ACEN Q2: Waiting for the build-out to payoff

From AB Capital's The Opening Bell: Three Moves

Event

ACEN reported 2Q26 core income of P1.3 billion, reversing the P1.2 billion loss in 2Q25 but declining 11% QoQ. Excluding non-recurring gains, 1H26 core earnings reached P2.7 billion, representing just 41% of our FY26E and 32% of consensus, as higher financing, depreciation, and operating costs weighed on earnings conversion despite revenue growth of 52% YoY.

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Results highlight continued strength in ACEN's international portfolio, with attributable generation rising 10% YoY, led by Australia (+31%), India (+25%), and Vietnam (+17%), while EBITDA growth was strongest in India (+64%) and Vietnam (+28%). However, revenue growth translated into only 3% EBITDA growth as purchased power costs (+55%) and a 255% increase in opex offset operating momentum. Build-out costs also remain a key headwind, with interest expense (+52%) and depreciation (+37%) continuing to pressure profitability.

Catalyst

Key catalysts include: (1) sustained earnings delivery as new projects mature, (2) improved visibility on Vietnam tariff outcomes, (3) integration of battery storage beginning in 2027 to improve price capture and reduce reliance on Wholesale Electricity Spot Market (WESM) purchases, and (4) continued ramp-up of international assets.

Action

We remain NEUTRAL, as improving international operations and revenue growth continue to be offset by weak earnings conversion from rising build-out costs and limited battery storage. We would become more constructive with clearer evidence of sustained earnings delivery, tariff visibility, and successful battery storage integration.

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