{"id":332052,"date":"2025-03-28T01:06:14","date_gmt":"2025-03-27T17:06:14","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=332052"},"modified":"2025-03-28T01:06:17","modified_gmt":"2025-03-27T17:06:17","slug":"stock-in-focus-dmci-holdings-inc-dmc-28-march-2025-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-dmci-holdings-inc-dmc-28-march-2025-by-ap-securities\/","title":{"rendered":"Stock in Focus: DMCI Holdings Inc. (DMC) – 28 March 2025 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>DMC<\/td><\/tr>
Company Name<\/strong><\/td>DMCI Holdings Inc.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>28 March 2025<\/td><\/tr>
Recommendation<\/strong><\/td>Buy<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 12.92<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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Despite the earnings miss, the fresh contributions from CHP and the new nickel mine warrants a Target Price (TP) upgrade, along with headwinds from Maynilad tariff adjustments and prospective IPO. Further, coal and energy prices are now mostly normalized and we can expect these units to stabilize this year. The only weakness now lies in property and construction, and that is already baked into our current TP. Along with this, we expect cash dividends to be declared soon with an annualized yield of at least 8.4%. These factors underpin our rating upgrade of DMC from HOLD to BUY with an upgraded TP of P12.92.<\/p>\n\n\n\n

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

Earnings miss on multiple segment weaknesses<\/strong><\/p>\n\n\n\n

DMC\u2019s core net income of P18.8-Billion, down 21.5% year-on-year (YoY), missed consensus estimates of P22.6-Billion, as weaker-than-expected power rates, property development sales, and construction earnings compound the expected weakness in coal revenues. Reported net income, which includes booked profits from sale of land and net forex gains, was slightly higher at P19.0-Billion (-20.9% YoY). <\/p>\n\n\n\n

Coal revenues impacted by lower ASP<\/strong><\/p>\n\n\n\n

Revenues from SCC\u2019s mining segment declined on lower production in the 4th quarter (4Q) of 2024 (-31.0% YoY at 2.9 MMT) and reduced shipments (sales volume -18.9% YoY at 4.3 MMT) due to inclement weather and lower average selling prices (ASP) (-14.6% YoY at P2,821\/MT). <\/p>\n\n\n\n

Generation output from SCC\u2019s power plants edged up by 7.9% YoY in 4Q24 despite lower plant availability, but revenues were still impacted by soft power prices as spot ASP decline 14.8% to P3.73\/kWh. This was somewhat offset by a 14.9% increase in bilateral contract prices, which averaged P4.70\/kWh for the period. <\/p>\n\n\n\n

SCC is also implementing a pivot to more contracted sales, as evidenced by the reduction in its 4Q24 spot exposure to 56.2% from 67.8% in the same period last year. For the full-year, SCC\u2019s earnings contribution to DMC declined by 30.2% YoY to P11.0-Bn which was just a slight miss on expectations.<\/p>\n\n\n\n

Fewer projects and delays weigh on construction<\/strong><\/p>\n\n\n\n

Construction revenues for 2024 contracted by 9.0% to P15.0-Billion due to fewer projects and delays in key infra contracts. At the same time, cost of services fell at a slower pace (-6.9% YoY) and operating expenses picked up by 18.1% YoY. As a result, the construction unit\u2019s income contribution to DMC tumbled by 56.9% to P247-Million.<\/p>\n\n\n\n

Anemic property market weighs on sales<\/strong><\/p>\n\n\n\n

Revenues from DMCI Homes plunged by 36.0% YoY to P12.3-Billion on slower completion rates for ongoing projects, as well as higher reversals from cancellations of pre-pandemic sales. This was somewhat buffered by other income which increased due to forfeitures and rental income from rent-to-own programs on RFO units. The property unit\u2019s contribution to DMC\u2019s 2024 income likewise dropped by 35.5% to P2.5-Billion.<\/p>\n\n\n\n

Maynilad is a bright spot<\/strong><\/p>\n\n\n\n

Maynilad\u2019s revenues jumped by 22.6% to P33.5-Billion on the back of higher billed volumes and an 18.6% increase in average effective tariffs. We expect this trend to continue at least in the next two or three years as Maynilad has scheduled tariff increases like MWC. On top of this high earnings visibility for Maynilad, DMC is also expected to benefit from Maynilad\u2019s planned IPO as it would boost the valuation of DMC\u2019s 25% stake in the company. The water distribution unit\u2019s contribution to DMC\u2019s bottom line in 2024 surged by 58.5% to P3.3-Billion.<\/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>