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Stock Commentary

Solar Philippines takes 70% of the DoE’s Green Energy Auction Program capacity

Merkado Barkada
Solar Philippines takes 70% of the DoEâs Green Energy Auction Program capacity
This wasn’t what SPNEC was originally created to do, but it is what SPNEC has been reconfigured to do, and thankfully for investors, SPNEC does it well.
Merkado Barkada

Solar Philippines (SP) [link], the parent company of Solar Philippines NEC [SPNEC 1.54 ?2.67%], won 70% of the renewable energy capacity that was up for auction in the first round of the Department of Energy’s (DoE) “Green Energy Auction Program” (GEAP).

The capacity awarded to SP also represents 91% of the total solar capacity awarded in this round of GEAP bidding. According to Secretary Cusi, the DoE plans to conduct a GEAP round annually to contract new sources of renewable energy.

While none of the projects that successfully bid for capacity from the DoE are owned by SPNEC, the parent/child group is working on a share-swap deal to transfer ownership to SPNEC at some point in the near future.


MB BOTTOM-LINE

This wasn’t what SPNEC was originally created to do, but it is what SPNEC has been reconfigured to do, and thankfully for investors, SPNEC does it well.

Leandro Leviste, the owner of SP and SPNEC, has been consistent since the advent of the new plan to acquire these projects from SP that SPNEC’s main super-power is to deliver these kinds of shovel-ready projects to big-time developers.

SPNEC’s specialty is to take high-quality land and bundle it together with all of the permits and approvals needed to enter into bidding schemes like the DoE’s GEAP. SPNEC is up 54% from its December 2021 IPO price, but it’s down 34% from its early-February high of P2.34/share.

Clearly, the market has been having some trouble figuring out the future value of these projects to SPNEC, which could be tied to the uncertainty surrounding the pricing details of the “mini” stock rights offering (SRO) that SPNEC has planned to download the Prime Infra-related projects from SP to SPNEC, and the pricing details of the big SRO or follow-on offering that will be needed to keep SPNEC’s public ownership level compliant after the share swap is completed between SP and SPNEC for the SP assets.

There are a ton of moving pieces here, but this auction result is definitely a win for SPNEC.

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Merkado Barkada's opinions are provided for informational purposes only, and should not be considered a recommendation to buy or sell any particular stock. These daily articles are not updated with new information, so each investor must do his or her own due diligence before trading, as the facts and figures in each particular article may have changed.

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