Earlier last week, Energy Development Corporation reported a rise in Net Income for the first half of 2012 by 350%. While this may sound impressive, we have to consider that part of this was the reversal of previous year's losses mainly due to repair of its Bacon-Manito (Bacman) Plant. The report came in after news that management expects another delay from said plant.
If I recall it right, this is the second or third time that Bacman plant incurred delays. Despite of this, operations from the plant posted positive cash flows from revenues generated from contracts.
EDC remains an attractive investment because it gives opportunity of diversifying to energy sector. Although the stock valuation have since recovered from its previous low, the company should be cautious in throwing expectations as investors may lose confidence to the ability of management to fulfill it. I personally would like to see the prices go down to P5.50 - P5.70 range and accumulate from there as I can still see the company meet its target. The stock may not be very attractive to traders as I believe it will just continue to move sideways, at least for the next two months.
EDC stock price - 2 years
Disclaimer: This article is solely the opinion of the blogger based on personal research. Any statement made is not a conclusion of absolute fact and is not intended to impose or persuade anyone's judgement.