ACEN Corp.’s stock seesawed last week after investors heard its aggressive 2030 goal while its first-half income came out lower compared with last year.
Data from the Philippine Stock Exchange showed a total of 105.44 million shares worth P903.53 million were traded from Aug. 8 to 12.
Shares in the Ayala-led energy platform decreased by 1.8% week on week, finishing at P8.70 apiece on Friday from its P8.86 closing on Aug. 5. The stock has fallen by 17.1% since the beginning of the year.
Analysts said ACEN’s stock price last week teetered mostly due to investors receiving news on ACEN’s half-year income report and its commitment to expanding renewable energy (RE).
Globalinks Securities and Stocks, Inc. Head of Sales Trading Toby Allan C. Arce said in an e-mail exchange that while ACEN’s first-half attributable net income declined by 19% year on year, its “aggressive expansion” will bring optimism in the future. He also cited the company’s improved performance in the second quarter.
“For [the second quarter], the company realized fresh contribution from new Philippine and international plants, as well as the easing of curtailment issues in the Visayas. Also, improvements in plant availability allowed ACEN some excess capacity, thus enabling the company to benefit from strong wholesale electricity prices during the quarter,” he said.
The energy company disclosed on Aug. 9 its “ACEN 2030” plan to expand its RE capacity to 20 gigawatts (GW) by 2030. It currently has 3.4 GW of renewables. ACEN targets to transition its power generation portfolio to 100% renewables by 2025 and retire its remaining coal plant by 2040.
“The company strategy of concentrating on RE has been consistent and with their recent announcement of targeting a higher attributable capacity from RE power plants by 2030 shows management’s commitment to this strategy,” Philippine National Bank Senior Equity Research Analyst Jonathan J. Latuja said in a separate e-mail.
“Investors view management consistency and commitment favorably as this implies stability and predictability of the business,” he said, adding that the plan’s execution is another matter that investors will monitor moving forward.
Mr. Arce said ACEN’s focus on RE is what the market may be looking for, which is to not depend on fossil fuels. The energy company also builds RE projects in other countries, including Vietnam, Indonesia, and India.
Since the start of the Russia-Ukraine conflict in February, fuel prices have surged as supply chain constraints have spread across the globe due to Russia freezing its supply of fuels to other countries.
“A global energy crisis is afoot and the elevated fuel prices are compounding the tight power supply situation in the country. The world needs to accelerate the energy transition, and the country needs new capacity urgently. Renewable energy is a huge pillar of a country’s energy self-sufficiency, and ACEN is now putting itself out there as the group [is] best situated to help all the countries in our region develop additional capacity,” Mr. Arce said.
Similarly, inflation continued to rise as surging fuel costs create a domino effect of rising prices of commodities.
Inflation rose to 6.4% in July, settling on the upper end of the Bangko Sentral ng Pilipinas’ forecast, from 6.1% in June and above the 2-4% forecast range of the central bank for 2022.
ACEN’s second-quarter net income attributable to parent firm equity holders picked up by 25.4% to P1.78 billion from P1.42 billion in the same quarter a year ago. After-tax income went up by 0.9% P2.2 billion from P2.18 billion.
However, for the six months to June, its attributable income was down by nearly 19% to P2.18 billion from P2.69 billion a year ago.
The company’s income after tax for the first semester declined by 28.4% to P2.95 billion from P4.12 billion a year earlier.
Mr. Latuja said that inflation affected ACEN’s growth in the second quarter due to higher fuel costs and lower purchasing power.
“For 2022, our earlier forecast was at [P7.3 billion] but we may have to revise this given their [first half 2022] performance. We believe that the more important story for [ACEN] is how the management team will be able to fund and realize their long-term goals given the overall increase in interest rates,” he said.
Mr. Arce expects the company’s third-quarter net income to drop to P1.3 billion before surging to P2 billion in the last quarter of 2022, while he projects net income for the year to reach P6.8 billion and to double in 2023 to P12.5 billion.
“Inflationary pressures have been at the heart of this disruption. Global supply chain bottlenecks, rising input costs, concerns around the underlying health of the economic recovery, and the threat of rising interest rates, have created a very challenging environment,” he said.
Looking forward, analysts will follow ACEN to see whether it is on track to achieve its 2030 goal despite local and international pressures.
Mr. Latuja said that if inflation continues to climb and the government raises its policy rates higher, ACEN might be affected in terms of higher costs of funds in their expansion plans.
Mr. Arce gave his support and resistance levels at P8.50 and P9, respectively, adding that while the cost of developing RE projects has increased due to inflation, this is lower compared with the heightened cost of commodity inputs for other power assets.
“Although RE firms remain cautious about the time it may take for the current headwinds to settle, the longer-term opportunity behind the energy transition remains firmly in place — and only gets stronger as economics improve, demand accelerates, and policy support grows. As long-term investors in RE, using short-term disruption as an opportunity to buy is critical — especially given the underlying structural growth potential behind this particular investment space,” Mr. Arce said. — Bernadette Therese M. Gadon