As it prepares for its initial public offering (IPO), Raslag Corporation, a significant participant in the renewable energy industry and one of Solenergy Sytems Inc’s clients, is currently creating a stir on the Philippine Stock Exchange. The company is aiming to raise up to P805 million in its IPO, which would be the fifth of the year and has received all essential regulatory clearances.
According to the IPO strategy, ASLAG would sell up to 350 million primary shares to the general public for P2.00 each. In addition, J Ten Equities, the controlling shareholder, is offering an extra 52.5 million secondary shares to accommodate any anticipated spike in IPO demand. As a result of this tactical decision, the offer shares will account for about 23.3 percent of ASLAG’s anticipated P3.0 billion post-IPO market capitalisation.
ASLAG’s IPO journey, as one of the newest players in the renewable energy sector on the Philippine Stock Exchange, follows the success of successful offerings by well-known industry players like AC Energy (PSE: ACEN), Aboitiz Power (PSE: AP), First Gen Corp (PSE: FGEN), and Solar Philippines (PSE: SPNEC), underscoring the sector’s growing significance in the market.
Vital Insights for IPO Investors
Company Background and Founder’s Legacy
Under the brilliant direction of Engineer Peter G. Nepomuceno, Raslag Corporation is a forerunner in the nation’s solar energy industry. The Nepomuceno family has a century-long history in Angeles City of numerous commercial enterprises, including real estate endeavors and well-known organizations like the Angeles Ice Plant, Angeles Electric Corporation, Holy Angel University, and Nepo Mart Commercial Complex. ASLAG, which stands for “light” in Pampango, manages Raslag 1 and Raslag 2, two active solar power plants. The inauguration of Raslag 3, constructed by Solenergy Systems Inc., in Mabalacat, Pampanga, this year is evidence of ASLAG’s dedication to the development of renewable energy sources.
Utilization of IPO Proceeds
ASLAG plans to allocate approximately P330 million, or around 50 percent of its net profits from the IPO, to partially fund the development and construction of Raslag-4, the company’s fourth solar power plant. Solenergy is engaged as the EPC partner for this project. The remaining funds will support the progression of ambitious solar initiatives, including Raslag-5 in Panipuan, Mexico, Pampanga. This tactical decision underlines ASLAG’s commitment to portfolio growth and its role in advancing renewable energy infrastructure.
Earnings Prospects and Revenue Growth
From its operating solar power plants, ASLAG has seen strong revenue growth, with an outstanding average increase of 15% from P300 million in 2018 to P395 million in 2020. Due to the improved gross margins, which saw an increase from 68 percent in 2018 to 74 percent in 2020 due to sales growth, ASLAG’s net income increased to P178.8 million in 2020. In the same vein, during the first nine months of 2021, with relatively constant revenue trends, adept financial management enabled ASLAG to boost net income by 15%. Anticipating the year 2023, ASLAG expects that the launch of Raslag-3 will further enhance its revenue potential.
Risk and Opportunities
As part of its financial leverage strategy, ASLAG has relied heavily on debt finance to support its expansion efforts. Despite the company’s moderate debt-to-equity ratio, vigilant attention should be paid to the forthcoming borrowing for projects like Raslag-4 and Raslag-5, especially considering the potential impact of rising interest rates. These elements emphasize how important it is to consider potential financing expenses and return on investment.
Comparative Analysis
Comparing ASLAG’s pricing multiples to local industry norms uncovers a compelling investment opportunity. ASLAG surpasses the industry average favorably, showcasing a Price-to-Earnings (P/E) ratio of 15.5 times. This ratio is computed by dividing trailing net income by the projected market capitalization of P3.0 billion. Emphasizing the potential for substantial returns on investment, ASLAG also presents a Price-to-Book Value (PBV) ratio of 1.47 times. ASLAG’s strategy to uphold a higher PBV ratio through a strong return on equity further underscores the prospect of significant returns.
In a nutshell, ASLAG’s IPO offers investors a special chance to align their portfolios with a competitive player in the renewable energy sector. Due to its robust legacy, ambitious expansion objectives, and prudent financial management, ASLAG stands as an ideal candidate for leaving a lasting imprint on the Philippine Stock Exchange. Nonetheless, we strongly advise prospective investors to conduct thorough analysis before finalizing investment choices. It’s crucial to gain a comprehensive comprehension of the company’s business model, growth prospects, and potential risks.
