Energy Development Corporation (PSE: EDC)

Energy Development Corporation (EDC, the Company) has a portfolio of renewable energy generating assets that rely on indigenous fuels. The Company has 305 MW of geothermal (Palinpinon and Tongonan) and 132 MW hydro (Pantabangan and Masiway) installed capacity that is operating commercially which generates 6,847.4 GWh electricity sales or P24 billion revenue for 2011. The Company still has 825 MW installed geothermal capacity not yet in commercial operations. In addition to high potential geothermal portfolio, EDC is developing an 86 MW wind farm in northern Luzon. Below is the location of EDC’s power generation projects:

EDC map

Below is EDC corporate structure:

EDC3

EGC is a holding company for EDC’s geothermal operations. Below are EGC’s subsidiaries:

EDC4

GCGI was incorporated on June 22, 2009 with primary activities on power generation, transmission, distribution, and other energy related businesses. GCGI currently operates 192.5 MW Palinpinon and 112.5 MW Tongonan 1 geothermal power plants in Negros Oriental and Leyte respectively.

FG Hydro operates the 120 MW Pantabangan and 12 MW Masiway Hydroelectric Power Plants locates in Pantabangan, Nueva Ecija Province, Central Luzon.

EDC Drillco provides drilling services to Lihir gold Limited in Papua New Guinea which contributed P710 million of revenues for the Company in 2011.

 

Comments:

EDC revenue performance for 2012 had much improved due to new contract prices agreed mid 2011 and power supply agreements signed in December 2011. Revenues had increase by 21% year-on-year in September 2012 translating to an EPS of 0.38. I project EDC’s EPS to reach 0.49 by the end of 2012.

Based on EDC’s annual report in 2011, the Company expects to put in commercial operations their 130 MW Bacman geothermal power plant by 2012. This is expected to contribute P4.2 billion additional revenues for the year 2013. I project the Company’s EPS for 2013 to at 0.58.

 

Valuation:

Assuming a 13x PE ratio multiple, EDC’s value should be 6.37 [0.49 x 13] by the end of 2012 and 7.54 [0.59 x 13] by 2013.

Other data:

EDC2

EDC1

Disclaimer: I do not claim to be an expert and nothing I say should be taken as a recommendation to buy or sell.

Advertisements

3 thoughts on “Energy Development Corporation (PSE: EDC)

  1. Hi! I’m with the Environment and External Relations group of EDC. I stumbled upon your EDC writeup in this blog.Thanks for featuring EDC. Just want to give feedback about the MW operating capacity. EDC is managing a total of 1,130 MW of commercially operating geothermal facility. The ones in the pipeline are mostly for frontier projects, the potential capacity yet to be deternined. But today, EDC has 1,130MW in operating capacity for geothermal and 132.5 MW for hydro. This info was also reported to SECOND in its filing in March this year.

    All the best.

    Reply
    • Thank you for taking your time in reading this post Mr. Dave. 🙂
      I believe that the break-down of the 1,130 MW are as follows:
      Location
      Upper Mahiao – 125 MW
      Malitbog – 232.5
      Mahanagdong – 180
      Optimization of Mahanagdong – 50.9
      Mindanao I – 52
      Mindanao II – 54
      Tongonan – 112.5
      Palinpinon I – 112.5
      Palinpinon II – 80
      BacMan 1 – 110
      Bacman 2 – 20
      Total 1,129.4

      EDC is managing 1,130 MW but only 305 MW (Palinpinon and Tongonan) are contributing substantially to EDC’s revenues.

      Is my understanding correct sir?

      Reply
  2. Pingback: Learning from Tycoons, Mike Ferrer, Stock thoughts: EDC, AT, MER, VITA | Fundamental Enthusiast

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s