November 19, 2014

FGEN reported net income up 38% in 9M14

First Gen Corp (FGEN), in a one-page disclosure, today said its 9M14 net income rose 38% YoY to USD162.8m, driven by higher earnings contribution from its two gas plants – Santa Rita and San Lorenzo (collectively referred to as First Gas) – as well Energy Development Corp’s (EDC) geothermal power plants. The gains more than offset the lower earnings contribution from 70%-owned subsidiary First Gen Hydro Power Corp (FG Hydro) due to lower water levels.

First Gas contributed around US$88.6m in earnings, a 34% from the previous year’s US$66.1m as all units were back in operations. Recall that last year’s earnings were weighed down by lower capacity generation as a result of the temporary shutdown of one of San Lorenzo’s 250 MW units from May to December 2013. A 250 MW unit of the Santa Rita power plant was also successfully re-commissioned in July after being offline since February of this year. 50%- owned affiliate EDC contributed around US$112.4m in earnings, almost double last year’s earnings of US$57m.

On a stand-alone basis, EDC reported a 94% increase in reported net income to P10.38b. The increase was attributed to incremental electricity sales generated by the BacMan and Nasulo power plants, the reversal of a P1.85b net impairment loss resulting from Nasulo’s commercial operations and the receipt of insurance claims of around P529m. Net of one-offs, EDC’s recurring income grew by 25% to P7.8b (see Company AlertEDC’s results las 13 Nov 2014)).

Our take: We cannot estimate FGEN’s actual recurring earnings pending the release of its financial statements. Excluding one-offs, we believe earnings growth would have been smaller as there were several one-off gains booked this year (forex gains, proceeds from insurance claims, reversal of impairment loss) compared with one-off expenses in 2013 (forex loss, input VAT claims written off) – WealthSec