April 07, 2015

TA coal-fired power plant now synchronized to the grid

At the sidelines of yesterday’s stockholders’ meeting, Trans-Asia Oil and Energy Development Corporation (TA) CFO Pythagoras Brior Jr said that the first 135-MW unit of South Luzon Thermal Energy Corporation’s (SLTEC) 2x135 MW coal-fired power plant was synchronized to the Luzon grid last 3 April.

SLTEC Unit 1 is the second greenfield project completed by TA in less than six months, following the commissioning of Trans-Asia Renewal Energy Corp (TAREC) 54-MW San Lorenzo wind farm project in Guimaras in December last year (16 Dec 2014, Daily Wealth Take).
Construction of SLTEC’s second 135-MW unit is still ongoing and is already 88% completed as of end-2014. Commissioning is expected to start in 4Q15 while commercial operations should begin by early 2015. SLTEC is a 50-50% jv between TA and Ayala Corp (AC) subsidiary AC Energy Holdings.

Our take: With SLTEC unit 1 now contributing to revenues starting April this year, we believe TA’s over-all margins should improve in 2015. Last year, TA reported a 69% YoY decline in earnings to P180m from P573m in 2013, pulled down by trading losses incurred in 3Q14 and higher interest costs (which grew to P171m from P14m) on long-term loans.

Should WESM prices remain relatively stable this year, we believe 2015 could be a turnaround year for TA, boosted by higher revenue contribution from SLTEC unit 1 and TAREC’s 54-MW San Lorenzo wind farm. – WealthSec