CreditSights Inc., a financial research company, cited San Miguel Global Power Holdings Corp.’s improved credit metrics over the past five quarters and predicted further gains due to several positive factors.
CreditSights said lower thermal coal input costs, projected by its sister company BMI to average $135 per ton in 2024 amid increased supply and softening demand, would bolster expectations. The full-year impact of a larger 910-megawatt emergency power supply agreement (EPSA) with Manila Electric Co. is another positive factor.
Additional contributors include the newly commissioned Mariveles power plant, 220 megawatt-hours of battery energy storage systems (BESS) projects completed in the second half of 2023, 110 MWh of BESS projects completed in the first quarter of 2024, and a new 400-megawatt interim power supply agreement secured from August 2024 to February 2025.
SMCGP’s first-half results were strong as expected, CreditSights said. Revenue and earnings before interest, taxes, depreciation, and amortization climbed 17% and 44% year-over-year, respectively, driven by robust power sales volume growth, new capacities and power contracts, and lower thermal coal input costs.
“While liquidity remained poor, we expect bank funding channels to remain open for SMCGP for refinancing of its existing loan facilities given its improving credit profile and the strong reputation of its parent SMC [San Miguel Corp.],” the company said.
SMCGP’s recent redemption of its $783 million 2024 perpetual securities also signals management’s willingness and ability to repay outstanding perpetul securities, CreditSights said.
The company remains watchful of SMCGP’s $3.3 billion liquefied natural gas (LNG) development project and concurrent asset sale transaction, as well as its net cash flow impact.
CreditSights also noted an improvement in SMCGP’s free cash flow to P9 billion as stronger operating cash flows offset higher capital expenditures. Operating cash flows soared to P38 billion due to robust cash EBITDA generation and stronger receivables and payables management.
SMCGP’s capital expenditures also rose to P29 billion due to various project developments including the 600-megawatt Mariveles coal-fired plant, 700-megawatt Masinloc plant expansion, Batangas combined cycle plant (BCCP), and assorted BESS projects.
The Mariveles plant began operating in March 2024, the Masinloc power plant expansion is slated for completion in 2025-2026, and the BCCP is targeted for completion by the end of 2024.
