:42","slug":"stock-in-focus-manila-electric-co-meralco-mer-28-may-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-manila-electric-co-meralco-mer-28-may-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Manila Electric Co. – Meralco (MER) – 28 May 2024 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>28 May 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 351.25<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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While we appreciate the added value of MER\u2019s strong push into powergen, the distribution business still makes up the majority of its revenue stream. Considering the uncertainty over the renewal of its franchise, we must continue to discount the distribution segment, which is the main reason why our Target Price (TP) for MER has gone down to P351.25 per share. Nonetheless, our TP is currently under review and could be subject to an upgrade. For now, however, we remain a HOLD on the stock.<\/p>\n\n\n\n

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

MER secures funding for solar projects<\/h3>\n\n\n\n

MGreen, MER\u2019s wholly-owned RE platform via MGen, has secured a P2.8-Billion project financing facility from SECB for two solar projects with a combined gross capacity of 67.8-MW. Greenergy for Global, Inc. (GGI), a 57% joint venture with Greenergy Solutions, Inc., is developing the 49-MW Phase 1 of what will
eventually be a 200-MW facility in Cordon, Isabela. Greentech Solar Energy, Inc. (GSEI), a wholly-owned unit of MGreen, is developing an 18.8-MW solar facility in Bongabon, Nueva Ecija. GGI and GSEI will receive P2.0-Bn and P791.0-Mn in
funding respectively.<\/p>\n\n\n\n

Both facilities are slated to start operations in the 1st half (1H) 2024 and have already secured offtake agreements via the second round of the DOE\u2019s Green Energy Auction Program (GEAP-2), which would generate revenues of P4.4043\/kWh upon the start of commercial operations.<\/p>\n\n\n\n

Going all-in on powergen<\/h3>\n\n\n\n

Despite having a total gross capacity of only 198-MW under MGreen at the moment,
MER seems keen to push hard into the RE space. Most notable is its acquisition of a 53.7% stake in listed solar developer SPNEC, which is developing a mammoth 3.5-GW solar facility with a 4.5-GW battery energy storage system (BESS). MGen is also buying into SMC\u2019s natgas power plant and storage facilities to further boost its powergen segment. <\/p>\n\n\n\n

We see this as MER hedging its bets ahead of the 2028 expiration of its distribution franchise, the renewal of which is still failing to make any significant headway in Congress.<\/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>