Merkado Barkada
November 12, 2024 | 8:10am
Alternergy [ALTER 0.91 unch; 31% avgVol] [link] posted a Q3 income of P17.4 million, which was down 82% from its Q3/23 net income of P97.0 million on “high bar” effects from one-time cost recovery income that it booked in the previous period. ALTER reported higher revenue from electricity sales (+125%) thanks to the addition of the Palau solar project, which contributed approximately 51% of the company’s operating revenues for the period. Net income from core operations increased by 63% from the start of commercial operations for the Palau solar facility.
MB bottom-line: ALTER has financial megaminds in its c-suite, so I’m not concerned about the company’s ability to juggle all of the fundraising balls that it has in the air right now, but I am disappointed with the lack of context from the ALTER group on this Q1 result. ALTER’s communications strategy feels very granular. We get well-crafted releases on specific topics like the full acquisition of the Tablas Projects, the increase in capacity approval for the Tanay Project, or the start of full construction on the Tanay, Alabat, and Solana Projects. But what we don’t get is the zoomed-out look of where these developments place the company within the narrative of its explicit goals (the 500MW by 2026 goal is top of mind here) and its implicit drive to improve profitability and shareholder returns. If ALTER were a mature business, its bare-bones discussion section would make a lot more sense, but this is anything but a mature business. It’s growing super fast (125% y/y increase in sales revenue), adding international projects, raising funds through several channels, and its accounting is not intuitive to those who are not already familiar with the business. The discussion section contextualizes the 82% drop in profitability by saying that it’s “mainly” due to the one-time project cost recovery in Q3/23, but it doesn’t go any further. How big was that one-time gain? (It was ?86.2 million.) What would the net income have been last year without that? (Approximately ?11.5 million.) How would this quarter have looked if that one-time gain were excluded? (Net income would have been up 48% y/y.) This is a nitpick, I know. As someone who communicates with thousands of retail investors on a daily basis, I also know these small adjustments can make a huge difference in the accessibility of the report (and the results).
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