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Long term outlook of gas plants rests on success of regasification facility. The gas sales 110
and purchase agreement between FGEN’s gas plants and Spex (Malampaya gas seller) will end
in 2024. To ensure that its existing gas plants would be able to continue operating beyond
2024, FGEN needs to build an LNG regasification terminal that will allow the plants to utilities 100
imported LNG as fuel. The estimated construction period for the regasification is 5 years, while
the capex requirement ranges from US$600Mil to US$1Bil, depending on the capacity of the 90
facility. Given the size of the capex requirement, FGEN is looking to entering into JV from the
regasification project. Funding for the project will be predominantly from debt, while the equity
portion of the investment will be from internally generated cash. Furthermore, to fund its future 80
capex requirement, management reiterated that it is open to selling up to 10.5% stake in EDC 30-Mar-17 30-Apr-17
Estimates under review. FGEN’s share price fell by more than 9% in reaction to its poor 1Q17
earnings performance. Given the low commodity prices (particularly coal) and ample power ABSOLUTE PERFORMANCE
supply in the country, we believe that it might take a while for the San Gabriel to maximize its
earnings potential and for the stock price of FGEN to rebound. We are currently reviewing our 1M 3M YTD
rating and FV estimate of FGEN for a potential downgrade in light of the recent developments. FGEN -9.40 -7.68 -11.45
PSEi 2.94 8.80 15.28
FORECAST SUMMARY
Year to Dec. 31 2014 2015 2016 2017E 2018E
Sales (US$Mil) 1,909 1,846 1,570 1,786 1,833
% change y/y -0.3 -3.3 -14.9 13.7 0.8 MARKET DATA
EBIT (US$Mil) 564 485 564 696 724
% change y/y 48.8 -14.0 16.3 23.4 0.7 Market Cap 71,315.00Mil
EBIT Margin (%) 29.5 26.3 35.9 39.0 39.5 Outstanding Shares 3,661.00Mil
EBITDA (US$Mil) 728 671 761 905 933 52 Wk Range 19.40 - 26.60
% change y/y 35.3 -7.8 13.5 18.9 0.5
EBITDA Margin (%) 38.1 36.3 48.5 50.7 50.9 3Mo Ave Daily T/O 45.33Mil
Net Profits (US$Mil) 193 167.3 199.6 186.5 204.4
% change y/y 63.6 -13.4 19.3 -6.6 2.4
NPM (%) 10.1 9.1 12.7 10.4 11.2
EPS (US$) 0.042 0.035 0.044 0.041 0.046
% change y/y 85.0 -16.9 27.2 -6.4 3.0
RELATIVE VALUE
P/E(X) 9.4 11.4 8.9 9.5 8.5 GEORGE CHING
P/BV(X) 0.75 0.72 0.69 0.65 0.58 Research Manager
ROE(%) 10.10 8.34 9.55 8.43 8.21
george.ching@colfinancial.com
Dividend yield(%) 1.80 1.80 3.52 4.48 4.55
*So urce: COL estimates
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FIELD NOTES I FGEN: NO QUICK TURNAROUND SEEN FOR THE SAN GABRIEL
HOLD
Stocks that have a HOLD rating have either 1) attractive fundamentals but expensive valuations 2) attractive valuations but near-term earnings outlook
might be poor or vulnerable to numerous risks. Given the said factors, the share price of the stock may perform merely in line or underperform in the
market in the next six to twelve months.
SELL
We dislike both the valuations and fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to12 months.
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Securities recommended, offered or sold by COL Financial Group, Inc. are subject to investment risks, including the possible loss of the principal
amount invested. Although information has been obtained from and is based upon sources we believe to be reliable, we do not guarantee its accuracy
and said information may be incomplete or condensed. All opinions and estimates constitute the judgment of COL’s Equity Research Department as of
the date of the report and are subject to change without prior notice. This report is for informational purposes only and is not intended as an offer or
solicitation for the purchase or sale of a security. COL Financial and/or its employees not involved in the preparation of this report may have investments
in securities of derivatives of the companies mentioned in this report and may trade them in ways different from those discussed in this report.
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