First Gen Corporation (PSE: FGEN)

Business Profile

First Gen Corporation (FGEN or the Company) is incorporated in the Philippines and registered with the Philippine Securities and Exchange Commission (SEC) on December 22, 1998. FGEN and its subsidiaries are involved in the power generation business. FGEN shares are first offered to the public on February 10, 2006.

FGEN is engaged in the business of power generation through subsidiaries that are holding companies of their interest in a power generating company.
I.   First Gas Holding Company (FGHC) a 60% owned subsidiary is a holding company of a wholly owned First Gas Power Corporation which operates the 1,000 MW Santa Rita Power Plant.
II.   Unified Holdings Corporation (UHC) a wholly owned subsidiary of FGEN is a holding company of their 60% interest in FGP Corp. (FGP) which operates the 500 MW San Lorenzo Power Plant.
III.   First Gen Renewables, Inc. (FGRI) a wholly owned subsidiary is holding company of FG Bukidnon Power Corporation (FG Bukidnon) which operates the 1.6 MW FG Bukidnon Hydroelectric Power Plant.

FGEN has investments with less than the controlling stake (50%) which are Prime Terracota and FG Hydro.

Prime Terracota is a 45% owned holding company of a wholly owned Red Vulcan which in turn has 48.8% interest in EDC, the country’s largest geothermal power producer.

FG Hydro a 40% owned subsidiary which operates the newly rehabilitated and upgraded 132 MW Pantabangan-Masiway hydroelectric power plant.

Below is FGEN’s corporate structure:

Others include the following:

Comments:

This May, the Company issued series “G” preferred shares disclosing their intent to use the proceeds for acquisition of more interest in their subsidiaries or extinguishment of debt.[1][2] On May 30, 2012, the company disclosed on a press release that they purchased all the capital stock of Lisbon Star Management Limited for $360 million[3] or approximately P15 billion. The transaction will increase FGEN’s stake in Santa Rita and San Lorenzo power plants to 100% which will obviously benefit the Company’s net income. The method of financing the acquisition is said to be from the recent preferred shares issuance (P12 billion),[4] loans, and internal cash.

I expect FGEN’s EPS for June to be at least P1.01. FGEN is an attractive buy and hold stock until 2013 which I expect its EPS to reach at P2.11 or more than double its 2010 EPS.

Other data:


Sources:
1.   Use of proceeds from public offering of Series “G” Preferred Shares (PDF) http://www2.pse.com.ph/html/disclosure/pdf/2012/pdf/dc2012-4237_FGEN.pdf
2.   Press Statement: “First Gen Issues and Lists the Series ‘G’ Preferred Shares” (PDF) http://www2.pse.com.ph/html/disclosure/pdf/2012/pdf/dc2012-3868_FGEN.pdf
3.   Press Release: Acquisition by Blue Vulcan Holdings Corp. of entire outstanding capital stock of Lisbon Star Management Limited http://www2.pse.com.ph/html/disclosure/pdf/2012/pdf/dc2012-4214_FGEN.pdf
4.   Additional investment of FPH re: payment of difference between issue price paid and issue price for publicly-offered Series “G” Preferred Shares http://www2.pse.com.ph/html/disclosure/pdf/2012/pdf/dc2012-4092_FGEN.pdf

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