Skip to main content

SPC’s outsized 2025 dividend: signal, not trap—yet


SPC Power Corporation surprised the market with a year‑end ₱0.80/share cash dividend—lifting full‑year distributions to ₱1.20/share—after its Board approval on December 9, 2025 (record Dec 26, payable on/before Jan 9, 2026). That move caps a year of margin recovery and leaves investors wondering whether it is sustainable or a one‑off flourish. 

At ₱9.00, the combined ₱1.20/share payout implies a ~13.3% full‑year yield—eye‑catching for a net‑cash utility. On trailing measures, independent trackers had SPC’s yield in the 4.4–5.0% range before the latest announcement, reflecting the earlier ₱0.40 mid‑year dividend; the step‑up reframes the yield conversation decisively.

Crucially, 2025’s earnings quality improved. SPC’s 9M‑2025 total comprehensive income rose to ₱1.744B, and EPS reached ₱1.17, even as reported revenues dipped (–10.3%) due to lower pass‑through fuel costs. The gross margin surged to ₱1.494B (from ₱228.5M in 9M‑2024) on cost optimization and better plant utilization; management notes the generation segment contributed ~72% of net income this year, tilting results back toward core operations rather than associates.

On coverage, the numbers are reassuring—but nuanced. Operating cash flow (OCF) for 9M‑2025 stood at ₱1.279B, while cash & cash equivalents were a hefty ₱6.181B—with a current ratio of 11.47 and debt ratio ~0.06, underscoring a net‑cash profile. That means the ₱0.80 year‑end dividend (~₱1.197B) is cash‑covered with room to spare; total FY dividends (~₱1.796B) are covered ~3.4× by cash on hand, though only ~0.71× by 9M OCF—so Q4 cash generation matters for purists who want dividends funded from operations alone.

Associates still play a material role. SPC’s equity share in the earnings of KSPC/MECO was ₱491.0M in 9M‑2025 (down year‑on‑year), yet cash dividends received from associates reached about ₱852.4M over the same period—significant support for parent‑level liquidity. The strategic overlay: Korean media report KEPCO plans to divest its 60% stake in KSPC (SPC owns 40%), potentially reshaping governance and dividend policy at the associate level. That is not inherently negative, but it warrants monitoring because associate cash flows have historically augmented SPC’s payout capacity.

Market conditions are a swing factor, too. The Independent Electricity Market Operator (IEMOP) has expressed optimism for stable/lower WESM prices in 2025 amid ample supply—good for consumers, more challenging for merchant margins if generators cannot offset via efficiency or contracted sales. SPC’s 2025 margin expansion shows it can win on costs; sustaining this in a soft price environment will demand continued operational discipline.

One structural lever is battery energy storage. On October 17, 2025, a wholly owned subsidiary signed supply and EPC contracts for BESS projects in Panay (100 MWh) and Bohol (60 MWh)—positioning SPC to capture ancillary and flexibility revenues as rules mature. The policy groundwork for BESS in the WESM has been laid over recent years; execution will dictate how quickly these assets translate into earnings that can buttress future dividends.

So is SPC’s dividend sustainable—or a value trap? On the evidence, not a value trap. SPC in 2025 showed improved core margins, sits on net cash with minimal leverage, and holds ample liquidity to fund distributions, even at the enhanced year‑end rate. The magnitude of the ₱1.20/share payout, however, is above a normal run rate and depends on Q4 earnings and, to a degree, associate cash flows. In other words, ongoing dividends look supportable; repeating 2025’s size every year would require continued operational strength and no adverse surprises from KSPC or WESM pricing.

For investors, the watch‑list is straightforward: (1) FY‑2025/Q4 results to confirm post‑payout cash and operating cover; (2) KSPC ownership changes and any shift in dividend policy; (3) WESM price trajectory and SPC’s contracted versus merchant mix; and (4) BESS milestones and monetization in the ancillary/Reserve Market. If these line up, baseline dividends (₱0.40–₱0.60) look comfortably repeatable, with top‑ups plausible in stronger years. 

We’ve been blogging for free. If you enjoy our content, consider supporting us!



Comments

Post a Comment

Popular posts from this blog

From Meralco to Rockwell: How the Lopezes Restructured to Put Rockwell Land Under FPH’s Control

  The Big Picture In the span of just a few years, the Lopez family executed a complex corporate restructuring that shifted Rockwell Land Corporation firmly under First Philippine Holdings Corporation (FPH) —even as they parted with “precious” equity in Manila Electric Company (Meralco) to make it happen. The strategy wove together property dividends, special block sales, and the monetization of legacy assets, ultimately consolidating one of the Philippines’ most admired property brands inside the Lopezes’ flagship holding company.  Laying the Groundwork (1996–2009) Rockwell began as First Philippine Realty and Development Corporation and was rebranded Rockwell Land in 1995. A pivotal capital infusion in September 1996 brought in three major shareholders— Meralco , FPH , and Benpres (now Lopez Holdings) —setting up a tripartite structure that would endure for more than a decade.  By August 2009 , the Lopezes made a decisive move: Benpres sold its 24.5% Rockwell stake...
Post a Comment
Read more

ABS-CBN Faces Financial Crisis as TV5 Exits Over ₱1B Dispute: Why Lopez Group Must Use Its ₱50B Windfall to Rescue Its Media Flagship

TV5’s termination of its partnership with ABS-CBN over a ₱1 billion payment demand exposes deep financial cracks. With ₱13 billion in payables and cash reserves down to ₱718 million, the Lopez Group must act fast—using its ₱50 billion windfall from First Gen’s sale to Enrique Razon—to prevent a collapse that could damage its entire credit reputation. When TV5 , backed by the Manny Pangilinan group , pulled the plug on its partnership with ABS-CBN and demanded a ₱1 billion payment , it wasn’t just a broken deal—it was a warning shot. A signal that the financial cracks in ABS-CBN are widening, and the tremors could shake the entire Lopez Group . The numbers are stark: ABS-CBN’s SEC filing shows ₱13 billion in trade and other payables , a ₱11 billion working capital deficit , and cash reserves down to ₱718 million . These aren’t minor hiccups—they’re existential threats. When a major partner like TV5 walks away over unpaid obligations, others will take notice. Talent agencies, event venue...
Post a Comment
Read more

BDO’s Premium Under Pressure: Why Investors Should Watch CASA, Margins, and Cyber Risk

BDO Unibank has long been the crown jewel of Philippine banking—commanding scale, profitability, and a valuation premium that peers struggle to match. But its latest quarterly filing and sector trends suggest that the next chapter may be more challenging than the last. The Margin Squeeze Begins The first red flag is in the funding mix. Current and savings accounts (CASA)—the cheapest source of funds—slipped from about 71.5% at end-2024 to 66.6% by September 2025. Time deposits surged by nearly ₱300 billion. This isn’t just a footnote; it’s a structural shift that raises funding costs. Combine that with the Bangko Sentral ng Pilipinas’ rate-cut cycle—policy rate now at 4.75% and likely heading lower—and you have a classic margin squeeze: loan yields fall faster than deposit costs. For a bank with ₱5.27 trillion in assets, even a 10–20 basis point hit to net interest margin (NIM) can shave billions off earnings. Consumer Credit: A Quiet Risk BDO’s consumer book is growing, but so a...
Post a Comment
Read more