In this briefing:
1. FGEN (FGEN PM): New Contract with Meralco to Support Cash Flow
- Low correlation to the Thai market, low correlation with Western stock markets, and cheap on a PE basis relative to its sector
- Stable cash flow from new contract for FGEN’s San Gabriel plant to sell its entire capacity of 414 MW to Meralco Manila Electric Company (MER PM) until 2024
- Geothermal-energy producer EDC has been delisted through a share buyback tender offer, FGEN to benefit from higher equity stake (47% vs 42%) and more control over the firm to implement longer-term strategies
- Trades at discount to ASEAN Utilities at 19CE* 6.5x PE and offers much better EPS growth
- Risks: Facility breakdowns, uncertainty regarding plans for LNG facility
* Consensus Estimates
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