April 26, 2010 | admin | Comments 0

Buy Geothermal: Philippine geothermal company pick helps local students take world investment prize

Ouezon Hall, University of the Philippines

Ouezon Hall, University of the Philippines

In Hong Kong, the University of the Philippines won the fourth annual CFA Institute Global Investment Research Challenge (IRC), a worldwide competition that provides university students with real world experience in equity research and company analysis.

Competing against over 425 universities and 2,000 students from many of the world’s top finance schools, UP students Raymund Li, Choerleen Solema, Jose Mari Punzalan, Pamela Li and Rachel Sison used a presentation on the Philippines largest geothermal energy producer, Energy Development Corp., to seal the win.

They of course suggested that the company’s stock was a good buy.

Other finalists competing in Hong Kong were Brigham Young University from the Americas region; Fordham University from the New York region; and University of Cape Town from Europe, the Middle East and Africa (EMEA).

In advance of of the global championship, UP topped 15 other universities in a regional final. Represented there were universities from China, Hong Kong, Taiwan, Indonesia, Korea, India, Japan, Malaysia, Australia, New Zealand, Pakistan, Singapore and Sri Lanka.

The students cited EDC’s stock price upside potential given its industry leadership, the country’s power supply shortage problems and the incentives that the company can avail under the Renewable Energy law.

A smart choice. Here in the U.S., investment dollars are following the lead of the Department of Energy, which is pumping millions into renewable energy projects, including geothermal. In the Philippines, the Word Bank estimates that it will take a net additional investment of $2 billion every year for the Philippines to attain sustainable generation of clean energy. A report authored by WB analyst Dr. Xiaodong Wang noted that the country is a net energy-importer and is expected to still be importing 60 to 70% of its energy needs in 2030.

EDC itself saw its profits 25.5% in 2009. Among other things, the company cited accounting adjustments brought about by a new Renewable Energy law, although revenues rose by $60 million on increases in electricity sales and drilling services. EDC recently added the 192.5 MW Palinpinon and 112.5 MW Tongonan geothermal plants to its portfolio for $123 million and also raised $257 million from a first ever retail bond offering.

John Rogers, president and CEO of CFA Institute, congratulated the UP team for winning the Global IRC. “I was extremely impressed with the final four teams’ research and presentations and would like to applaud their skill and tenacity. We at CFA Institute hope that the experience has helped to instill ethics and best practices in what may be the next generation of investment professionals,” he said.

The Institute awarded the University of the Philippines $10,000 for the win.

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