Semirara Q2 profit surges 170% y/y, but slumps 28% from last quarter
Semirara Mining and Power [SCC 40.85 0.74%] [link] published a pre-earnings teaser to report a Q2/22 profit of P10.8 billion, up 170% from Q2/21 profit of P4 billion, and down 28% from Q1/22 profit of P15 billion.
SCC attributed the performance to “all-time high coal selling prices”, combined with a larger quantity of spot electricity sold at higher-than-normal rates. SCC’s H1 net income was up 311% y/y to P25.8 billion.
SCC said that its quarter-on-quarter performance was weaker (“as expected”) due to the lockdowns in China, which reduced demand for SCC’s coal shipments.
The company said that its Q2 coal shipments fell by 25% as China imposed lockdowns and “shifted to Russian coal,” but that the reduced shipments were somewhat off-set by the 126% increase in the selling price of coal.
MB BOTTOM-LINE
I really want to know more about that somewhat ominous line, about how the 25% dip in coal shipments was caused, in part, to China’s shift to Russian coal.
As far back as April, newsrooms have been publishing stories about China’s opportunistic approach to buying the steeply discounted coal that Russia has been selling since many of its traditional coal buyers moved to ban imports of Russian fuel exports like coal and oil.
China is SCC’s largest market when it comes to coal sales, so I’m curious whether this 25% dip is stable, or if that was just the tip of the iceberg?
Will SCC pivot away from China to sell coal to other international buyers at prices that are closer to the “everything except Russia” elevated spot price, or will SCC try to compete with the “double dirty” discounted Russian coal?
It doesn’t look like the Russia/Ukraine conflict is ending any time soon, and the same goes for all of the sanctions imposed against Russia as a result of its actions in the region. The discounted coal problem could be one that persists for a long time.
What are SCC’s plans to deal with this?
--
Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.
- Latest
