Market Talk (SCC, RFM, AP, MER, TA)

Mining: SCC unfortunate incident. According to Semirara Mining and Power Corp (SCC-BUY), a portion of the northern edge of Panian pit gave way about 3:45am last 17 Jul. Three bodies have been recovered while six are still missing. SCC is giving full support to the families of the victims. It is also coordinating with national and local authorities to keep them updated with the search-and-rescue efforts and other necessary measures, including adequate supply of coal since the Department of Energy has ordered the suspension of operations at the Panian pit pending results of the ongoing investigation. We will have a fuller report soon. 

Consumer: RFM’s 1H15 net profit rose 11% YoY to PHP471m. RFM Corp (RFM – BUY) reported net income grew 12.7% YoY in 2Q15 to PHP292m bringing it to PHP471m in 1H15, up 10.6%. This is equivalent to PHP50% of our full-year net income forecast of PHP951m. 1H15 sales went up 10% to PHP5.5b while EBIT increased 17.5% to PHP665m. Higher sales were led by ice cream and pasta. We will come out with a more detailed report on the results within the week. 

Utilities: Pagbilao on track to finish plant. According to Manila Standard, Pagbilao Energy Corp said in a recent interview it is on track to complete the 420MW Pagbilao 3 coal-fired power project in Quezon province in time for full commercial operations by 2018. The project, which started last year, is expected to take about 42 months to complete. Aboitiz Power Corp (AP-HOLD) CEO Erramon Aboitiz earlier said the project would be built as a merchant plant, or one without contracts as the company was confident in the “regime of open access.” Pagbilao Energy is the joint venture of TPEC Holdings Corp and Therma Power Inc, whollyowned subsidiaries of TeaM Energy Corp and AP, respectively.

Utilities: Meralco set to acquire distibution utilities. According to the Philippine Star, Manila Electric Co (MER-HOLD) said in a recent interview it has recommenced exploring opportunities and talks with its target distribution utilities and electric cooperatives after slowing down last year to focus on the rehabilitation of a debt-ridden electric cooperative in Pampanga. MER is scouting for opportunities on growing its electric distribution area in North Luzon and South Luzon through acquisitions of electric cooperatives and private distribution utilities in areas as far as La Union, Batangas, and Laguna. MER, however, declined to specify which distribution utilities and electric cooperatives it is targeting to purchase.

Utilities: Maibarara Geothermal expansion operational by mid-2017. According to BusinessWorld, an official from the Maibarara Geothermal, Inc (MGI) venture said the 10MW geothermal plant expansion in Batangas is programmed to be commissioned in mid-2017. PetroEnergy Resources Corp’s (PERC-Not Rated) subsidiary, PetroGreen Enery Corp, holds a 65% interest in MGI while Trans-Asia Oil and Energy Development Corp (TA-BUY) holds 25% and PNOC Renewables Corp holds 10%. Last month PERC reported MGI completed tests within the site that confirmed sufficient steam to support the 10MW expansion of the operational geothermal project in the municipality of Sto. Tomas. 

- Maybank ATR