6 days ago
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A strong player in the nation’s energy security program, Aboitiz Power Corporation (Aboitiz Power), is gearing up to increase its power distribution and retail business as part of its strategic goal to actively support the country’s race for access to reliable, affordable, and sustainable energy sources.
The Philippines has been lagging on this score, for while its planned energy mix shift to renewable energy has been placed at 35% by 2030 and 50% by 2040, 78% of its electricity supply in 2023 still came from fossil fuels while only 22% of its generated electricity came from clean sources, which was then below the global average of 39%.
The country’s total peak power demand is gradually increasing, too. Total peak power demand last 2023 hit the high of 17,300 megawatts. This was higher than in 2022 which in turn was also higher than the year before.
At present, Aboitiz Power operates a significant number of power generation facilities. It has 20 thermal facilities that serve as baseload and peak energy supply source. It also has a diverse power portfolio of 29 facilities (per 3rd quarter report of 2023) that utilizes a mix of renewable energy sources like hydroelectric power, geothermal energy, wind and solar power, under the identifying mark of “Cleanergy” to represent its renewable energy sources and as a brand statement emphasizing its commitment to sustainable energy.
With its 29 “Cleanergy” facilities, Aboitiz Power is purportedly the country’s largest power generation company of renewable energy based on installed capacity.
Apart from power generation, Aboitiz Power is a significant player in the retail electricity market. It has a large distribution utility network that “owns the second and third-largest distribution utilities in the country, providing various services and solutions serving a diverse range of customers across various industries in Luzon and Visayas.”
Notably, Aboitiz Power offers tailored energy solutions designed to meet the specific needs of its clients for reliable and competitively priced electricity. Among these are: a) access to adapting energy solutions to match unique operational requirements for cost savings and optimal performance; b) energy solutions to mitigate power outages, incorporating technologies like batteries and solar panels and enabling customers to monitor and manage energy consumption through digital technologies; and c) electrical thermography and power quality analysis for preventative maintenance and efficiency.
All these services in the retail supply of electricity are undertaken through the following subsidiaries: Aboitiz Energy Solutions Incorporated (AESI); Advent Energy Incorporated (AdventEnergy); Prism Energy Incorporated (Prism Energy); and SN AboitPower RES Incorporated (SNAP-RES).
Its subsidiary, AboitizPower Distributed Energy Incorporated (APX), provides medium-to large-scale solar power installations.
New bond issue
In this connection, Aboitiz Power has filed a registration statement with the Securities and Exchange Commission (SEC) for a peso-denominated fixed-rate retail bond program worth up to P100 billion under a shelf registration system.
The bond issue will be issued in tranches. The first tranche is planned to be offered to the general public during the second quarter of 2025. Its listing with the Philippine Dealing and Exchange Corporation (PDEx), however, is estimated to be done by the third quarter of 2025.
The planned bond issue is part of the company’s 10-year growth strategy of adding approximately 3,700 megawatts (MW) of new renewable energy capacity, hopefully growing its energy fleet by three times at the end of 2030. Nonetheless, the proceeds from the first tranche will be used to refinance corporate debt and for general corporate purposes.
Depending on market conditions, the amount of the first tranche will be worth P20 billion. It will also have an oversubscription option of up to P10 billion.
Management is given the task to determine the final issue amount, interest rate, offer price, tenors, and other terms of the bonds, including the appointment of the parties that will manage or otherwise be involved in the offering.
Financial and market performance
The net income of Aboitiz Power increased by 2% to P33.9 billion compared to P33.1 billion in 2023, despite recognition of depreciation and interest for GNPower Dinginin Limited Co.’s (GNPD) Units 1 and 2. Excluding the impact of the GNPD depreciation and interest, the company’s net income growth would have been 18% year-on-year.
For the full year of 2024, core net income grew by 5% to P33.7 billion from P32 billion in 2023. Furthermore, beneficial EBITDA (earnings before interest, taxes, depreciation and amortization) of the distribution business of Aboitiz Power was 13% which was higher than in 2023, driven by higher energy sales from the 159 MW-peak (“MWp”) Laoag and 94 MWp Cayanga Solar Plants and growth in retail supply volume.
Energy sales rose due to the higher demand driven by the effect of the El Niño phenomenon. Likewise, energy sales from residential and commercial, and industrial customers increased by 13% and 5% year-on-year, respectively.
Aboitiz Power’s total consolidated assets as of December 31, 2024 stood at P517.6 billion, 6% higher compared to its 2023 year-end result of P487 billion.
Total cash and cash equivalents were P56.8 billion, while total consolidated interest-bearing liabilities was P243.2 billion. And, equity attributable to stockholders of the parent was P203.2 billion.
As of December 31, 2024, too, the company’s current ratio was 1.6x, versus 1.8x for the year-end of 2023. Net-debt-to-equity ratio was also equivalent to 0.8x, versus 0.9x for the year-end of 2023.
The last traded price of Aboitiz Power as of March 19, 2025 was at P40.60/share. Its shares have a 52-week high of P44.50/share and a 52-week low of P32.40/share, with the average price of P41.20/share.
Summary and recommendation
Aboitiz Power continues to be profitable and financially robust. It also continues to lead as the country’s largest power generation company of renewable energy based on installed capacity.
The planned new bond issue would certainly bolster its standing as a strong player in the power distribution and retail utility business that will ensure greater portfolio margins and higher energy sales.
As an investment, Aboitiz Power stands out with an analyst rating of “Strong Buy” supported by its performance as a good “dividend play stock” for both big and small investors, having a history of consistently paying out a portion of its earnings to shareholders in the form of dividends.
With respect to this matter, the board of Aboitiz Power again approved and declared a regular cash dividend of P2.35/share, equal to a dividend yield of 5.79% based on its traded share price of P40.60. The source will come from the company’s unrestricted retained earnings as of December 31, 2024. The record date or the specific date as to who are eligible to receive the cash dividend will be those recorded as stockholders as of March 21, 2025. Payment date is on March 28, 2025.
Lastly, Aboitiz Power will hold its annual stockholders’ meeting on April 28, 2025 at 9:30 am, Philippine time, through an online digital platform. Stockholders of record as of March 24, 2025 will be eligible for this meeting. The company’s board also approved the participation of stockholders via remote communication as well as voting in absentia. – Rappler.com
(The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity. You may reach the writer at densomera@yahoo.com)
