Last December 2009, First Philippine Holdings Corporation or FPH in the Philippine Stock Exchange disclosed that it is planning to invest more than $750 million in renewable energy. The company’s chief financial officer, Francis Giles Puno, said the company is planning to produce 200-megawatts of wind power, with a cost of about $3 million per megawatt, from the farms they are building. This project will be coursed under its subsidiary, Energy Development Corporation (EDC) and will be partly financed by a proposed $200 million dollar bond offering during the first quarter of this year. Presently, the company is also in the process considering the viability of building three hydroelectric power plants, worth $150 million, in Mindanao. If all goes well, construction of the plants will commence this year. Additionally, FPH also plans to invest $40 million in solar farms. These additional investments could of course provide some sustainable cash stream for the company in the foreseeable future.
San Miguel Corporation (SMC) and Aboitiz Power (AP), with their investments in energy and power generation, were the flavors of 2010. Now, given FPH’s additional venture in the same industry and their expertise (Meralco and FGEN), 2011 could be a blow out year for the company.
From a technical perspective, FPH had already broken out from a cup and handle formation during the early part of the fourth quarter of 2009. However, it was not able to sustain its move upwards, causing it to just move sideways and then eventually revisit the cup and handle‘s neckline. Presently, the shares of FPH are just hovering above the neckline at around PHP 60.00. This “return move” now gives us a better opportunity to get in and ride FPH’s potential move higher. If the support at PHP 60.00 holds, FPH could then aim for its upside target of around PHP 100.00 (gauged by projecting the height of the cup from the point of breakout).