Meralco shares slip on profit taking after PSEi rebalancing

MANILA ELECTRIC CO. (Meralco) shares fell last week as investors took profits following gains from the recent Philippine Stock Exchange index (PSEi) rebalancing, with analysts citing technical factors as the main driver.

Data from the Philippine Stock Exchange showed Meralco was the eighth most traded stock of the week, with 1.33 million shares worth P717.51 million changing hands by Friday.

The stock closed at P547 last Friday, down 2.3% from a week earlier, defying the 0.7% rise in the industrial sector week on week. However, it mirrored the 0.5% decline in the benchmark PSEi.

Franco Fernandez, equity research analyst at Dragonfi Securities, said Meralco’s decline was primarily driven by technical factors following a sharp price increase the previous Friday due to the PSEi rebalancing.

Effective Aug. 18, the PSE announced changes to its indices, which included the removal of Bloomberry Resorts Corp. from the PSEi and the addition of DigiPlus Interactive Corp.

In the industrial index, Concepcion Industrial Corp., Citicore Renewable Energy Corp., and Vitarich Corp. were added, while Basic Energy Corp., EEI Corp., and Max’s Group, Inc. were removed.

Additional changes were made to the Mining and Oil, MidCap, and Dividend Yield indices to reflect the latest market capitalization and liquidity review.

“This led to profit taking as the stock approached a resistance level,” Mr. Fernandez added.

Year to date, Meralco’s share price has risen 12.1%, compared with the PSEi’s 3.8% decline.

In an Aug. 15 disclosure, Meralco reported an attributable net income of P13.19 billion for the second quarter, up 2.7% from P12.84 billion a year earlier. This brought the first-half bottom line to P23.64 billion, 5.3% higher than the P22.44 billion in the same period last year.

Meanwhile, consolidated revenues reached P130.71 billion in the second quarter, down 1.7% from P132.93 billion a year earlier. For the first half of 2025, revenues stood at P245.22 billion.

“The slight revenue contraction and softer sales growth across customer segments prompted some caution (in the market),” said Jervin De Celis, equity trader at The First Resources Management and Securities Corp.

Luis A. Limlingan, head of sales at Regina Capital Development Corp., said that Meralco’s earnings stood out as notably strong compared with its previous performance, despite lower spot market prices compressing margins.

In a statement on Aug. 19, Meralco said it had signed an agreement with South Korea’s DL Engineering & Construction (DL E&C) to conduct studies on the possible deployment of small modular reactors (SMRs) in the Philippines.

The company has expressed strong interest in SMRs as a solution to energize off-grid areas.

“This was seen as a forward-looking move that could largely contribute to the company’s energy diversification and electrification in off-grid areas,” Mr. De Celis said via e-mail.

However, he added that the market appeared to view the development as only a mildly positive signal, since the studies remain in the preliminary stage and are unlikely to have any immediate effect on earnings.

Similarly, Mr. Fernandez noted “limited immediate impact until feasibility results are clearer and capital intensity is better defined.”

For the third quarter, Mr. De Celis forecast Meralco’s attributable net income at P11-12 billion.

Mr. Fernandez estimated core net income for the year at P50-51 billion. He also pegged immediate support and resistance at P520-530 and P550-560, respectively.

Likewise, Mr. Limlingan placed support at P531 and resistance at P560.

Mr. De Celis sees support at P531 and resistance at P548, with stronger resistance at P560-580.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Heather Caitlin P. Mañago