SMC’s topline may kick up after purchase of Masinloc Power Plants

SAN Miguel Corp. (SMC) can expect its acquisition of Masinloc Power Plants Co. Ltd. (MPPCL) to boost the company’s revenue by nearly 18.9 percent this year and by 13.7 percent in 2018.A person familiar with the transaction but declined to be named said SMC’s revenue projection, including the new Masinloc asset, will hit P815 billion for 2017 and P927 billion for 2018.

Income from operations, meanwhile, is expected to reach P106 billion for 2017 and P125 billion for 2018, added the person not authorized to speak about income but privy to SMC operations.

Earnings before interest, taxes, depreciation and amortization (Ebitda) for 2017 could hit P146 billion and P166 billion in 2018.

SMC reported in March that it booked P52 billion in net profit in 2016, up by 80 percent from the previous year. Revenue, meanwhile, grew by 2 percent to P685 billion. Last year’s consolidated operating income rose by 24 percent to P99.7 billion, while Ebitda reached P131 billion in 2016.

The source explained the conglomerate’s beer, food, liquor, oil and power businesses all performed well this year.

“This is the projection of San Miguel Group. All organic businesses of SMC became more stable. Food, beer, Petron, all really performed. The weakest was power because prices are so low,” the source said.

The growth for 2018 could be attributed to “maturing expansion” of SMC’s businesses, which the source described as “perfect.”

SMC Global Power Holdings Corp. (SMCGPH), SMC’s power arm, announced on Monday that it reached a share purchase agreement with AES Philippines Investment Pte. Ltd. and Gen Plus B.V. for the sale of their 51-percent and 49-percent interests in Masinloc, respectively, at $1.9 billion.

MPPCL is 51-percent owned by AES Philippines Investment Pte. Ltd., a wholly owned subsidiary of AES Corp., and 49-percent owned by Gen Plus B.V. Gen Plus is a wholly owned subsidiary of Egco (Electricity Generating Public Co. Ltd.).

The sale also includes the 335-MW coal-fired unit that is currently under construction and the 10-MW Masinloc energy storage project under commissioning.

The implied enterprise value of the company based on the transaction is at $2.4 billion.

MPPCL owns, operates and maintains a coal-fired power plant comprising of two units of 315 megawatts (MW), a 335-MW expansion (Unit 3)—which is under construction—and a 10-MW battery energy storage facility all located in Zambales province in Luzon.

“We are happy to be able to acquire Masinloc. I think it’s a good investment,” SMC President Ramon S. Ang said. “The additional power assets provide us an opportunity to increase our footprint in clean coal technology that provides reliable and affordable power, particularly in Luzon.”