MANILA ELECTRIC Co.’s (Meralco) share price increased last week following news of its capital expenditures (capex) plan amounting to P215.36 billion, as well as higher generation costs due to fluctuations in foreign exchange, according to analysts.
Data from the Philippine Stock Exchange showed that 800,500 Meralco shares worth P391.46 million were traded from Feb. 10 to 14, making the listed power distributor the 14th most actively traded stock last week.
Meralco shares finished at P488.40 apiece on Friday, rising by 1.6% from a week earlier. Year to date, the stock inched up by 0.1%.
Meralco’s movement last week was likely influenced by developments regarding its proposed capital expenditures plan amounting to P215.36 billion for its fifth regulatory period (5RP), which covers 2026 to 2029, Andrei Jorge G. Soriano, research associate at China Bank Securities Corp., said in an e-mail.
For Arielle Anne D. Santos, equity analyst at Regina Capital Development Corp., the listed power distributor saw mixed movements last week, influenced by the peso’s depreciation, analysts’ expectations of rate cuts, and sector-specific concerns.
“Higher generation costs due to foreign exchange fluctuations added pressure, while defensive buying in utilities provided some support,” Ms. Santos said in an e-mail.
Last Thursday, the Bangko Sentral ng Pilipinas (BSP) decided to keep its rates steady at 5.75% at its first policy meeting for the year, surprising the market’s expectations of a rate reduction.
The BSP cut rates by a cumulative 75 basis points last year.
Reports last week showed that the listed power distributor proposes a capital expenditure of approximately P215.36 billion for its regulatory period from 2026 to 2029.
As stated in its filing with the Energy Regulatory Commission, Meralco plans to invest P34.39 billion in 2026, P59.50 billion in 2027, P57.91 billion in 2028, and P64.56 billion in 2029.
This investment aims to enhance the capacity of its network, relocate assets necessary for government infrastructure projects and third-party initiatives, purchase non-network assets essential for the efficient operation of the electric distribution system, and implement automation and technology projects.
Mr. Soriano said that if approved, the proposed 5RP plan could lead to higher electricity prices for consumers, given that the proposed distribution rates average P1.69 per kilowatt-hour (kWh).
He added that the plan’s impact on the power distributor’s financial health will be minimal, as these rates are primarily based on planned expenses and projects over the regulatory period.
Additionally, in another report, the power distributor anticipates a higher generation charge for the month due to peso depreciation.
The report stated that in an interview with Joe R. Zaldarriaga, the company’s vice-president and head of corporate communications, they are still waiting for final billings from suppliers. However, initial indications suggest a higher generation charge due to peso depreciation, which affects the costs for suppliers, most of whom have contracts priced in dollars.
It noted that the generation charge typically accounts for more than 50% of the monthly electricity bill.
“Higher generation charges will likely lead to higher electricity bills, as these charges are typically passed through,” Mr. Soriano said.
For Ms. Santos, Meralco’s capex plan aims to enhance grid capacity, improve reliability, and automate operations. While this ensures long-term efficiency, it may result in rate adjustments and increased funding needs.
“The peso’s depreciation could push generation charges higher, impacting consumers and inflation,” she said.
She added that cost recovery mechanisms and hedging strategies will be key mitigants.
In the third quarter, Meralco’s attributable net income rose by 7.3% to P11.31 billion. Likewise, its nine-month attributable bottom line grew by 18.9% to P33.76 billion from P28.40 billion previously.
During the period, its consolidated revenues rose 6.8% to P117.95 billion. Its nine-month top line went up by 6% to P355.42 billion.
“Meralco is expected to post stable earnings, supported by demand growth and cost pass-through mechanisms,” Ms. Santos said.
Additionally, she noted that the outlook for the full year remains strong, but foreign exchange risks and regulatory factors could temper gains.
The listed power distributor’s 2025 performance will depend on the execution of its capex plan, economic conditions, and power supply stability, she said.
Mr. Soriano expects the power distributor to maintain its strong momentum in 2025 due to anticipated growth in power distribution volumes and prospective contributions from new power plants, among others.
“Our forecast for [full-year 2024] core net income is set at P43 billion, reflecting a nearly 16% increase year-on-year,” Mr. Soriano added.
Additionally, he said that aside from stable distribution and the expansion of its power generation portfolio, Meralco’s attractive dividends could compel investors to consider the company.
For full-year 2025, he estimates an annualized dividend yield of approximately 5% based on the last closing price.
“Meralco remains attractive for its defensive nature, strong cash flows, and dividend yield,” Ms. Santos said.
She also highlighted that growth from renewable energy sources and network expansion is a long-term catalyst but cautioned that foreign exchange exposure and regulatory risks remain key considerations.
Ms. Santos placed support at around P470.00-P475.00, with resistance at P490.00-P495.00.
“A breakout above resistance could test higher levels, while failure to hold support may lead to further downside,” she said.
She also cautioned that traders should watch volume trends and macro catalysts.
Meanwhile, Mr. Soriano sees current support at P450.00, while resistance is at P500.00.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc.
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Abigail Marie P. Yraola
