the Outsider - PSE Points to Ponder

The Lopezes are fighting over an empire whose operating assets sit far below them, while only a modest stream of dividends reaches the family apex. At first glance, the Lopez family quarrel looks like a fight over power: board seats, patriarchal authority, corporate succession, and the right to speak for one of the Philippines’ oldest business dynasties. Look closer, however, and it becomes something more modern and more uncomfortable: a fight over a pyramid whose jewels sit far below the family holding company, while the cash reaching the summit has become surprisingly thin. The latest spark is First Gen, the listed power producer under First Philippine Holdings and Lopez Holdings, where the family dispute has spilled over into allegations of a ₱50bn hydropower “premium” paid in connection with First Gen’s investment in Prime Infrastructure’s pumped-storage projects. The Lopez majority bloc has questioned the economics and disclosure of the deal; First Gen has responded that the final...

  First Gen Corp. is asking investors to look past the earnings drop and see a cleaner, more renewables-heavy company emerging from the sale of most of its gas business. The problem is that the transition is already consuming cash. The Lopez-led power producer reported a 15.7% decline in consolidated net income to ₱5.45 billion in the first quarter, while net income attributable to parent shareholders fell 23.8% to ₱3.63 billion . Recurring net income attributable to the parent dropped 24.7% to ₱3.38 billion , underscoring that the decline was not merely an accounting quirk.  On the surface, the quarter had plenty for bulls to like. Revenue from electricity sales rose 32.2% to ₱15.34 billion , driven by stronger geothermal, wind and solar output under Energy Development Corp., as well as a strong quarter from the Pantabangan-Masiway hydro complex. EBITDA climbed to ₱7.64 billion from ₱6.45 billion a year earlier. But underneath that growth, investors got a reminder that Firs...