June 10, 2014

FGEN still open to minority interest in Pagbilao

BusinessWorldtoday reported that First Gen (FGEN) is still studying its options to acquire a minority stake in the 420-MW Pagbilao coal power plant in Quezon province. Construction of the power plant is slated to be completed by November 2017. FGEN is heavily invested in natural gas-fired power projects, which includes 1,500 MW worth of capacity from Sta. Rita and San Lorenzo and upcoming power plants the 414-MW in San Gabriel project and the 100-MW Avion plant.

Our take: While acquiring a minority stake in the Pagbilao coal power plant could expand FGEN’s portfolio, potential contributions will hinge on the extent of its investments.

In the meantime, we believe that its near-term prospects are still underpinned by an earnings recovery that will arise from the full-year contribution of 250MW San Lorenzo plant which suffered fire damages last year and the expected recovery of the 250MW Sta Rita plant with the expected repair and installation of a new transformer by 4Q14.

The same is true for its subsidiary Energy Development Corp which has recovered from damages due to the typhoon last year and the successful test runs of its Bacman units.– WealthSec