Investors unload Phinma Energy Corp. shares after the planned stock rights offering

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By Marissa Mae M. Ramos

NEWS of Phinma Energy Corp.’s (now AC Energy Philippines, Inc.) plans to fuel its expansion through a stock rights offering (SRO) made the stock one of the most actively traded last week.

Data from the Philippine Stock Exchange showed the listed energy firm trading P413.267 million worth of 149.288 million shares from Sept. 16-20.

Shares closed at P2.69 apiece on Friday, 8.8% down week on week from its P2.95 per share finish on Sept. 13. For the year, the stock gained 133.91%.

“[Phinma Energy Corp.] was among the most active stocks [last] week as investors sold on the news about its planned capital raising via SRO next year to fund the $2 billion spending plan to become the leader in renewable energy by 2025,” said Unicapital Securities, Inc. technical analyst Cristopher Adrian T. San Pedro in an e-mail.

Mr. San Pedro explained that the move concerned investors as SROs can cause stock dilution.

“[SRO] leads to dilution, which results in a decrease of an existing stockholder’s ownership percentage of that company. Another thing to consider is that the company’s earnings per share decreases as the allocated earnings result in share dilution,” he said.

Last Tuesday, AC Energy Philippines President and Chief Executive Officer Eric T. Francia told shareholders during their annual meeting of the company’s goal of being “the leader in renewable energy in the country.” The firm looks to reach its target of 2,000-megawatts of renewable energy capacity by 2025.

To finance its capital expenditures of $2 billion in the next six years, Mr. Francia told reporters that the fund-raising would be conducted through an SRO. The terms would be decided by management on Oct. 9.

If approved, the company expects to receive the proceeds from the SRO “sometime [in the] first or second quarter next year,” said Mr. Francia.

The annual meeting last Tuesday also saw shareholders approved the renaming of the listed firm to AC Energy Philippines, Inc. as well as the company’s plan to increase its capitalization to P24.4 billion from P8.4 billion.

To recall, AC Energy, Inc. announced in January that it was taking control of Phinma Energy through a “mutually strategic agreement” that gives the Ayala-led firm a 51.48% stake in the listed energy company for P3.42 billion. The acquisition was completed on June 24.

“They have also disclosed that AC Energy, Inc. will be injecting some of its Philippine assets into AC Energy Philippines… Valuation of the assets here is key,” RCBC Securities, Inc. equity analyst Jeffrey Lucero said in an e-mail.

For Philstocks Financial, Inc. senior research analyst Japhet Louis O. Tantiangco, the stock’s price movement was attributed to profit-taking “amid a worrisome general market sentiment.”

“We did see a 3.77% surge in [the company’s] share price last Sept. 18 following its announced plan to allocate $2 billion for its renewable energy projects. This was cancelled out in the next two trading days, however, as general market uncertainties continued to linger,” Mr. Tantiangco said in a separate e-mail.

In the second quarter, Phinma Energy’s attributable net loss widened by 344% to P406.6 million from P91.57 million in the same quarter last year.

Philstocks’ Mr. Tantiangco said the company’s earnings “could remain depressed” for the rest of the year, but that it may recover in the long run as “it is already being combined with AC Energy, which would give it more operational capacity.”

Mr. Tantiangco pegs the stock’s support at P2.20 apiece while initial resistance is at P2.80 and next resistance at P3 per share.

“Its 50-day exponential moving average also serves as a dynamic support which is expected to be tested in the upcoming trading days. If it holds, then [Phinma Energy] may continue with its uptrend,” said Mr. Tantiangco.

For RCBC Securities research head Raul P. Ruiz, support and immediate resistance is at around P2.69 and P3, respectively.

“The stock encountered heavy selling primarily by local players early in the week, but found support at around the P2.50 level. It might consolidate over the next few days before attempting a retest of the P3.00 resistance,” Mr. Ruiz said in an e-mail.

Unicapital’s Mr. San Pedro expects “the stock to consolidate between P2.60 support and P2.92 resistance in the short term.”

“A bearish scenario to test the support levels at P2.40 and P2.45 might happen if the stock falls below P2.60,” Mr. San Pedro said.