Meralco shares jump on Q3 profit, shareholder tussle

Posted at 10/30/09 1:27 PM

MANILA - Shares of Manila Electric Co. (Meralco) jumped as much as 5.9% on Friday after its third quarter profits surged 95% and as a major shareholder group moved to increase its stake in the Philippine power firm.

Meralco reported on Thursday that its net income in January to September reached P5.32 billion ($112 million), up 42% from a year ago.

Taking out first half profits, the country's largest power retailer had net income of P2.16 billion in the third quarter alone against P1.11 billion a year earlier, based on Reuters' calculations.

Meralco pared some of its gains to trade at P195, up 4.84%, outpacing the main stock index's 2.1% rise.

"It's more because of its earnings, and also the general market is doing good," said Jose Vistan, research head at AB Capital Securities Inc. "But even if you annualise its Q3 earnings, it doesn't justify the current price, so the earnings report is helping sentiment on the part of speculative trades."

Meralco has risen more than 200% this year and 9.4% this month due to a shareholder tussle pitting the group of PLDT, the country's most valuable firm, against food-to-power conglomerate San Miguel Corp.

Both shareholder groups want to get majority control of the power firm to support their respective telecommunications businesses.

On Thursday, Metro Pacific Investments Corp., a PLDT affiliate, said it expects to soon bag a deal to buy an additional 6.7% stake in Meralco from the Lopez family, which has been running the power firm for decades. The deal could be worth more than $290 million at latest prices.