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ANALYST see the stock rights or similarffering (SRO) by Solar Philippines Nueva Ecija Corp. (SPNEC) more attractive to long-term investors as they expect their business to grow over the long term due to cheap government support for green energy projects.
“Long-term investors who wish to subscribe to the SRO can look forward to a bright future as the government favors green energy projects and SPNEC’s expansion is supported by the government,” Timson Securities, Inc. Online Trading Director, Marc Kebinson L Lood said in a Viber message.
Separately, Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., said the country’s continued increase in energy demand presents growth opportunities for SPNEC as the company looks to continue expanding its renewable energy portfolio.
“SPNEC is on track to complete its key transactions this year, including its [SRO] within the next few weeks and the asset-for-share swap with parent company Solar Philippines [Power Project Holdings, Inc. or SPPPHI] by the end of 2022,” Mr. Arce said in a Viber message.
In June, SPNEC filed its preliminary SRO prospectus with the Securities and Exchange Commission and the Philippine Stock Exchange for nearly 1.88 billion shares.
Following the SRO’s price adjustment in July, which is now between P1.50 and P1.75 per share, it placed the total offering amount at P2.81 billion to approximately P3.3 billion.
The OonwardsThe term begins on August 30th and ends on September 5th. It has a subscription ratio of one share for every 1.28 shares held.
“While this SRO may not appeal to short-term players as they remain on the sidelines, those players who will participate are likely betting on the bright prospects this project could offer for SPNEC’s future earnings,” said Mr.Lot written down.
In a media letterfing on Friday, SPNEC President and Chief Executive OffiCer Leandro Antonio L. Leviste said the P2.8 billion proceeds from the SRO “will help complete the P10 billion that we plan to invest to complete the development of 10 gigawatt (GW) projects.”
“As a project developer, our job is to consolidate land and permits so projects can secure launch and get ready to build, so projects can raise the financing to complete the investments with the help of partners,” he added.
Mr Leviste said brokers had started taking orders for August 22, with the deadline for orders at most brokers being August 30 or 31.
SPNEC put the industry standard cost of building one megawatt (MW) of solar power at US$700,000, which can generate revenues of 6 billion pesos per MW per year. It added that its 10GW projects would have a total out-of-country investment budget of $7 billion, or revenues of P60 billion per year.
Meanwhile, SPNEC also plans to conduct an asset-for-share swap with its parent company, Solar Philippines, after the first round of SROs.
“After the exercise, SPNEC will receive substantially all of the working assets of SPPPHI and its pipeline projects under development. After the asset swap for shares, SPNEC is expected to have a total operating capacity of 904 MW, making it the largest solar power generation company in the country,” said Mr. Arce.
SPPPHI and SPNEC have signed the share swap agreement for the issuance of approximately 24.37 billion shares at 2.50 pesetas each in exchange for SPPPHI’s shares in a portfolio of projects.
“SPNEC’s prospects for future revenue growth and value depend largely on its ability to deliver in excess of 10 GW of pipeline development. These developments require a high level of capital, most of which is likely to be funded by debt,” Mr Arce said.
Mr. Arce said that SPNEC will use the strategy of forming joint ventures and partnerships to develop its pipeline projects of over 10GW.
“SPNEC’s earnings growth will depend largely on the successful development of its solar generation pipeline projects. Any delay in the development and construction of these projects will likely impact SPNEC’s earnings growth prospects,” he added.
Mr. Lood expects the stock to perform better in the second half of the year “as the company begins to expand its operations to meet its ambitious goals and as we anticipate positive earnings numbers.”
In the stock market, shares of SPNEC rose 2.42% or P0.04 to P1.69 a share on Friday. — Justine Irish D. Tabile
