Malakas ang earnings growth ni MER, pero hindi sapat na sabihing magandang kumpanya ito. Ang mas mahirap na tanong ay kung ang presyo bago ang gap down ay may sapat bang margin of safety para sa isang regulated utility na mabilis ding lumalawak sa power generation.
Originally published: July 31, 2026 · Last updated: July 31, 2026
Links to related posts
- MER Stock Study, Post 1: MER Series Introduction
- MER Stock Study, Post 2: MER Fundamental Analysis
- MER Stock Study, Post 3: MER Technical Analysis
- MER Stock Study, Post 4: MER Valuation
- MER Stock Study, Post 5: MER Risk Management
- MER Stock Study, Post 6: MER Capital Allocation
Ang Punto ng Usapan
For this reconstruction, hanggang July 24, 2026 market close lamang ang gagamitin nating impormasyon.
Ibig sabihin, kasama sa valuation base ang:
- 2025 audited financial statements;
- Q1 2026 SEC Form 17-Q;
- dividend declarations available by then;
- at historical financial results.
Hindi natin isasama sa original estimate ang first-half 2026 results na inilabas noong July 29. Gagamitin lamang iyon later bilang post-event validation.
Ang pangunahing tanong natin:
Bago nangyari ang gap down, magkano ang reasonable value range ng MER?
Hindi natin hinahanap ang isang magic number na eksaktong fair value. Ang gusto natin ay isang valuation range na sapat para makita kung:
- overpriced ba ang MER;
- fairly valued;
- o may meaningful margin of safety.
Ang Dating Paniniwala
Madaling i-value ang isang utility stock gamit ang dividend yield.
Tingnan ang dividend per share, pumili ng acceptable yield, at kunin ang implied price.
May silbi ang approach na iyon kay MER dahil malinaw ang dividend policy nito. Ang regular cash dividend ay katumbas ng 50% ng consolidated core net income, habang ang special dividends ay nakadepende sa available unrestricted retained earnings at free cash.
Pero hindi na sapat ang pure dividend valuation.
Ang modernong MER ay may:
- regulated distribution utility;
- power generation;
- LNG exposure;
- renewable-energy projects;
- retail electricity supply;
- engineering and other businesses;
- associates and joint ventures;
- at substantial project financing.
Ang Q1 2026 report itself separates the group into regulated distribution and several unregulated businesses across the energy value chain.
Kaya kung dividend yield lamang ang gagamitin natin, posibleng maliitin natin ang growth value ng generation assets—or balewalain ang debt at capital requirements na kasama ng expansion.
Ang Binagong Pananaw
Theoretically, SOTP ang best method
Ang ideal valuation approach kay MER ay Sum-of-the-Parts, o SOTP.
Sa ideal model:
- ang Distribution Utility ay iva-value gamit ang normalized regulated earnings o regulatory asset base;
- ang Power Generation and Renewables ay gagamitan ng project-level FCFF;
- ang RES and Other Services ay maaaring gamitan ng earnings or EBITDA multiples;
- at pagkatapos ay ia-adjust para sa debt, cash, minority interests at investments in associates.
Ito ang pinaka-conceptually correct dahil magkaiba ang economics ng bawat segment.
Pero may practical limitation.
Hindi sapat ang public pre-July 24 disclosures para gumawa tayo ng full project-by-project SOTP na hindi umaasa sa maraming speculative assumptions. Maraming generation assets ang held through subsidiaries, associates at joint ventures, at hindi pare-pareho ang disclosure ng segment-level free cash flow, project debt at minority ownership.
Kaya para sa public Stock Study na ito, gagamit tayo ng:
Practical SOTP proxy using normalized consolidated earnings, supported by dividend valuation and sensitivity analysis.
Hindi ito kasing granular ng institutional model. Pero mas transparent ito kaysa gumawa ng sobrang detalyadong DCF na maraming imbentong assumptions.
Paano Ito Umaandar
Step 1: Establish the earnings base
Noong 2025, MER reported:
- net income attributable to parent shareholders of ₱51.13 billion;
- earnings per share of ₱45.36;
- at cash and cash equivalents of ₱109.32 billion.
Ang 2025 EPS ay mas mataas kaysa:
- ₱40.69 noong 2024;
- ₱33.74 noong 2023;
- ₱25.23 noong 2022;
- at ₱20.85 noong 2021.
Malinaw ang earnings growth trend. Pero hindi natin dapat i-project na pareho ang bilis ng growth forever.
Sa Q1 2026, ang attributable net income ay tumaas ng 4% to ₱10.83 billion, habang ang EPS ay umakyat mula ₱9.27 patungong ₱9.61.
Kasabay nito:
- bumaba ng 2% ang electricity sales volume;
- tumaas ang debt;
- at mahina ang quarterly operating cash flow kumpara sa malaking capital expenditures.
Kaya hindi natin gagamitin ang aggressive extrapolation ng Q1 earnings.
