November 25, 2019 | 12:03 am
SEMIRARA Mining and Power Corp.
(SMPC) was among the most actively traded stocks last week, after the
Department of Energy (DoE) issued a suspension of Consunji-led company’s coal
trading activities for one month and coal mining operations due to a mudflow
incident in Semirara island.
A total of P348.56 million worth of
16.36 million shares of SMPC exchanged hands on the trading floor from Nov. 18
to 22, data from the Philippine Stock Exchange showed, making it the 17th
most actively traded issue last week.
SMPC shares closed at P20.75 apiece
on Friday, up five percent from P19.76 the previous day but down 13.2% from
P23.90 a week ago. Year to date, it slipped by 10.6%.
“The sudden news of coal mining
shutdown made SMPC one of the most active stocks. In addition, the company was
slapped with a fine and suspension for one-month due to coal trading,”
Unicapital Securities, Inc. Technical Analyst Jeff Radley C. See said in an
e-mail interview.
“The bears took control and push the
price lower to new lows,” he said.
In a disclosure to the stock
exchange, SMPC said it suspended its mining operations after receiving a letter
from the DoE dated Nov. 14 directing the company to “suspend any and all mining
activities under Coal Operating Contract No. 5” until conditions set by the
department are met.
The mudflow incident in its Molave
Pit on Semirara island occurred on Oct. 2. SMPC’s mining operator went missing
after the incident and his remains were found after a three-day search and
rescue operation, the DoE said on Oct. 5.
“The DoE orders of suspension will
result to opportunity loss in production per day from 40,000-45,000 MT (metric
tons). The financial impact, however, shall depend on the prevailing price of
coal,” SMPC said.
In a separate e-mail, Philstocks
Financial, Inc. senior research analyst Japhet Louis O. Tantiangco said SMPC’s
share price fell by 13.18% week on week to P20.75 “due to the regulatory
challenges it is facing.”
“Investors were worried of the
opportunity losses brought by the suspension. At the same time, Investors
feared the possible coal trading suspension brought by the Department of Energy
(DoE) amid SMPC’s said transactions with Gold Anchorage, an unaccredited coal
trader,” Mr. Tantiangco said.
Also last week, the DoE imposed a
one-month suspension on SMPC, after the company was found to be in violation of
Department Circular No. DC2012-05-0006 or the Guidelines on the Accreditation
of Coal Traders and Registration of Coal End-Users. The company was found to
have made coal trading transactions with an unaccredited coal trader.
The DoE also slapped a
P1.735-million fine against SMPC for violating Section 3 of the same circular
over alleged unabated and continuous coal trading despite suspension of its
accreditation.
Last Thursday, SMPC appealed to the
Energy department to reconsider the sanctions.
Mr. Tantiangco said that SMPC’s
fundamentals are facing struggles with its power generating segment.
“While a suspension is already in
place, the company’s coal production and shipment has already exceeded 2018
levels. And this is seen to support SMPC’s financial performance for the rest
of 2019. This is unless the DoE’s coal trading suspension becomes final,” Mr.
Tantiangco said.
SMPC’s consolidated net income
during the nine months fell by 4.8% to P8.25 billion from P8.66 billion posted
in the same period last year.
For this week, Mr. See placed the
stock’s support level at P20.00. Meanwhile, resistance level is pegged between
P24.00 and P25.00.
“The stock would move sideways for
now awaiting the resume of their operation. The stock is a buy near P20.00 but
make sure to place a mental stop just in case it moves down below its support,”
added Mr. See.
Meanwhile, Mr. Tantiangco gave
SMPC’s support price at P20.00 and a resistance range from P21.50 to P22.00,
adding that if it fails to hold the P20.00 support line, its next support would
be P18.00.
“The regulatory challenges are still
expected to weigh on SMPC’s share price next week giving it a downward bias
with a possible testing of the P20.00 support level. We could see a rally in
its price if it is able to show positive developments in the said challenges,”
added Mr. Tantiangco. — Lourdes O. Pilar
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