Industry: Mining
Listing Date: November 28, 1983

Financial Highlights

Financial performance summary and key ratios 1,2,3,4,18

Semirara Mining and Power Corporation (SCC, the “Company”) is engaged in thermal coal extraction and power production. SCC created a value proposition through integrating coal mining activities and power operations in transforming low-value input into high-value output in a continually efficient and responsible manner.

Summary of it business segment operational highlights is as follows:

Mining

• SCC has four (4) mining sites, 2 of which are currently are operational (Narra and Molave). While operations at Unong mine ceased in 2000 after 17 years of extraction and the Panian minesite in September 2016 after full depletion. 5
• In a statement in 2016, annual report, the Company stated that Semirara has 570 metric tons of which 94 metric tons were already extracted.16
• Narra and Molave minesite only started operation at the end quarter of 20165
• In 2007, SCC successfully ventured to export market with its maiden shipment to China. Since then, it has expanded its market base to include India, Hong Kong, Japan, Taiwan and Thailand.6 As of end of 2016, coal sales in export market constitute 58.92% of its total coal sales.7
• Coal Operating Contract (COC) in Semirara was extended until July 14, 2027.

Power

• SCC has 2 operational power plants, the Sem-Calaca Power Corporation (SCPC) and Southeast Luzon Power Generation Corporation (SLPGC)
• SLPGC unit 1 started its commercial operation in April 1, 2016 while unit 2 was on August 1, 2016.
• SCPC unit 2 undergone powerplant rehabilitation and was able to resume its operation on the 2nd quarter of 2017
• As of end of 2016, power sales through contracts of SCPC and SLPGC were 99% and 81% respectively. Status of existing bilateral contracts as of 3rd quarter of 2017 were as follows:9

For the last 3 years, SCC’s revenue was driven by the following:

Below is the breakdown of SCC’s total revenue for the year 2016 and 2017

Key Notes:

• Increased production and higher Average Retail Price (ASP) of coal due to increased coal price index improved coal profitability.
• In 2016 and 2017 coal sales are inclusive of low-grade coal sold to own power plants of 975 thousand tons and 1.3 million tons, respectively.
• Higher ASP and volume sold in 2017 translated to 22% increase in SCPC Revenues.
• Meralco remains to be the single biggest customer of the Company, accounting for 84% of sales volume and 85% of revenues.
• Eight percent (8%) increase in SLPGC volume sales was due to its equipment efficiency.

SCC’s has the following corporate structure:10

Few important notes:

• SIPDI is into development and investment of infrastructures in economic zones
• SEUI was incorporated to perform Qualified Third Party (QTP) functions. Department of Energy defines QTP as an alternative service provider authorized to serve remote and unviable areas pursuant to Section 59 of the EPIRA Law.
• (SELPGC) was formerly named as SEM-Balayan Power Generation Corporation (SBPGC)
• In 2016, SRPGC become a joint venture when Meralco PowerGen Corporation (MGen) subscribed to the remaining unissued capital stock of SRPGC.

The Company’s management team are as follows:

Table of Ownership11

SCC’s common shares increased due to the declaration of 300% stock dividend during the 1st quarter of 2017.

Conversely, in August 2016, SCC BOD approved a buy-back program wherein it will buy-back shares at prevailing market price not exceeding 20 million shares for a period of 60 days beginning August 18, 2016. As of December 31, 2016, SCC has bought-back a total of 3,463,570 shares for a total consideration of Php 387.55 million.

Table of directors and executive officers11,12

Highlights of SCC’s BOD and executive officers professional and business experience are:

– Three (3) BOD members hold directorship position to other publicly listed
– Six (6) members are majority stockholders of SCC’s significant shareholder. This may result to a probable conflict of interest due to interlocking directorship and ownership
– Five (5) has international education
– Three (3) is holding a post graduate degree
– Two (2) previously holds a government office (Napocor CEO and Central Bank of the Philippines, Member of the Monetary Board during GMA and Marcos administration)

Dividend Policy13,14

Schedule of SCC’s dividend declarations for the past 3 years

• **In 25th of April 2017, the company declared a Php 5,326 million (Php5/sh) cash dividends which will be paid on 27th of May 2017.
• **Another Php5 dividend per share was declared by the board of Directors and was paid 8th of September 2017
• The company had also declared 200% and 300% stock dividend on 6th of March 2014 and 23rd of February 2017, respectively.

Business considerations/opportunities:

• SCC has 2 other 36-year COC in the province of Oriental Mindoro and Sarangani. Contracts will expire on April 29, 2049 and June 7, 2049 respectively.8 The COC covers coal-bearing parcels of land covering areas of 7,000 and 5,000 hectares, respectively.
• 5,000 hectares, respectively.
• SCC was able to secure an approval from DENR-EMB in its coal expansion project in Molave site of 16 million MT from 12 million MT last 29th of April 2016
• Unit 2 of SCPC undergone a successful unit upgrade such as the unit during 3rd Q of 2017 can now run at 250 MW to 270 MW using Semirara coal from 180MW to 200MW15
• During the 3rdQ of 2017, SCC’s investment to additional equipment increased the moved materials by 12% YoY to 101.9 million bank cubic meters (bcm) from 91.09 million bcm for the same period in 2016.15
• Both Units 3 and 4 of SLPGC are already on commercial operations since August 2016. The ERC granted the Certificate of Compliance, permitting both plants to run at its maximum capacity of 150 MW, on May 15, 2017.15

References:

  1. SCC SEC Form 17-Q for the 1st quarter pages 5-8 https://goo.gl/4YT9Ya
  2. SCC SEC Form 17-Q for the 2nd quarter pages 5-8 https://goo.gl/tKpBFk
  3. SCC SEC Form 17-Q for the 3rd quarter pages 5-8 https://goo.gl/m4s1HZ
  4. SCC Integrated annual report for 2016 page 83-85 https://goo.gl/LkSsga
  5. SCC Integrated annual report for 2016 page 103 (note 11 of FS presentation)
  6. http://www.semiraramining.com/our_business/content/Business_Operations
  7. SCC Integrated annual report for 2016 page 118
  8. SCC Integrated annual report for 2016 page 115
  9. SCC SEC Form 17-Q for the 3rd quarter page 48-49
  10. http://www.semiraramining.com/our_organization/content/Group_Corporate_Structure
  11. PSE Disclosure Form POR-1 – Public Ownership Report for 31st of December 2017 https://goo.gl/xK37C2
  12. http://www.semiraramining.com/our_organization/content/Board_of_Directors
  13. SCC Integrated annual report for 2016 page 55 and 107
  14. SCC SEC Form 17-Q for the 3rd quarter page 61
  15. SCC SEC Form 17-Q for the 3rd quarter page 44 and 45 (significant events)
  16. SCC 2016 annual report, Value Creation, business model, and strategy, p.8
  17. Declaration of 300% stock dividends https://goo.gl/Ts9V1N
  18. SCC Full year 2017 results briefer pack slide 24-26 https://goo.gl/HLxft3

Pin It on Pinterest

Share This