Aboitiz Power's nearing 4GW net capacity to buoy earnings

It may also benefit from a tightening power supply-demand dynamics in 2022.

Philippines’ Aboitiz Power (AP) could see a long-term growth despite a 26% crash in 9M 2019 earnings as it gears towards breaching 4,000MW in net capacity by end-2020 from only 3,400MW as of 9M19, Nomura reported.

The company might be able to deliver 30TWh of energy supply by 2025, from 23TWh by end 2020.

It is also expected to benefit from a tightening power supply-demand dynamics in 2022-2023 through exposure to the spot market and its ability to provide ancillary services, which hold an estimated combined 13% of AP’s revenues in 9M 2019.

However, the company could see further unforeseen plant shutdowns, bottlenecks on expansion and a normalization in spot market rates in 2020 as about 1,300MW are about to come on stream in Luzon/Visayas grids, which could hinder it from delivering expansion and earnings growth.

AP’s earnings plunged to $271.31m (PHP13.7b) from higher volume and cost of purchased power resulting from over-contracting and plant outages, spot market revenue decline and lower plant availability.