First Gen makes stock mart debut
By Zinnia B. Dela Peña
The Philippine Star 02/11/2006
Shares of First Generation Corp., the largest Filipino-controlled independent power producer, made their debut at the Philippine Stock Exchange (PSE) yesterday.
First Gen stocks closed at P45.50 a share compared with the initial public offering (IPO) price of P47 a share. They had opened at P46.50 a share.
A total of 1.08 billion common shares were listed on the Philippine Stock Exchange (PSE) yesterday, of which 180.91 million new shares were offered to the public. First Gen is the 238th company listed on the PSE.
Dealers said UBS AG and CLSA Ltd, the lead underwriters for First Gen’s international offering, bought the bulk of the shares traded.
Commenting on the weak performance of First Gen shares, company vice-chairman Peter Garrucho said he is confident that more investors will consider the power firm in the coming weeks given its improved growth profile.
"This is just the opening day. We feel that in the coming weeks, the strengths of the firm will shine out. We prepared long and hard for this," Garrucho said.
PSE president Francis Lim, for his part, said: "I’m very positive that the company will eventually show its fundamentals and recover whatever lost ground on its opening day. We should take into consideration the mixed assessments made by international credit rating agencies on the Philippines’ debt rating."
Standard & Poor’s revised its outlook on the Philippines’ BB-sovereign rating to stable from negative in the wake of its better-than-expected 2005 fiscal performance as well as recent implementation of the expanded value-added tax, the main revenue-raising measure aimed at balancing the budget by 2008.
US-based credit rating firm Moody’s, on the other hand, maintained its "negative" outlook on the country’s "B1" debt rating, which means a downgrade is possible in the near term.
Moody’s said that while there was progress in reducing the budget deficit in 2005 by implementing an expanded value-added tax, "more will be needed to bring the Philippines’ exceptionally high public sector deficit down."
First Gen raised around $160 million from the maiden offering of its shares to the public. It plans to use part of the IPO proceeds to improve existing facilities and fund future expansion projects which include both potential acquisitions of power generation assets and the development of greenfield projects.
Local stockbrokerage house Citiseconline has a buy recommendation for First Gen, noting that its generation subsidiaries have contracts that are seen to provide the company with stable long-term cashflows.
An analyst at another local brokerage house, however, said the financial difficulties of its affiliate companies may adversely affect First Gen, which has just one buyer for its electricity: Manila Electric Co. (Meralco).
Meralco has been under pressure in the past years due to a court ruling ordering the refund of over P29 billion in overbillings.
First Gen president and chief operating officer Federico Lopez said that aside from assets of the state-owned National Power Corp., the company is looking at acquiring foreign companies intending to exit the Philippines.
Lopez said the company is in a position to benefit from improved economic growth in Luzon where around 78 percent of the country’s total installed generating capacity is located. All of First Gen’s power generation facilities are located in the Southwestern Luzon region and linked to the Luzon grid.
First Gen owns four power plants with a total generation capacity of 1,726.6 megawatts, equivalent to around 11 percent of the country’s total installed capacity. Lopez said the company’s earnings were likely flat last year. In the nine months ended Sept. 30, 2005, First Gen posted a net income of P3.65 billion on P33.73 billion in revenues.
Net profit in the year-earlier period was slightly higher at P3.70 billion even though revenue was lower at P28.32 billion. For the whole of 2004, net profit was P4.96 billion, down from P5.33 billion in 2003. – With Donnabelle Gatdula
By Zinnia B. Dela Peña
The Philippine Star 02/11/2006
Shares of First Generation Corp., the largest Filipino-controlled independent power producer, made their debut at the Philippine Stock Exchange (PSE) yesterday.
First Gen stocks closed at P45.50 a share compared with the initial public offering (IPO) price of P47 a share. They had opened at P46.50 a share.
A total of 1.08 billion common shares were listed on the Philippine Stock Exchange (PSE) yesterday, of which 180.91 million new shares were offered to the public. First Gen is the 238th company listed on the PSE.
Dealers said UBS AG and CLSA Ltd, the lead underwriters for First Gen’s international offering, bought the bulk of the shares traded.
Commenting on the weak performance of First Gen shares, company vice-chairman Peter Garrucho said he is confident that more investors will consider the power firm in the coming weeks given its improved growth profile.
"This is just the opening day. We feel that in the coming weeks, the strengths of the firm will shine out. We prepared long and hard for this," Garrucho said.
PSE president Francis Lim, for his part, said: "I’m very positive that the company will eventually show its fundamentals and recover whatever lost ground on its opening day. We should take into consideration the mixed assessments made by international credit rating agencies on the Philippines’ debt rating."
Standard & Poor’s revised its outlook on the Philippines’ BB-sovereign rating to stable from negative in the wake of its better-than-expected 2005 fiscal performance as well as recent implementation of the expanded value-added tax, the main revenue-raising measure aimed at balancing the budget by 2008.
US-based credit rating firm Moody’s, on the other hand, maintained its "negative" outlook on the country’s "B1" debt rating, which means a downgrade is possible in the near term.
Moody’s said that while there was progress in reducing the budget deficit in 2005 by implementing an expanded value-added tax, "more will be needed to bring the Philippines’ exceptionally high public sector deficit down."
First Gen raised around $160 million from the maiden offering of its shares to the public. It plans to use part of the IPO proceeds to improve existing facilities and fund future expansion projects which include both potential acquisitions of power generation assets and the development of greenfield projects.
Local stockbrokerage house Citiseconline has a buy recommendation for First Gen, noting that its generation subsidiaries have contracts that are seen to provide the company with stable long-term cashflows.
An analyst at another local brokerage house, however, said the financial difficulties of its affiliate companies may adversely affect First Gen, which has just one buyer for its electricity: Manila Electric Co. (Meralco).
Meralco has been under pressure in the past years due to a court ruling ordering the refund of over P29 billion in overbillings.
First Gen president and chief operating officer Federico Lopez said that aside from assets of the state-owned National Power Corp., the company is looking at acquiring foreign companies intending to exit the Philippines.
Lopez said the company is in a position to benefit from improved economic growth in Luzon where around 78 percent of the country’s total installed generating capacity is located. All of First Gen’s power generation facilities are located in the Southwestern Luzon region and linked to the Luzon grid.
First Gen owns four power plants with a total generation capacity of 1,726.6 megawatts, equivalent to around 11 percent of the country’s total installed capacity. Lopez said the company’s earnings were likely flat last year. In the nine months ended Sept. 30, 2005, First Gen posted a net income of P3.65 billion on P33.73 billion in revenues.
Net profit in the year-earlier period was slightly higher at P3.70 billion even though revenue was lower at P28.32 billion. For the whole of 2004, net profit was P4.96 billion, down from P5.33 billion in 2003. – With Donnabelle Gatdula
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