F RI 08 J U LY 2016

ABOITIZ POWER CORPORATION:

Postponement of Davao coal plant expansion to

have minimal impact on FV
Postponement of Davao coal plant to cut 2018 profits by 6.5%. AP announced that it will
postpone its plan to expand the capacity of its Davao coal plant. AP originally planned to expand
its 300MW Davao coal plant by another 150MW. The expanded capacity was supposed to be
operational by 2018. The company said it made the decision as it projects power supply in Mindanao
to be in surplus with the operation of several new power plants in the new few years.

SHARE DATA

HOLD

Rating
Ticker

AP

Fair Value (Php)

44.40

Current Price

44.95

The postponement of the 150MW expansion project will result to a 6.5% reduction in APs 2018
profits. It will also lead to a 1.8% reduction in our FV estimate to Php44.40/sh.

Upside (%)

-1.22

Power generation capacity to still register healthy growth. Despite its decision not to push
through with the expansion of the Davao coal plant, AP still has many growth projects in the pipeline,
including the 68 MW Manolo-Fortich Hydroelectric Project, the 300MW Cebu Coal Project, the
300MW Subic coal Project and the 400MW Pagbilao expansion Project. Combined, APs beneficial
power generation capacity will still increase by 600MW by 2019, representing 24% of APs current
power generation capacity.

SHARE PRICE MOVEMENT

Reiterate HOLD rating. We reiterate our HOLD rating on AP. Fundamentally, we like AP given
its plans to expand its power generation portfolio, allowing it to capitalize on the favorable growth
prospect of the country. However, at APs current price of Php44.95/sh, the stock is already fairly
valued as it is trading at a slight premium to our revised FV estimate of Php44.40.

120

110

100

90

80
8-Apr-16

8-May-16
AP

8-Jun-16

8-Jul-16

PSEi

ABSOLUTE PERFORMANCE
AP
PSEi

FORECAST SUMMARY:
Year to Dec. 31
Sales
% change y/y
EBIT
% change y/y
EBIT Margin (%)
EBITDA
% change y/y
EBITDA Margin (%)
Net Profits
% change y/y
NPM (%)
EPS (Php)
% change y/y

2012
62,153.2
14.1
20,430.0
0.4
32.9
40,906.2
1.0
65.8
24,406.8
13.0
39.3
3.32
13.0

2013
72,055.2
15.9
19,477.3
(4.7)
27.0
33,892.4
(2.5)
47.0
18,576.9
(23.9)
25.8
2.52
(23.9)

2014
86,759.4
20.4
22,350.8
14.8
25.8
35,082.3
15.6
40.4
16,705.2
(10.1)
19.3
2.27
(10.1)

2015
85,174.0
(1.8)
24,686.6
10.5
29.0
34,048.7
7.5
40.0
17,603.8
5.4
20.7
2.39
5.4

2016E
83,272.9
(2.2)
24,858.2
0.7
29.9
39,918.3
2.7
47.9
19,151.9
8.8
23.0
2.60
8.8

2017E
89,771.1
7.8
28,488.7
14.6
31.7
41,967.7
12.9
46.7
22,225.5
16.0
24.8
3.02
16.0

RELATIVE VALUE
P/E(X)
P/BV(X)
ROE(%)
Dividend yield (%)

13.6
4.0
29.5
2.0

17.8
3.6
20.4
2.9

19.8
3.4
17.4
2.9

18.8
3.3
17.3
4.2

17.3
3.1
18.0
4.3

14.9
2.9
19.6
4.6

1M

3M

YTD

-5.88

2.09

5.52

0.63

7.43

11.79

MARKET DATA
Market Cap
Outstanding Shares
52 Wk Range

330,769.07Mil
7,358.60Mil
38.40 - 49.00

3Mo Ave Daily T/O

99.39Mil

George Ching, Analyst

george.ching@colfinancial.com

*Source: COL est imat es

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside of
the COL Financial website as these may be subject to tampering or unauthorized alterations.

C o m p an y U p d at e I A b o i t i z P ower C or por ati on

F R I 08 J ULY 2016

Important Rating Definitions

BUY
Stocks that have a BUY rating have attractive fundamentals and valuations based on our analysis. We expect the share price to outperform the market in the
next six to twelve months.
HOLD
Stocks that have 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 valuation fundamentals of stocks with a SELL rating. We expect the share price to underperform in the next six to twelve months.

Important Disclaimer
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 gurantee its accuracy and it may be
incomplete or condensed. All opinions and estimates constitute the judgment of COLs Equity Research Department as 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 of 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.

COL Research Team

April Lynn Tan, CFA, VP & Head of Research
april.tan@colfinancial.com
Analysts
Charles William Ang, CFA
George Ching
Richard Laeda, CFA
charles.ang@colfinancial.com george.ching@colfinancial.com richard.laneda@colfinancial.com
Meredith Hazel Cua
Jose Angelo Lecaros
Michelle Angeline Yu
meredith.cua@colfinancial.com angelo.lecaros@colfinancial.com michelle.yu@colfinancial.com

Contact
COL Financial Group, Inc.
2402-D East Tower, Philippine Stock Exchange Centre,
Exchange Road, Ortigas Center, Pasig City
1605 Philippines
Tel No. +632 636-5411
Fax No. +632 635-4632
Website: www.colfinancial.com

Disclaimer: All content provided in COL Reports are meant to be read in the COL Financial website. Accuracy and completeness of content cannot be guaranteed if reports are viewed outside
of the COL Financial website as these may be subject to tampering or unauthorized alterations.