{"id":329965,"date":"2024-10-17T01:06:28","date_gmt":"2024-10-16T17:06:28","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=329965"},"modified":"2024-10-17T01:21:14","modified_gmt":"2024-10-16T17:21:14","slug":"stock-in-focus-semirara-mining-power-corp-scc-17-oct-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-semirara-mining-power-corp-scc-17-oct-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Semirara Mining & Power Corp. (SCC) – 17 Oct 2024 by AP 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 & Power Corp.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>17 Oct 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 34.45<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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We welcome the company\u2019s plan to expand its operations, and we have no concerns over SCC\u2019s ability to fund this venture given its robust cash flow. However, the outlook for coal is too dim at this point and SCC\u2019s prospects seem to be mostly priced in. As such, we remain a HOLD given the minute return potential of 0.16% to our Target Price of P34.45\/share.<\/p>\n\n\n\n

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

SCC to spend P291.4-Billion to extend production beyond<\/strong><\/p>\n\n\n\n

SCC confirmed plans to spend around P290-Billion in the next five years to start production in the Acacia pit, which will extend production beyond the 2026 depletion of its existing Narra Mine. SCC\u2019s other site, Molave Mine, met the end of its mine life in November last year and is currently undergoing rehabilitation. The Acacia deposit has an estimate coal resource of 90-Mn MT and reserve of 72-Mn MT, and could continue production for 6-8 years.<\/p>\n\n\n\n

Higher volumes could be the key to offset price decline<\/strong><\/p>\n\n\n\n

Newcastle coal prices are down 62.2% from its peak two years ago, but appears to have stabilized at slightly below $150\/MT. However, demand and supply dynamics moving forward point to further declines of around 3.0% annually in the next three years with coal prices estimated to end 2027 at around $112\/MT. The combined
production volume of Narra and Acacia in 2026 could help offset some of this decline.<\/p>\n\n\n\n

Not too quick<\/strong><\/p>\n\n\n\n

SCC disclosed to the Exchange that it will still have to apply for the expansion of its Environmental Compliance Certificate (ECC) to include the Acacia deposit, which will likely take some time. Further, the company expects that expansion works for Acacia may take up to three years. This means that potential delays can leave a production void if the new site fails to start commercial operations before Narra\u2019s end of life in 2026.<\/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>