The company was sold on fears that it will incur a significant increase in interest rates upon refinancing of debt which is due in the near future. It may also be forced to renegotiate its rates if the economic situation in the Philippines continues to deteriorate.
Floated in February 2006, First Gen is the Philippines' largest independent power producer. It generates electricity from four power stations, selling on long-term, secure contracts to the distributors. It is owned by the Lopez group, who also own the large distributors, providing further security of revenue which should continue to grow in line with GDP. Management have been very good at not over-paying for new stations. The company produces very strong cash flow and, as the stations are relatively new, capital expenditure is fairly low, making the stock a buy.
| Sedol |
Type |
Price |
Date |
| B0XNCB0 |
Sell |
PHP 32.301 |
22/05/2008 |
| B0XNCB0 |
Buy |
PHP 58.562 |
12/04/2007 |
|
