Semirara in Q2: Power strength offsets coal weakness

From AB Capital's The Opening Bell: Three Moves

Event

Semirara Mining and Power Corp. (SCC) 2Q26 revenues grew 25% YoY to P17.3 billion and EBITDA was up 12% YoY to P6.8 billion. Net income expanded 17% YoY to P4.8 billion, bringing 1H26 earnings to P8.6 billion (+2% YoY). Results were in line with our FY26E at 49%, but ahead of consensus at 57%. The quarter saw a sharp rotation in earnings drivers: power accounted for 96% of earnings, inverting SCC's typical coal-heavy baseline.

View

The two main businesses showed wide divergence, with power outperforming and coal disappointing. Power reinforced our view of SCC as the key beneficiary of spot market tightness, with revenues surging 40% YoY on higher ASP (+29% YoY to P5.8/kWh), driving a 65% YoY EBITDA growth. Coal, however, was a drag, with EBITDA declining 38% YoY as weaker shipments and higher costs, i.e. fuel, mine stripping, more than offset firmer pricing.

Catalyst

We would monitor: (1) 2Q26 earnings briefing (Aug. 6), (2) clarity on the coal contract bidding process, (3) electricity spot prices, and (4) coal price benchmarks.

Action

While a recovery in coal volumes would provide upside, power earnings are increasingly offsetting the weakness in the mining business. With SCC trading around our bear case valuation of P20.8/sh, current valuations appear to already price in a highly adverse outcome, creating an increasingly compelling risk-reward setup.

Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.