{"id":325740,"date":"2023-09-21T01:43:53","date_gmt":"2023-09-20T17:43:53","guid":{"rendered":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/?p=325740"},"modified":"2023-11-15T23:05:59","modified_gmt":"2023-11-15T15:05:59","slug":"stock-in-focus-acen-corp-acen-15-nov-2023-by-ap-securities","status":"publish","type":"post","link":"https:\/\/www.pinoyinvestor.com\/smartinvestor\/stock-in-focus-acen-corp-acen-15-nov-2023-by-ap-securities\/","title":{"rendered":"Stock in Focus: ACEN Corp. (ACEN) – 15 Nov 2023 by AP Securities"},"content":{"rendered":"\n

Summary of Broker’s Recommendation<\/h2>\n\n\n\n
Stock Code<\/strong><\/td>ACEN<\/td><\/tr>
Company Name<\/strong><\/td>ACEN Corp.<\/td><\/tr>
Broker<\/strong><\/td>AP Securities<\/td><\/tr>
Opinion Issued on<\/strong><\/td>15 Nov 2023<\/td><\/tr>
Recommendation<\/strong><\/td>Hold<\/td><\/tr>
1-Year Target Price<\/strong><\/td>PHP 7.43<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
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There is much to be excited about when it comes to ACEN, as the first and largest pure renewable energey (RE) play which has assets across the broader Indo-Pacific region. While more than 60% of its projects are still under construction, a big chunk of this is due to come online within the next three quarters and we should see this \u201cunder construction\u201d metric dropping to 50% or lower in the succeeding quarters.<\/p>\n\n\n\n

However, we have yet to see ACEN\u2019s ability to consistently generate income without any asset sales or capital recycling activities and we need to see revenues catch up to the company\u2019s rising costs without stripping away any line items. As such, we remain a HOLD on ACEN despite the sizable upside to consensus Target Price of P7.43.<\/p>\n\n\n\n

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Analysis and Opinion<\/h2>\n\n\n\n

Earnings slightly behind consensus<\/h3>\n\n\n\n

ACEN reported P2.6 Billion in earnings for the 3rd quarter (3Q) 2023, slightly behind consensus expectations for the quarter and representing 24% of 2023 estimates, while year-to-date (YTD) figures amount to 70% of full-year forecasts. The weakness mostly came from a 27.8% sequential decline in revenues due to scheduled plant maintenance and seasonally low wind and WESM prices. <\/p>\n\n\n\n

On the costs side, the 13.5% quarter-on-quarter (QoQ) decline in cost of sale of electricity was offset by a more than threefold increase in general and administrative expenses (GAE), resulting in a 10.9% QoQ increase in operating expenses. According to the company, this increase in GAE was mostly due to a higher head count for projects under development and newly-commissioned projects. ACEN ended the quarter with a net operating loss of P3.2 Billion, while net operating loss for the first nine months was P2.5Billion.<\/p>\n\n\n\n

One-time gain from Indonesia sale boosted bottom line<\/h3>\n\n\n\n

ACEN realized a one-time gain of P1.1 Billion from the sale of a 24.2% stake in ACEHI Netherlands, which holds its interests in the Salak & Darajat Geothermal plants in West Java, Indonesia. The company retained a 50% stake in ACEHI Netherlands after the transaction, with a 10% indirect stake in the Indonesian geothermal project. It also reported a one-time remeasurement gain of P1.5 Billion from unspecified items, while the balance for the P6.5 Billion in \u201cOther income\u201d remained unspecified. These \u201cother income\u201d are the main reason ACEN was able to post positive net earnings this quarter despite operating losses.<\/p>\n\n\n\n

The core of the matter<\/h3>\n\n\n\n

Given the complicated nature of ACEN\u2019s income statement, the company has started reporting income under a new metric called \u201ccore operating income\u201d which strips away one-time development costs and income from the capital recycling activities. This leaves behind only income and costs related to operating projects and highlights ACEN\u2019s transition from asset accumulator to RE platform operator. Using this metric, ACEN\u2019s core operating income declined 97% QoQ to P176 Million primarily due to seasonality of wind and solar generation, while 9M 2023 core operating income jumped 107% to P3.9 Billion.<\/p>\n\n\n\n

Fresh contributions from additional capacity boosts generation<\/h3>\n\n\n\n

Seasonally lower solar and wind generation were offset by additional contributions from continued commissioning of Arayat-Mexico Solar Farm and Pagudpud Wind Farm in the Philippines, New England Solar in Australia, Masaya Solar Farm in India, and the newly-acquired Solar NT in Vietnam. In total, the Philippine portfolio generated 201 GWh (-22.1% QoQ) while the international portfolio generated 922 GWh (+25.4% QoQ) in Q3. YTD, RE generation grew by 29% in the Philippines and 27% in overseas operations.<\/p>\n\n\n\n

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Check how many brokers recommend this stock<\/h2>\n\n\n\n
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All Stock Rankings<\/a><\/blockquote>