Equity Analysis /
Thailand

Gunkul Engineering PCL: All the green businesses that are good

  • Answers to climate change and power price surges

  • Joint venture with GULF to amplify growth

  • The good stuff remains a good story

Bualuang Securities
29 June 2022

We see plenty of opportunities tied to the de-carbonization theme. And GUNKUL’s renewables JV with GULF amplifies the scope for growth. The firm is also exploring opportunities in the cannabis industry, which could mean bottom-line upside. We have initiated coverage with a BUY call on to a YE22 SOTP-derived target price of Bt7, premised on a strong (and secure) profit growth profile.

Answers to climate change and power price surges

The upcoming PDPs of Thailand and Vietnam will expand renewable allocations. New investment opportunities will open for GUNKUL to develop renewable projects. And in the interim, Thailand’s power price surge will boost the firm’s mean electricity sales price. We estimate that for every Bt1.00/kWh that the Ft rate exceeds our 2023 Ft rate assumption (Bt0.15/kWh), there would be upside to our revenue projection of Bt400-500m/year (and 13-17% upside to our 2023 earnings forecast).