Semirara: Power Strength Offsets Coal Weakness in Q2

Semirara Mining and Power Corp. (SCC) reported a 25% year-on-year increase in revenues to P17.3 billion for the second quarter of fiscal year 2026. EBITDA also grew 12% year-on-year to P6.8 billion, with net income expanding 17% year-on-year to P4.8 billion. This brings SCC's first-half earnings to P8.6 billion, a 2% increase from the previous year. The results were in line with AB Capital's full-year estimates at 49% of their forecast, but ahead of consensus at 57%. The quarter was marked by a significant rotation in earnings drivers, with the power segment accounting for 96% of net income, a reversal of SCC's typical coal-heavy baseline. The two main businesses showed wide divergence, with power outperforming and coal disappointing. Power reinforced the view of SCC as the key beneficiary of spot market tightness, with revenues surging 40% year-on-year on higher ASP (+29% year-on-year to P5.8/kWh), driving a 65% year-on-year EBITDA growth. Coal, however, was a drag, with EBITDA declining 38% year-on-year as weaker shipments and higher costs, i.e. fuel, mine stripping, more than offset firmer pricing. Analysts would monitor: (1) the 2Q26 earnings briefing on August 6, (2) clarity on the coal contract bidding process, (3) electricity spot prices, and (4) coal price benchmarks. While a recovery in coal volumes would provide upside, power earnings are increasingly offsetting the weakness in the mining business. With SCC trading around the P20.8 per share bear case valuation, current valuations appear to have already priced in a highly adverse outcome, creating an increasingly compelling risk-reward setup. Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise. Information Source: Philstar Business