Para sa valuation, gagamit tayo ng normalized forward EPS range na:
- Bear case: ₱44
- Base case: ₱47
- Bull case: ₱50
Ang ₱47 base EPS ay bahagyang mas mataas sa 2025 reported EPS na ₱45.36, pero hindi kasing aggressive ng annualizing a strong growth assumption.
Step 2: Select the valuation multiple
Hindi dapat pareho ang multiple ng mature regulated utility at high-growth generation developer.
Ang regulated utility deserves a degree of stability premium because of its franchise, customer base and recurring demand.
Pero may offsetting considerations:
- regulatory risk;
- large capital requirements;
- rising debt;
- interest-rate sensitivity;
- project execution risk;
- at increasing exposure to unregulated generation.
Pagsapit ng March 31, 2026, umabot sa humigit-kumulang ₱238 billion ang consolidated interest-bearing debt, mula ₱230 billion noong December 2025. Ang additional borrowings ay pangunahing ginamit para sa investments at strategic projects.
Sa kabilang banda, may ₱112.90 billion cash and cash equivalents ang grupo sa parehong reporting date.
Dahil dito, gagamit tayo ng blended earnings multiple range na:
- 11 times for a cautious or regulatory-stress case;
- 13 times for the base case;
- 15 times for a stronger growth and stable-regulation case.
Ang range na ito ang practical proxy natin para sa pinaghalong value ng stable DU at faster-growing generation businesses.
Primary Earnings-Based Valuation
Bear Case
Normalized EPS: ₱44
Applied multiple: 11 times
Implied fair value:
₱484 per share
Ito ang case kung:
- humina ang earnings growth;
- magkaroon ng regulatory pressure;
- tumaas ang financing burden;
- o mag-demand ang market ng mas mataas na risk premium.
Base Case
Normalized EPS: ₱47
Applied multiple: 13 times
Implied fair value:
₱611 per share
Ito ang case kung:
- modest ang earnings growth;
- stable ang distribution earnings;
- nagpapatuloy ang generation contribution;
- at manageable ang debt and execution risks.
Bull Case
Normalized EPS: ₱50
Applied multiple: 15 times
Implied fair value:
₱750 per share
Ito ang case kung:
- matagumpay ang generation expansion;
- nananatiling supportive ang regulatory environment;
- lumalakas ang earnings mix;
- at willing ang market na magbigay ng premium multiple.
Sensitivity Analysis
Mas mahalaga sa valuation ang range kaysa isang single number.
At 11 Times Earnings
Kung ang normalized EPS ay ₱44, ang implied value ay ₱484.
Kung ₱47 ang EPS, ang implied value ay ₱517.
Kung ₱50 ang EPS, ang implied value ay ₱550.
Ito ang conservative valuation range.
At 13 Times Earnings
Kung ang normalized EPS ay ₱44, ang implied value ay ₱572.
Kung ₱47 ang EPS, ang implied value ay ₱611.
Kung ₱50 ang EPS, ang implied value ay ₱650.
Ito ang central or base valuation range.
At 15 Times Earnings
Kung ang normalized EPS ay ₱44, ang implied value ay ₱660.
Kung ₱47 ang EPS, ang implied value ay ₱705.
Kung ₱50 ang EPS, ang implied value ay ₱750.
Ito ang optimistic valuation range.
What the sensitivity tells us
Ang valuation ng MER ay heavily dependent sa dalawang bagay:
- Gaano karaming earnings ang sustainable?
- Anong multiple ang dapat ibigay ng market sa earnings na iyon?
Kahit hindi magbago nang malaki ang EPS, maaaring bumagsak ang fair value kapag nag-contract ang multiple dahil sa higher perceived regulatory risk.
Halimbawa, sa parehong ₱47 EPS:
- 15 times gives ₱705;
- 13 times gives ₱611;
- 11 times gives ₱517.
Iyan ay halos ₱188 per share difference kahit pareho ang earnings assumption.
Ito ang mahalagang point sa nangyaring gap down.
Hindi kailangang mawala agad ang malaking bahagi ng earnings para bumagsak ang presyo. Minsan, sapat nang baguhin ng market ang multiple na handa nitong bayaran.
Dividend-Based Cross-Check
Dahil dividend-harvester candidate ang MER, kailangan nating tingnan ang dividend-supported value.
Ang regular dividend policy ay 50% ng consolidated core net income.
Kung gagamitin natin ang normalized EPS na ₱47 at 50% payout ratio, ang indicative regular dividend ay:
₱23.50 per share
Hindi natin isasama ang possible special dividends sa base estimate dahil hindi guaranteed ang mga iyon.
At a 3.5% Required Dividend Yield
Implied value:
Approximately ₱671 per share
At a 4.0% Required Dividend Yield
Implied value:
Approximately ₱588 per share
At a 4.5% Required Dividend Yield
Implied value:
Approximately ₱522 per share
At a 5.0% Required Dividend Yield
Implied value:
Approximately ₱470 per share
Ang dividend cross-check ay nagbibigay ng reasonable range na:
₱470 to ₱671 per share
The midpoint is around the high-₱500s.
