AP. Nine-Month Earnings Grow Despite Soft Third-Quarter Generation

Highlights

• Nine-month 2026 core income rose 11% to ₱25.5 billion, with net income up 13% to ₱26.2 billion.
• Third-quarter generation sales fell 3% on lower coal plant availability and softer demand, while distribution EBITDA rose 9%.
• Vini Research Desk rates AP a Buy, ~29% upside to our ₱57.30 fair value.

The Setup

Following our Oct. 22 note, AboitizPower's third-quarter results put nine-month beneficial EBITDA up 13% at ₱63.7 billion. Over the same nine months, generation and retail electricity supply sales grew 9% and distribution electricity sales rose 8%. Our momentum read on AP is Bullish.

Source: PSE disclosure

Our Read

The key point is that earnings growth held through a weak generation quarter. The regulated distribution business kept compounding, which keeps the full-year earnings path intact. At a ₱331.8 billion market cap, the stock has priced in the soft quarter more than the nine-month growth. Restored coal output would narrow that gap.

Vini Research Desk rates AP a Buy, seeing about 29% upside to our fair value of ₱57.30. Steady double-digit core earnings growth also supports future dividend growth and capital appreciation, which benefits holders of the Passive Income Plan and Smart Momentum Quant Plan.

What We're Watching

• Return of the Therma Visayas unit to service
• Pending tariff-reset approvals for the distribution utilities
• Coal fleet availability and fourth-quarter demand in the full-year 2026 results