SPNEC’s SRO favors long-term investors — analysts 

ANALYSTS see the stock rights offering (SRO) of Solar Philippines Nueva Ecija Corp. (SPNEC) to be more appealing to long-term investors as they expect its business to grow in the long run amid favorable 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 the expansion of SPNEC will be supported by the government,” Timson Securities, Inc. Head of Online Trading Marc Kebinson L. Lood said in a Viber message.

Separately, Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said that the continuous rise of the country’s power demand presents growth opportunities for SPNEC as it looks to further expand its renewable energy portfolio.

“SPNEC is on track to complete its major deals this year, including its [SRO] within the next few weeks and its asset-for-share swap with parent 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 Philippine Stock Exchange for nearly 1.88 billion shares.

After the SRO’s price adjustment in July to now range from P1.50 to P1.75 per share, it placed the aggregate offer amount at P2.81 billion to about P3.3 billion.

The offer period will start on Aug. 30 and end on Sept. 5. It has an entitlement ratio of one share for every 1.28 shares held.

“While this SRO may not be appealing for short-term players as they stay on the sidelines, those players who’ll participate are probably banking on the bright prospects that this project may yield for SPNEC’s bottom-line figures in the future,” Mr. Lood noted.

In a media briefing on Friday, SPNEC President and Chief Executive Officer Leandro Antonio L. Leviste said the SRO’s P2.8-billion proceeds “will help complete the P10 billion that we plan to invest to complete the development of 10 gigawatts (GW) of projects.”

“As a project developer, our job is to consolidate land and permits so the projects can secure off-take and become construction-ready, to enable the projects to raise financing to complete the capital expenditure with the help of partners,” he added.

Mr. Leviste said brokers had begun taking orders for Aug. 22, with the deadline for orders with most brokers on Aug. 30 or 31.

SPNEC placed the industry standard cost of putting up a megawatt (MW) of solar power at $700,000, which can translate into revenues of P6 billion per MW per year. It added that its 10 GW of projects would have a total non-land capital expenditure budget of $7 billion, or revenues of P60 billion per year.

Meanwhile, SPNEC is also planning to conduct an asset-for-share swap with its parent Solar Philippines after the first round of SRO.

“Following the exercise, SPNEC will obtain basically all the operating assets of SPPPHI, and the latter’s pipeline projects under development. After the asset-for-share swap exercise, SPNEC is expected to have an operating capacity of a total of 904 MW, making it the biggest solar power generation company in the country,” Mr. Arce said.

SPPPHI and SPNEC have signed the share-swap agreement for the issuance of around 24.37 billion shares at P2.50 apiece, in exchange for the shares of SPPPHI in a portfolio of projects.

“SPNEC’s future earnings growth outlook and value depend largely on its ability to execute more than 10 GW of pipeline developments. These developments require high level of capital, the bulk of which will likely be funded through debt,” Mr. Arce said.

Mr. Arce said that SPNEC would utilize the strategy of forming joint ventures and partnerships going forward to develop its pipeline projects of over 10 GW.

“SPNEC’s earnings growth will depend largely on the successful development of its solar power generation pipeline projects. Any delay in the development and construction of these projects will likely affect SPNEC’s earnings growth outlook,” he added.

Mr. Lood expects the stock to perform better in the second half of the year “as the company begins to roll out its operations to meet its ambitious goals and as we anticipate positive earnings figures.”

On the stock exchange on Friday, shares in SPNEC climbed by 2.42% or P0.04 to P1.69 apiece. — Justine Irish D. Tabile

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