Looking ahead, market consensus expects Manila Electric's core net profit to decline by -13% YoY to PHP20,775 million in FY 2020, which is close to the company's FY 2020 core net income guidance of PHP21 billion.
Manila Electric's residential segment's sales volume as a proportion of the company's total sales volume expanded from 31% in 1H 2019 to 39% in 1H 2020. This was mainly attributable to Manila Electric's favorable sales mix, as the company saw higher distribution revenue contribution from the residential segment (relatively higher average tariffs compared with other segments) vis-a-vis the commercial and industrial segments.Ī greater number of people in the Philippines either cut back on outdoor activities or worked from home, which led to increased power demand for the residential segment. Nevertheless, it is noteworthy that Manila Electric's distribution revenue grew (albeit marginally), despite a 7% decline in energy sales volume from 22,823 GWh in 1H 2019 to 21,139 GWh in 1H 2020. This was partially offset by a +2.8% growth in the company's distribution revenue to PHP33,365 million in the first half of the year. The company's core net income, excluding non-recurring items, decreased by -14% from PHP12.3 billion in 1H 2019 to PHP10.6 billion in 1H 2020, while its revenue declined by -14% from PHP165.0 billion to PHP142.3 billion over the same period.ĭue to reduced power demand and lower fuel prices as a result of lock-down measures initiated in the Philippines to contain Covid-19, Manila Electric suffered from a -18.3% YoY fall in generation & other pass-through charges to PHP105,266 million in 1H 2020. Manila Electric announced the company's 1H 2020 financial results on July 27, 2020, and its financial performance was not as bad as feared notwithstanding the negative impact of Covid-19. brokers with international coverage, such as Interactive Brokers or Fidelity, or international brokers with Asian coverage like Hong Kong's Monex Boom Securities and Singapore's OCBC Securities. Investors can invest in key Asian stock markets either using U.S. Institutional investors who own Manila Electric shares listed in the Philippines include The Vanguard Group, BlackRock, Artemis Investment Management, and Geode Capital Management, among others. Average daily trading value for the past three months exceeds $1.5 million, and market capitalization is above $6 billion, which is comparable to the majority of stocks traded on the US stock exchanges. For those shares listed as ADRs on the OTCBB, note that liquidity is low and bid/ask spreads are wide.įor those shares listed in the Philippines, there are limited risks associated with buying or selling the shares in terms of trade execution, given that the Philippines Stock Exchange is one of the major stock exchanges that is internationally recognized and there is sufficient trading liquidity.
Readers have the option of trading in Manila Electric shares listed either on the Over-The-Counter Bulletin Board/OTCBB as ADRs with the ticker MAEOY, or on the Philippines Stock Exchange with the ticker MER:PM. The stock also offers a consensus forward FY 2020 dividend yield of 5.6%. Manila Electric trades at 14.3 times consensus forward next twelve months' P/E, which represents a discount to its historical three-year and five-year mean forward P/E multiples of 17.9 times and 19.2 times, respectively. Manila Electric's share price has increased by +5% from PHP258.00 as of Mato PHP270.80 as of Augsince my last update.
This is an update of my prior article on Manila Electric published on May 10, 2020. With Manila Electric's forward P/E at a discount to its historical average, some of the negatives have been priced in, which justifies a Neutral rating for the stock. Separately, the fifth rate regulatory period and its impact on Manila Electric's distribution tariffs represent key regulatory risks for Manila Electric in the medium term, which cannot be ignored. Manila Electric's 1H 2020 results were not as bad as expected with core net income down -14% YoY, but an extension of lock-down measures, considering the high daily confirmed cases of Covid-19 in the Philippines, could pose downside risks to the company's earnings. I maintain my Neutral rating on Philippines-listed electric utility Manila Electric Company ( OTCPK:MAEOY).
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