Energy companies seen to sustain earnings in first half

KENNY ELIASON-UNSPLASH

By Sheldeen Joy Talavera, Reporter

EARNINGS of listed energy companies in the Philippines are expected to be sustained during the first half of the year, driven by improving power supply conditions and capacity expansions, according to analysts.

“We expect energy sales volumes to post stable growth on the back of a growing economy. However, we do expect top-line growth to moderate year-on-year as power prices generally continue to ease given improving power supply conditions,” China Bank Securities Corp. Research Associate Andrei Soriano said in an e-mail.

Mr. Soriano said earnings growth in the industry will still be driven by the companies’ continued capacity expansion and margin improvements.

“PH energy companies are poised for growth in 2023 and 1H24, driven by increased demand, RE (renewable energy) initiatives, and infrastructure development,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

The government targets to increase the share of RE in the country’s energy mix to 35% by 2030 and 50% by 2040.

For the third quarter, listed energy companies in the country posted mixed results. Those companies that delivered higher income cited increased demand, higher electricity sales, and strong revenues.

Manila Electric Co. reported an attributable net income of P10.55 billion, up 58% from the P6.64 billion posted a year ago on the back of higher sales of electricity and other services.

For the nine months to September, the power distributor’s attributable net income reached P28.4 billion, higher by 44% from P19.76 billion.

New operating capacity drove the attributable net income of ACEN Corp., which increased by 20.5% to P2.33 billion from P1.94 billion in the previous year.

ACEN’s income attributable to the parent company for the first nine months climbed by 59% to P6.56 billion from P4.12 billion previously.

First Gen Corp. saw its attributable net income rise by 23% to $80.35 million from $65.31 million on the back of better earnings from its geothermal and natural gas portfolio.

From the January to September period, the company’s attributable net income jumped by 31.5% to $246.79 million from $187.62 million.

Meanwhile, Aboitiz Power Corp. registered a consolidated net income of P8.9 billion, marking a 7% decrease due to its distribution group’s “timing of refunds” following rate adjustments mandated by the Energy Regulatory Commission in a resolution issued in 2022.

However, the company’s net income from January to September was P26.74 billion, up 37% from the P19.52 billion a year earlier.

Semirara Mining and Power recorded a 66% decline in attributable net income to P3.4 billion for the third quarter, dragged down by weak coal selling prices, fewer shipments, and lower foreign exchange gains.

Its income for the three quarters fell by 37% to P22.62 billion from P35.95 billion, which the company attributed to the “high base effect and stabilizing global coal market.”

Despite projected growth, analysts said that energy companies should look out for external factors that could influence their operations and performance.

“Despite power gen companies’ commitment to develop the country’s power supply, we remain wary of challenges about the pace of connectivity infrastructure expansion and possible delays in capacity build-out,” Mr. Soriano said.

Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce likewise said in a Viber message that the growth of the energy sector, especially in renewables, may be constrained by infrastructure challenges.

“Adequate infrastructure is crucial for the efficient generation and distribution of energy, and any delays or limitations in infrastructure development could hinder the sector’s growth,” he said.

Mr. Limlingan said that “vigilance is necessary to navigate challenges related to oil price volatility, regulatory changes, and supply chain disruptions.”