Coal Asia subsidiary gets BOI incentives

CEBU, Philippines - The Board of Investments (BOI) recently granted incentives for Coal Asia Holdings (COAL) wholly-owned subsidiary, Titan Mining and Energy Corporation (TMEC) as a New Producer of Coal in Davao Oriental and Zamboanga Sibugay on a Non-Pioneer status.

“The impact of these BOI incentives on the company’s bottom-line is very significant and can be a catalyst for further growth. Its revalued earnings forecast will be a positive driver of the company stock price,” said Aldo Claparols, Fund Manager at DA Market Securities.

“The income tax holiday will significantly revalue the company’s 2014 income from P500M to P714M based on 30 percent absorption of supposed tax back into the company’s bottom-line which would result in a PE ratio of four times making it far and away the cheapest energy stock in the PSE,” he added.

On a macro level, Coal Asia Chairman Harald Tomintz lauded the government’s support for projects that would contribute to industrial growth and economic upliftment, particularly in the countryside and in the South of the country where several opportunities are found. 

“The BOI approval of incentives strongly signifies government’s commitment to pursuing its development thrust to the local coal industry. Data from the Department of Energy (DOE) reported a historical average of 2.2 (million metric tons) MMT in local production. This output tripled to an average of 6.7 MMT in the last three years. Coal Asia, through its subsidiary Titan Mining, is proud to play a role in contributing to the continued success of the industry,” Tomintz said.

Coal Asia recently concluded its capital enhancement exercise with an initial public offering, raising approximately P800 million. Of the proceeds from the IPO, P105 million will be spent for the completion of the exploration and feasibility study of the Davao Oriental mine, P432 million for the development of the Davao mine, and the balance for continued exploration at the Zamboanga Sibugay mine and for working capital requirement.

The BOI granted income tax holiday for four years from January 2016 or actual start of commercial operations, whichever is earlier but in no case earlier than the date of registration.

Other incentives include Importation of capital equipment, spare parts and accessories at zero (0) duty from the date of effectivity of Executive Order No. 70 for a period of five (5) years from the date of registration or until the expiration of EO 70;

Additional deduction from taxable income of 50 percent of the wages corresponding to the increment in number of direct labor for skilled and unskilled workers in the year of availment as against the previous year if the project meets the prescribed ratio of capital equipment to the number of workers set by the BOI;

Importation of consigned equipment for a period of 10 years from date of registration, subject to posting of re-export bond; Employment of foreign nationals; and Simplification of customs procedures for the importation of the equipment, spare parts, raw materials and supplies. — (FREEMAN)