Meralco shares fall despite developments

By Abigail Marie P. Yraola, Deputy Research Head

MANILA ELECTRIC CO. (Meralco) shares dipped last week despite favorable developments concerning the power distributor and its position as one of the most traded stocks by value turnover.

Despite the week’s volatility, the movement signaled ongoing investor confidence, supported by the company’s earnings report.

From Feb. 27 to March 6, Meralco recorded a value turnover of P860.55 million from 1.40 million shares, making it the 11th most actively traded stock for the week, according to Philippine Stock Exchange (PSE) data.

Shares closed at P617 apiece on Friday, down 3.3% from a week earlier. The industrial index fell 4.8%, while the benchmark PSE index declined 4.4%.

Year to date, the Pangilinan-led company rose 7.5%, compared with a 4.3% gain in the industrial sector and a 4.4% increase in the PSE index.

Juan Alfonso G. Teodoro, equity trader at Timson Securities, said the slight downward trend reflected cautious market sentiment and some profit taking after earlier gains.

He added that trading activity was supported by key developments involving the company.

“Despite the pullback, the stock remained among the most actively traded by value as investors continued to focus on large-cap defensive companies with stable earnings and dividend income,” he said in a Viber message.

Aniceto K. Pangan, equity trader at Diversified Securities, Inc., noted that Meralco’s downtrend also reflects concerns over the ongoing Middle East crisis, which could bring prolonged economic and inflationary effects to the Philippines.

Recent company developments include a review of its fuel mix, which comprises liquefied natural gas, coal, and diesel. Shifts in global fuel prices driven by Middle East conflicts could affect electricity costs.

Meralco said that even if it does not source oil for its power supply, the Middle East conflict may indirectly impact electricity rates through upward inflationary pressure.

“If global prices of fuels such as liquefied natural gas, coal, and diesel increase due to geopolitical tensions, this could lead to higher generation charges and slightly higher electricity rates in the coming months,” Mr. Teodoro said.

He added that investors will likely monitor global fuel price movements, as these can influence short-term electricity costs for consumers.

Meralco is also awaiting a decision from the Energy Regulatory Commission (ERC) on its application to recover P7.98 billion in under-recoveries filed nearly three years ago.

In 2023, the company filed an application to recover P8.01 billion for generation, transmission, system losses, and pass-through taxes from January to December 2022. This would translate to an increase of about 21.91 centavos per kilowatt-hour (kWh) over a 12-month period.

Meralco also reported over-recoveries totaling P30.62 million from lifeline subsidies, senior citizen discounts, and local franchise taxes, equivalent to a refund of about 0.09 centavos per kWh to consumers.

“Investors think the approval is possible since these were legitimate expenses,” Mr. Teodoro said. He added that, if approved, electricity rates may marginally increase but are unlikely to significantly change consumption.

The company plans to fund its P247.14 billion capital expenditure program using a combination of cash, loans, and potential partnerships.

“Meralco expects around 3% growth in energy sales this year, which is generally seen as sustainable since electricity demand tends to grow steadily with economic activity and population growth,” Mr. Teodoro said.

He added that projected recovery in the next few quarters is primarily based on favorable weather, higher electricity usage during summer, and continued business and economic activity.

Meralco expects a 3% gain in energy sales volume for 2026, with flat growth in the first quarter and a recovery from the second quarter onward.

In 2025, Meralco’s net income rose 9.4% to P50.84 billion, while consolidated revenues grew 5.7% to P497.33 billion.

Mr. Teodoro said the company’s financial health remains solid, supported by stable cash flows from its regulated distribution business and consistent electricity demand. “Our Q1 2026 forecast for Meralco is approximately P13.52 billion,” he said.

Mr. Pangan described Meralco’s move to review its electricity supply amid rising fuel prices as a positive step to ease the burden on consumers.

“The under-recoveries are still under review by ERC. ERC will decide on how to apply this for consumers without creating a significant burden,” he said.

He added that the generation business contributed to Meralco’s growth in 2025, with an anticipated 3% increase in energy sales for 2026. He placed support at P600 per share and resistance at P640.

Mr. Teodoro described the developments as “fairly significant.”

“It also highlights Meralco’s advantage over other distribution utilities since it serves the country’s largest and most economically active areas, where electricity demand is typically stronger and more consistent,” he said.

He noted that traders and investors may consider Meralco a stable utility company with consistent earnings and dividends. “Our next resistance for Meralco would be around P640-650 per share. Current support would be around P610-600 per share, short-term.”

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., holds an interest in BusinessWorld through the Philippine Star Group, which it controls.