The former stock market darling of the renewable energy (RE) sector, SPNEC, has lost around 13.8% of its market cap since the start of the week. A blind item published on business tabloid website Bilyonaryo.com, which seems to refer to SPNEC owner Leandro Leviste, sent the stock plummeting to a new low that hasn\u2019t been seen since its stock market debut. <\/p>\n\n\n\n
To add fuel to the fire, the company disclosed to the PSE that a joint venture between SPNEC\u2019s parent company, Solar Philippines, and an unnamed partner has turned sour over discussions relating to the sale of land owned by SPNEC.<\/p>\n\n\n\n
The company may be as \u201cgreen\u201d as a company can be, but red flags abound. When SPNEC filed for IPO last year, we gave it a buy rating and saw it as a unique opportunity to invest in one of the first movers of a sunrise industry, pun intended.<\/p>\n\n\n\n
We have since turned cautious on the company, as it seems to have abandoned its original plans to build and operate a solar power facility in Nueva Ecija and instead turned its focus to injecting more assets from its parent company into the listed entity using additional funds from its public shareholders. There has been no update on the Nueva Ecija project, which the company said in its IPO prospectus should go online by the middle of 2022. Instead, most of the updates from SPNEC relate to planned purchases of additional land and an asset-for-share swap with its parent company.<\/p>\n\n\n\n
SPNEC\u2019s plans became more and more unclear with each disclosure, culminating in the renaming of SPNEC from Solar Philippines Nueva Ecija Corporation to SP New Energy Corporation. The latest issue only confirmed our suspicions that the corporate practices of the company is less than ideal and represent a major red flag for minority shareholders. It also invalidates our initial investment thesis that despite its relative lack of financial muscle, the company has the strong ability to forge collaborations with other players based on its successful joint ventures with Ricky Razon\u2019s Prime Infra and Korea\u2019s KEPCO.<\/p>\n\n\n\n
So far, the company\u2019s majority shareholder seems to be attempting to defend SPNEC\u2019s share price, but it is unclear how much longer they can fend off the bears. SPNEC shareholders should watch out for a breach of the P1.00 level as selling may accelerate if the price falls below this key support.<\/p>\n\n\n\n