Meralco share price boosted by takeover of SP New Energy

Meralco share price boosted by takeover of SP New Energy

By Abigail Marie P. Yraola, Researcher

THE share price of Manila Electric Co. (Meralco) rose last week on news of its takeover of SP New Energy Corp. with a P15.9-billion investment and after announcing a 650-megawatt (MW) energy supply deal for the summer.

Data from the Philippine Stock Exchange (PSE) showed 513,320 Meralco shares worth P251.7 million were traded from Dec. 27-29, making the listed power distributor the 10th most actively traded stock. Local financial markets were closed on Dec. 25-26 for the holidays.

Meralco shares closed at P399 each on Friday. The stock price rose by 2.8% from a week earlier. For the year, the stock increased by 33.5%.

The prospect of easing lending rates drove Meralco share prices up, Aniceto K. Pangan, a trader at Diversified Securities, said in an e-mail. “The move to acquire a majority stake in SP New Energy may further enhance the growth of Meralco with projected 3500-megawatt solar panels.”

Meralco Chairman and Chief Executive Officer Manuel V. Pangilinan has taken over the Leviste-led SP New Energy with a P15.9-billion investment from generation unit MGEN Renewable Energy, Inc. (MGreen), according to news reports.

In a regulatory filing, MGreen said it had completed the acquisition by paying the P8.89-billion balance. It will hold 15.7 billion common shares and 19.4 billion preferred shares in SP New Energy, giving it a total voting interest of 50.5%.

MGreen is the renewable energy development arm of Meralco unit Meralco Powergen Corp.

The listed distributor is said to be seeking to buy 650 MW of critical supply to ensure reliable service in the summer.

The company is waiting for the Department of Energy’s (DOE) approval of the terms of reference for separate contracts for a 400-MW interim power supply agreement and a 250-MW peaking supply deal.

Meralco plans to make available its 250-MW peaking supply between February and July, subject to approval by the Energy department. The company is looking at getting bid submissions by Jan. 23 and delivering the power by Feb. 26.

Mr. Pangan attributed the stock’s growth to double-digit income growth, which was driven by its generation business.

In the third quarter, Meralco’s attributable net income jumped by 58.9% to P10.55 billion from a year earlier, even as consolidated revenue fell by 4.2% to P110.41 billion. Its nine-month income rose by 43.7% to P28.4 billion, while consolidated revenue grew by 6.5% to P335.31 billion.

Mr. Pangan said investors and traders might consider Meralco if global interest rates continue to ease on subdued inflation.

He expects Meralco earnings to have risen to P12 billion in the fourth quarter, with a full-year net income of P40 billion. “Immediate support is at P382 per share, while immediate resistance is at P399 per share.”