PSE Points to Ponder

First Gen Corporation ( FGEN ) is currently investigating the condition of the generator of its 414MW San Gabriel Combined Cycle Power Plant following a trip. The initial investigation, which is being carried out by specialists from Siemens Power Operations Inc., indicates that there is an electrical fault in the generator, and pending completion of the inspection, the plant has been declared as unavailable for dispatch. First NatGas Power Corp. (FNPC) is the project company and operator of the 420 MW San Gabriel natural gas-fired power flex plant. FNPC is a wholly owned subsidiary of AlliedGen Power Corp. (AGPC) which is in turn a wholly-owned subsidiary of FGEN. As of end of 1H 2020, San Gabriel Combined Cycle Power Plant contributes US$97.3 Million to the revenues of FGEN. In March 2018, FNPC was awarded a six-year Power Supply Agreement (PSA) by Meralco for 414 MW of San Gabriel’s baseload capacity after undergoing a Competitive Selection Process (CSP). The sale of electricity t...

First Gen Corporation ( FGEN ) and subsidiaries earned $183 Million for the period 1H 2020. What is better is that it was able to translate such earnings into cash from operations of $302 Million. The cash generated from operations allow FGEN to bolster its liquidity. FGEN’s balance sheet has a cash of $748.7 Million as of end of 1H 2020. That is an increase of 20% from the end of 2019. Only around $36.7 Million were used by FGEN for capital expenditures. This is a testament to the efficiency and flexibility of operating a natural gas power plant. The low capex allows FGEN to pare down its debt. Long-term debt was down by around $200 Million from $1.6 Billion to $1.4 Billion. FGEN is an efficient and a flexible power company but underappreciated by the market. FGEN is undervalued. FGEN’s undervaluation by the market has been noticed by KKR , the giant US private equity pioneer. Just this June KKR through its Valorous Asia Holdings Pte. Ltd. made a tender offer of 22...