Securities Company (SEC) KGI (Thailand) analyzed stocks of Global Power Synergy Company or GPSC on February 9, expecting GPSC to report 4Q66F net profit of 365 million baht (-80% QoQ, YoY turnover), but excluding profit FX and amortization from GLOW, the main profit will be 575 million baht (-74% QoQ, YoY conversion) Profit will be much lower QoQ due to i) SPP margin is squeezed ii) Seasonal factors (lower electricity demand, higher SG&A costs, weaker performance of hydropower projects) and iii) lower AP values, we expect the average Ft value to drop to 0.20 baht/kWh (- 0.47 baht QoQ) Expect average gas and coal prices to be 340 baht/mmbtu (stable QoQ) and US$157/ ton (-US$68 QoQ), respectively We expect Avaada’s performance to remain stable, while CXFD may change. The YoY performance improvement will be a result of the stronger performance of SPPs, which outweighs interest costs. and increased G&A costs
1Q24F results should rebound strongly but decline YoY Factors helping to support QoQ results are seasonal factors (back electricity demand, lower SG&A costs) and increasing SPP margin. Factors dragging down YoY performance include i) weaker performance of GHECO-One and ii) higher Although GHECO-One resumed operations YTD, its performance
It may still be weak due to the anomaly of the low selling price (linked to the coal spot price with a long time) while the cost of old stocks.
Coal margins are high, especially 1H67F We expect SPP margins could increase slightly or remain flat YoY, depending on energy prices.
We are more positive on SPP’s outlook, believing that the cycle of earnings cuts is probably over. of gas prices which are in decline and less risk in terms of electricity rates We are of the opinion that the structural change in gas prices together with the reduction in electricity prices (from the previous reduction in electricity prices only) is a positive sign on for the profit of the SPP The Energy Regulatory Commission expects that electricity prices will remain between 4.20-4.25 baht. /kWh in 2024F (from 4.67 baht in 2023), with lower energy costs and increased supply from domestic gas fields likely to help stabilize SPP margins, while at the same time lower energy prices. This may be an opportunity to pay back the rest of EGAT’s debt under the expectation that electricity prices will remain stable.
We maintain our Sell recommendation with a DCF target price of 43.00 baht, although we believe there is still upside to lower energy prices and lower electricity price policy risks. Although there are new risks arising from GHECO-One’s operations (especially in 1H24), we are keeping our estimates unchanged for now. Waiting to see clarity on this issue at the analyst meeting regarding the 4Q23 budget.
Risk factors include unplanned maintenance shutdowns, cost overruns, and exchange rate fluctuations. and interest rates
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