Kapansin-pansin na malapit ito sa earnings-based base range na ₱572 to ₱650.
Reconciling the Two Methods
Ang earnings-based valuation ay nagbibigay ng base estimate na:
₱611 per share
Ang dividend-based cross-check, using a 4% required yield, ay nagbibigay ng:
₱588 per share
Kapag pinagsama ang dalawang reading, ang practical central fair-value zone natin ay:
₱590 to ₱610 per share
Para sa MH 2.0, gagamit tayo ng midpoint na:
Indicative Fair Value: ₱600 per share
Hindi ito exact intrinsic value. Isa itong practical valuation anchor based on normalized earnings and dividend capacity.
Margin-of-Safety Levels
Kung ang indicative fair value ay ₱600:
10% Margin of Safety
Buy-below reference:
₱540
15% Margin of Safety
Buy-below reference:
₱510
20% Margin of Safety
Buy-below reference:
₱480
25% Margin of Safety
Buy-below reference:
₱450
Para sa isang regulated and capital-intensive company na exposed sa policy risk, mas bagay ang 15% to 20% margin of safety kaysa aggressive 5% or 10%.
Kaya ang initial MH valuation zone ay:
Ordinary Buy-Below: ₱510
Stronger Margin-of-Safety Level: ₱480
Ito ay valuation reference lamang, hindi automatic trade instruction.
Valuation Reading at the July 24 Cut-Off
Ang existing MH position ay may average price net na:
₱596.386 per share
Ang average cost ay halos kapantay ng indicative ₱600 fair value.
Ibig sabihin, bago ang gap down:
- hindi mukhang grossly overvalued ang initial purchase;
- pero wala rin itong meaningful margin of safety;
- at sensitibo ito sa anumang contraction sa valuation multiple.
Sa fair value na ₱600, ang average cost na ₱596.386 ay may halos zero discount.
Kaya tama na 10 shares lamang ang hawak at 6% pa lang ang deployment.
The position was not bought at a deep bargain. It was a small visibility position near estimated fair value.
Ano ang Hindi Alam ng Valuation Noong July 24?
Hindi alam ng model ang specific policy catalyst na susunod.
Pero may isang risk nang nakikita sa structure ng valuation:
Malaki ang bahagi ng value na nakadepende sa market’s willingness to retain a utility-style premium multiple.
Kapag tumaas ang perceived regulatory risk, maaaring bumaba ang multiple mula 13 times patungong 11 times kahit hindi pa nagbabago ang reported earnings.
Sa ₱47 normalized EPS, ang ganitong derating ay magbababa ng implied value mula:
₱611 to ₱517
Kapag mas severe ang risk perception at ang required dividend yield ay umakyat sa 5%, ang dividend-supported value ay bababa sa paligid ng:
₱470
Kaya kahit hindi natin alam ang exact catalyst, kaya ng sensitivity analysis na ipakita na posible ang valuation zone sa high-₱400s to low-₱500s under regulatory stress.
Hindi nito eksaktong hinulaan ang gap down.
Pero ipinakita nito ang possible magnitude ng multiple compression.
Preliminary Valuation Conclusion
Batay sa information available hanggang July 24, 2026:
Indicative Fair Value: ₱600
Ordinary Buy-Below: ₱510
20% Margin-of-Safety Level: ₱480
Broad Sensitivity Range: ₱470 to ₱750
Ang broad range ay hindi weakness ng analysis. Reflection iyon ng tunay na uncertainty sa:
- sustainable earnings;
- appropriate market multiple;
- future dividends;
- debt;
- project execution;
- at regulatory environment.
The central reading is:
MER was approximately fairly valued near ₱600 before the gap down, but it did not offer a strong margin of safety.
That made a small probe defensible—but full deployment difficult to justify.
Pangwakas na Kaisipan
Magandang kumpanya ang MER. Malakas ang earnings history, malinaw ang dividend policy, at may substantial growth potential mula sa generation and renewable-energy investments.
Pero ang magandang kumpanya ay hindi awtomatikong magandang bilhin sa kahit anong presyo.
Bago ang gap down, ang market price at ang MH average cost ay halos nasa estimated fair value natin.
Walang malaking premium, pero wala ring malaking protection.
At dito naging mahalaga ang sensitivity analysis.
Hindi nito sinabi kung anong balita ang darating. Pero ipinakita nito na kapag bumaba ang acceptable earnings multiple o tumaas ang required dividend yield, mabilis ding bumababa ang reasonable value mula ₱600 papunta sa ₱500—or even high-₱400s.
Aba’y minsan, hindi earnings ang unang bumabagsak.
Ang unang bumabagsak ay ang presyong handang bayaran ng market para sa parehong earnings.
Sa susunod na post, gagawin nating mas formal ang risk-management reconstruction. Doon natin titingnan kung ang historical VaR, drawdown analysis at stress testing ay may kakayahang hulihin ang magnitude ng naging pagbaba.
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