For Part 1 of this review, click the link "SCC - Company Review Part 1"
ROE = 32.04%
Average ROE for 5 years = 19.32%
OCF/Equity = 43.47%
Net Profit Margin = 17.26%
SCC have been a consistent profit-making company as shown in its return of equity with 2010 as its banner year. ROE of 15 or higher is considered profitable (see related post: Definitive Guide to Stock Picking).
Annual Net Income Growth Rate = 19.95%
Being in the Power sector business (fuel and power generation), the company has more room for growth in the future. In the news "Power business to boost Semirara profit", it was mentioned that the rehabilitation of the Unit 1 of Calaca Power Plant is completed last April while the Unit 2 is expected to be fully rehabilitated by early next year.
Other factors that will contribute to its growth are the following:
1. Installation of additional 600 MW plants on top of the total rated capacity of Calaca resulting to 1,200 MW total.
2. Development of the the Calaca special economic zone which will cater to energy-intensive industries.
3. International coal price have increased significantly by 11% and are expected to increase further. China, SCC's main customer in its exported coal, are in trouble with its inflating coal prices due to high demand (see news here: China's Coal Prices Hit New High)
Dividend Yield (2010) = 3.21%
Note that SCC made an announcement about giving dividend to its shareholders recently at P10/share. This is 4.64% Div Yield as per closing sale price of P215.40 today, 6May2011. Ex-Div Date is 24May2011, Record Date is 27May2011 and Payout is on 22Jun2011.
PE Ratio = 18.03
PB Ratio = 5.78
Intrinsic Value = P304.4/share
Current Price = P218/share
Upside = 39.63%
(click to zoom)
Using discounted cash flow analysis, intrinsic value is calculated based on 2010 Annual Report. Cash Flow is projected to grow at a conservative rate of 17% (compared to 19% - 6 year historical annual growth). Discount rate employed is 15% based on historical Philippine 91-day T-Bills rate plus margin of safety).
It's directors have bought SCC shares at a price range of P199-240 per share as shown in here and here.
With all the potential room for growth, SCC is a good buy with expected 40% gain and possibly more in the long term.