Semirara Q3 profit: P3.1-B (down 8% y/y)

Semirara Mining and Power [SCC 31.85, down 0.3%; 52% avgVol] [link] posted a Q3 net income of P3.1 billion, down 8% y/y from its Q3/23 net income of P3.4 billion, and down 48% q/q from its Q2/24 net income of P6.1 billion. SCC’s 9M net income reached P15.7 billion, down 30% y/y from P22.6 billion. The Gotianun Family’s integrated coal company attributed the Q3 drop to lower international coal prices and to the “seasonal impact of the rainy season on coal shipments and electricity prices.” SCC said that it expects coal and electricity prices to “remain stable” for the remainder of the year. The company is focused on meeting its FY24 coal production target of 16 million metric tons.  

MB bottom-line: Live by the coal price, die by the coal price. And by “die” in this context, I do mean experiencing an 8% drop in profitability to “just” P3.1 billion for the quarter. While SCC is still wildly profitable, the near- and long-term forecast for the market price of coal is not great. Back in June, the World Bank expected coal’s price to fall 28% in FY24, and then another 12% through to the end of FY25. The only “upside” risks to price were higher-than-expected growth in China’s consumption metrics, or any weather factors that could cripple renewables like very low levels of rainfall or some other global weather events. Unfortunately, the IMF just lowered its guidance on China’s GDP due to concerns about the country’s property sector and consumer confidence. Fortunately for us (and unfortunately for the Gotianuns and SCC’s shareholders), there haven’t been any global weather patterns that have caused renewable energy generation to falter. So long as SCC keeps mining, it’s going to keep making boatloads of money, the profits are just not going to be of the “windfall” variety.

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