ACEN drops two early-stage solar projects

From AB Capital's The Opening Bell: Three Moves

Event

ACEN voluntarily relinquished solar contracts for 336MW in Quezon and 120MW in Zambales, citing land acquisition and site access issues. Neither project had reached final investment decision or commercial operations, and the projects were not yet factored into our forecasts, so we see no change to our estimates.

View

We see this as a sign of greater discipline in project selection, but it also underscores the challenge of reaching ACEN's ambitious 20GW 2030 target, which we think will be difficult. Management has highlighted a greater focus on execution, which we think is more important at this stage given the scale of the existing build-out and the capital required.

Catalyst

Near term, ACEN should remain supported by elevated spot power prices, but we need to see better earnings conversion given its capex-heavy expansion. We would watch generation growth, project ramp-up and earnings delivery.

Action

No immediate earnings impact, as these projects were not in our forecasts. We maintain our Neutral rating and P2.90/sh target, with execution and earnings delivery from the existing portfolio remaining our key focus.

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