Stock commentary: AlternativeEnergy Holdings files for P2.1-billion IPO in November
Alternative Energy Holdings [ALTER 1.48 pre-SEC] https://www.philstar.com/business/stock-commentary/2022/07/14/2195343/alternergy-holdings-files-p21-billion-ipo-november has filed with the SEC to sell 1,281,430,000 primary shares, and 192,220,000 secondary shares (as part of an over-allocation option), to raise approximately P2.1 billion through an IPO that ALTER launched in late November. planned to be listed. ALTER is a holding company that “holds a portfolio of investor companies” (subsidiaries) engaged in renewable energy projects related to “wind, solar, hydro, floating solar and battery storage power”. According to ALTER, it has 67 MW of operating assets in wind and solar, as well as 62 MW of hydro and solar projects that have “reached financial close”. ALTER says its entire project pipeline has a gross capacity of over 1.2 GW.
Primary/Secondary Split: Counting the over-allocation options as secondary shares (as we should), the deal is still around 87% primary, which (to me) is pretty healthy. Proceeds from the sale of primary shares go directly to ALTER to be used to grow the business and earn more money; The proceeds of the sale of secondary shares only go to the people or companies that are selling the secondary shares (in this case, a long list of private individuals and companies). A deal that is 87% primary takes a growth-oriented stance.
Use of Earnings: ALTER expects to have approximately P1.8 billion in net income (assuming a P1.48/share price, excluding secondary share sales, and after deducting fees). Of this amount, ALTER intends to spend 36% on the construction of the Solana Solar Project in Q4/22 and the Lamut Hydro Project in Q1/23, acquiring a majority stake in Kirahon Solar Energy Corp. , 22% of “pre-development” expenses related to Ibulao Hydro Project, Tanay Wind Project, Albat Wind Project, and Calawate Offshore Wind Project, as well as 12% on “general corporate purposes” and “working capital”.
Business: ALTER earns its income (at subsidiary level) by selling electricity from powered power plants. The money he earned from this activity has grown year after year for the past four years; P18.5 million in 2018, P22.7 million in 2019, P32.7 million in 2020 and P35.9 million in 2021. For all of these years, ALTER’s operating expenses have exceeded its operating income, making it posting negative net income for each year for which we have data, except for the most recent period in 2021. In 2018, ALTER posted a net loss of P42 million, a net loss of P51 million in 2019, a net loss of P31 million in 2020, and a net profit of P112 million in 2021. ALTER attributes this benefit in 2021 primarily to a “reimbursement” it receives for development costs incurred on behalf of a partner.
MB Bottom-line
I haven’t done anything to dig into the valuations here, and to compare ALTER against peer operating power generation companies to see if the valuation is in line with our expectation, or if it represents a discount or premium. Is.
Starting with what I love, I’m a big fan of IPOs that raise money to build stuff, and here, ALTER use this money to get a new facility and advance the construction of many more. which starts in that quarter. public.
no delay.
For the rest of now, given the company’s well-documented history of operating losses, and relatively slow progress to capture earnings up to expenses during that time, it’s hard to see where ALTER is going with it.
Like my coverage of the other recent IPO announcement, ORCA Cold Storage [ORCA]I think the potential value of this IPO is going to be heavily influenced by whatever ALTER and ICCP will issue us in the 2022 financials.
Whether it is Q1/22 or H1/22 data, it will give potential investors an idea of whether this company has cracked the code in terms of profitably generating renewable electricity.
Again, there’s a lot more information to consume before I make up my mind on this one way or another, and I’ll be on the lookout for more companies as more companies come to market and develop for more renewable energy. I am excited to see. Our overloaded grid, I’m still waiting for the hook to take this opportunity to understand more.
Let’s wait for the 2022 figures.
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Merkado Barkada’s opinion is 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 every investor should do their due diligence before trading, as the facts and figures in each particular article are subject to change.
