Executive Summary: Manila Electric Company

EXECUTIVE SUMMARY
MANILA ELECTRIC COMPANY

Manila Electric Company (MER), also known as Meralco, is a private distributor
of electric power in the Philippines. It was organized on May 7, 1919 which holds a
congressional franchise under Republic Act (RA) No. 9209 effective June 28, 2003. RA
9209 granted MER a 25-year franchise valid through June 28, 2028 to construct,
operate, and maintain the electric distribution system in the cities and municipalities of
Bulacan, Cavite, Metro Manila, and Rizal and certain cities, municipalities, and
barangays in the provinces of Batangas, Laguna, Pampanga, and Quezon. Meralco is
mainly owned by Beacon Electric Asset Holdings, Inc. holding a 34.96% of ownership,
JG Summit Holdings, Inc. by 29.56%, Metro Pacific Investments Corporation by
10.50%, First Philippine Holdings Corporation by 3.94%, First Philippine Utilities
Corporation by 0.01%, and by 21.03% of public stocks.
Meralco having a net income of Php23,102,000.00 after tax and a basic earnings
per share of 20.42, Manero Co. decided to invest its Php500,000.00 excess cash in the
Manila Electric Company. The details regarding the investment of Manero Co. is
presented below:
Investment of Manero Co.
PURCHASE DATE: June 24, 2019
CLOSING PRICE PER SHARE: ₱ 382.00
BOARD LOT: 10
NO. OF SHARES PURCHASED: 1300
TOTAL AMOUNT OF INVESTMENT: ₱ 496,600.00
Manero Co. purchased the investment at June 24, 2019 and decided to sell it in
July 15, 2019 and had a gain of Php10,400.00. The movement of the stock prices per
week of Manila Electric Company is presented below:
EXECUTIVE SUMMARY
The sudden downfall of the stock price in July 12, 2019 is due to the total
downward adjustment of around P0.57 per kWh since May. The company also said the
cost of power from IPPs fell by P0.2239 per kWh largely due to the appreciation of the
peso. About 97 percent of IPP charges are dollar-denominated. Cost of power from
PSAs is stable with a slight increase of P0.0414 per kWh. IPPs and PSAs provided 41.4
percent and 48.2 percent of Meralco’s supply needs, respectively. And also, to carry out
necessary maintenance and upgrading works on various MERALCO distribution
facilities, the electric services is temporarily interrupted on the said date.
Full disclosure regarding the company is included in the company disclosures
after the Notes to the Financial Statement.
AGRINURTURE, INC.
Incorporated on February 4, 1997, AgriNurture, Inc. (ANI) started its business
operations in the same year as an importer, trader and fabricator of post-harvest
agricultural machineries intended to improve the productivity as well as increase the
income of Filipino farmers. Formerly known as Mabuhay 2000 Enterprises, Inc., ANI
was the first to bring into the Philippine market the Mega-Sun brand of grain dryers and
thereafter established itself as one of the more reliable local supplier and manufacturer
of conveyor systems and other rice mill equipment.
ANI eventually diversified into other various agro-commercial businesses,
specifically focusing on the export trading of fresh produce as its main revenue stream.
Since then, ANI has become one of the Philippines' produce exporters to the world
market. At present, ANI supplies home-grown fruits such as mango, banana and
pineapple to customers in Hong Kong, Mainland China, the Middle East, and to different
European regions.
ANI ventured into the importation and trading of rice in the first quarter of 2015
and has since then participated in the rice importation program for private sector on the
National Food Authority. Currently, the Company conducts its business through
operating divisions and wholly-owned or majority-owned subsidiaries. The Philippine
operations group is organized into three business units, namely export, local
distribution, and retail & franchising. Meanwhile, the foreign operations group is
principally engaged in fruits and vegetable trading in Hong Kong and China.
The company also engages in the manufacture and distribution of fruit beverages
and puree, dried fruit snacks, processed fruit mix, frozen fruits & vegetables, dairy and
rice products. ANI’s family of brands now includes FCA (Fresh Choice Always) for fresh
and processed wellness food products; La Natural for coconut juice and Nikka for
mango nectar and tamarind juices, all of which are exported; Sungrown rice; Superfresh
and Big Chill for fresh fruit beverages and dessert kiosks; Canecoctions for sugar cane
juice; Chantilly for desserts; and Cafeteria Verde, Fresh Bar by Big Chill, and C’Verde
EXECUTIVE SUMMARY
by Big Chill for healthy snack bar and cafeteria. It has also entered into a master license
agreement with Tully’s Coffee International PTE LTD to operate Seattle’s famous Tully’s
coffee shop in the Philippines.
Manero Co. after selling the investments from Manila Electric Company, decided
to buy investments in AgriNurture, Inc. The details regarding the investment of Manero
Co. is presented below:
Investment of Manero Co.
PURCHASE DATE: July 19, 2019
CLOSING PRICE PER SHARE: ₱ 14.24
BOARD LOT: 100
NO. OF SHARES PURCHASED: 35,800
TOTAL AMOUNT OF INVESTMENT: ₱ 509,792.00
The movement of the stock prices per week of Manila Electric Company is
presented below:
Market value appreciation of the stock prices is due to the stake acquisition of
Black River (A Singapore-based Fund) amounting to Php682.1M worth of shares or
50M shares at a price of Php13.642 apiece through a block sale on August 22, 2019.
At the last day of trading the securities, Manero Co. sold all the shares at a stock
price of Php16.10 and had a gain of Php66,588.00.

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EXECUTIVE SUMMARY

MANILA ELECTRIC COMPANY

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