Semirara sees 2-digit hike in bottomline

MANILA, Philippines — Semirara Mining and Power Corp. (SMPC), the listed integrated energy company of the Consunji family, expects  a double digit increase in its  bottomline figures this year due to higher coal prices and rising electricity spot market prices.

In a report to analysts, SMPC said it expects coal average selling prices (ASPs) to stay elevated, driven by a demand surge and supply crunch as well amid geopolitical issues and policy interventions.

Based on its outlook, the company forecasts New castle prices to surge in March to $285 per metric tons (MT), a continued uptrend from $226 per MT in January and $238 per MT in February.

It expects coal prices to go down by the second quarter to average $196.5 per MT for the whole 2022, which is still higher than the ASP of $137.3 per MT in 2021.

“Overall, SCC’s coal business will continue to benefit from attractive selling prices globally,” brokerage firm Regina Capital Development Corp. (RCDC) said in a report.

Meanwhile, SMPC expects wholesale electricity spot market (WESM) prices to increase this year due to the full economic reopening from quarantine restrictions, election activities and supply constraints from large uncontracted capacity.

The company expects WESM prices to average P6.11 per kilowatt-hour (kWh), higher than the P4.83 per kWh average in 2021 and P4.66 per kWh average in pre-pandemic 2019.

RCDC said SMPC, being a net seller of power, has proven beneficial for the firm because of higher spot market prices.

“With spot market prices and coal ASPs expected to remain elevated relative to fiscal year 2021, it is highly likely that SCC will post double-digit (year-on-year) bottomline growth this year,” RCDC said.

For this year, SMPC has set a capital expenditure (capex) plan of P8.8 billion, more than double the P4-billion capex budgeted last year.

Of the total, P7 billion will be allocated to its coal business, P1 billion to Sem-Calaca Power Corp. (SCPC), and P0.8 billion to Southwest Luzon Power Generation Corp. (SLPGC).

SCPC looks to raise its coal production from 14.3 million MT last year to 14.5-15 million MT this year and sales from 15.2 million MT to 15.5 million MT.

For its power business, SCPC is targeting to resume the operations of its Unit 2 in the second quarter.

SCPC owns the 2x300-megawatt (MW) Calaca coal-fired power plant in Batangas, which it acquired from the government in 2009 for $362 million. SLPGC runs the 2x150-MW coal power facility also in the same area.

SMPC registered record earnings last year, ending with a net income of P16.2 billion, which is a five-fold surge from P3.3 billion in 2020 and is the highest in its 41-year history.

In the fourth quarter alone, SMPC saw its net income rise by nearly 20 times from P297 million to P5.9 billion, its highest profit level for any given quarter.

Earnings of the company’s coal business, which accounted for 60 percent of the total income, soared by 535 percent from P1.8 billion to P11.4 billion.

Average selling prices from October to December rallied by 229 percent from P1,354 per ton to P4,452 per ton as global supply disruptions and accelerated demand from China, India and Europe pushed index prices to record levels.