Global mutual fund takes 5% stake in Semirara Mining

The world’s largest mutual fund group, Boston, Massachusetts-based Fidelity Management and Research Co. (FMR), has acquired a 5.03 percent stake in the Philippines’ biggest coal producer, Semirara Mining Corp.

FMR, with $1.2 trillion in assets under management in more than 300 mutual funds, has amassed a total of 14,935,500 shares of Semirara in the open market, according to a regulatory disclosure filed with the Philippine Stock Exchange (PSE).

A senior member of Congress promptly welcomed FMR’s investment in one of Asia’s largest coal miners.

"This unmistakably demonstrates the growing global investor confidence in our financial markets and the national economy," House Deputy Majority Leader Eduardo Gullas said.

Gullas, who represents Cebu province’s first district, said he expects FMR’s initial investment in Semirara to further heighten foreign fund interest in Philippine equities, particularly in energy and mining issues.

He said FMR has been known to build stakes even in relatively small energy and mining companies, provided they are poised to significantly grow production and earnings. FMR’s investment decisions are followed closely by other large foreign funds, he added.

Semirara, which produces coal out of Semirara Island in Antique province, has been buoyed by the global surge in commodity prices.

The company sold over 1.1 million metric tons of coal from January to June this year, up 19 percent from sales volume in the same period in 2005. The company posted a net income of P402.69 million on revenues of P2.77 billion in the first semester.

To build shareholder value, Semirara has repurchased P528.89 million worth of its stock in the open market. This, on top of distributing P333.09 million worth of cash dividends (at P1.20 per share) and repaying P349.12 million in long-term debt in the second quarter.

Semirara sells its coal to power plants, cement producers, paper mills and other industries. The firm’s biggest customer is the state-owned National Power Corp.

Semirara has 296.875 million issued shares and a market capitalization of P5.71 billion. FMR’s stake is worth P287.5 million based on the P19.25 closing price of Semirara’s stock Friday on the PSE.

Semirara’s biggest stockholder is the Consunji family’s DMCI Holdings Inc., which owns 64.17 percent or 178.125 million shares. Besides the investing public, the state-owned National Development Co. and the Privatization Management Office also have stakes in the coal producer.

Apart from its investment in Semirara, FMR also owns 6.204 million shares of Philippine Long Distance Telephone Co. (PLDT) worth $310.3 million.

This is on top of the 4.887 million shares of PLDT worth $244.3 million held by four Fidelity mutual funds – the Fidelity Advisor Mid Cap Fund, the Fidelity Equity-Income Fund, the Fidelity Puritan Fund and the Fidelity Value Fund.