{"id":330280,"date":"2024-11-07T00:42:04","date_gmt":"2024-11-06T16:42:04","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=330280"},"modified":"2024-11-07T00:42:09","modified_gmt":"2024-11-06T16:42:09","slug":"stock-in-focus-aboitiz-power-corp-ap-7-nov-2024-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-aboitiz-power-corp-ap-7-nov-2024-by-ap-securities\/","title":{"rendered":"Stock in Focus: Aboitiz Power Corp. (AP) – 7 Nov 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>7 Nov 2024<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 46.19<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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After considering the company\u2019s earnings outperformance, we expect Target Price upgrades for AP after the company releases its full audited financial statements later this month. With this in mind, we maintain our BUY rating on AP based on the 23.2% upside to consensus Target Price of P46.19.<\/p>\n\n\n\n

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

AP earnings outperform<\/strong><\/p>\n\n\n\n

AP\u2019s reported net income of P10.2-Billion for the 3rd quarter (3Q) 2024 was 14% higher than what we expected, as 3Q is typically a weak quarter for powergen. On a year-to-date (YTD) basis, the numbers already reached 85% of consensus 2024 forecasts, marking an outperformance of more than 19%.<\/p>\n\n\n\n

Higher sales, better margins<\/strong><\/p>\n\n\n\n

The jump in net income was boosted by higher energy sales, which showed an unusual quarter-on-quarter (QoQ) increase of 2.3% to 9,151 GWh despite softer demand for power during the quarter. This can mostly be attributed to the newly-
energized Laoag and Cayanga solar projects, as well as higher output from AP\u2019s large hydro facilities. <\/p>\n\n\n\n

Despite higher energy sales year-on-year (YoY) for 9-months (9M) 2024, revenues were down by 10% at P144.2-Billion due to lower selling prices for both spot and contracted sales. However, due to lower fuel prices for thermal assets, gross margins rose by 3.75ppts to 38.2% in 9M 2024 from 30.7% in the same period last year.<\/p>\n\n\n\n

Margins are further improved by the reopening of the reserves market, where AP sold around 300 GWh of energy in 3Q 2024. AP CFO Sandro Aboitiz said that settlement prices on the reserves market tend to be higher than the non-firm ancillary services contracts that they used to have, leading to better profit margins for the company.<\/p>\n\n\n\n

New plant costs dampen earnings<\/strong><\/p>\n\n\n\n

The powergen side of the business also saw a healthy 10% YoY increase in beneficial EBITDA to P48.7-Billion. However, new depreciation and interest expenses from the GN Power Dinginin plant trimmed the bottom line, with net income growing by a more modest 2.2% YoY.<\/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>