Equity Analysis /
Thailand

Thailand (Bualuang): Utilities & Industrial - Gas price surge hits SPPs

  • Pooled gas price uptrend accelerated by war, while tariff is capped

  • Higher gas prices to squeeze SPPs’ 2022 earnings

  • IPPs and renewables are the only choices for 2022

Kalvalee Thongsomaung
Kalvalee Thongsomaung

Equity Research Analyst

Bualuang Securities
18 March 2022

The Russia-Ukraine conflict has pushed up commodity prices, so the pooled gas price—a major cost of generating gas-fired power—has risen sharply. And the market doesn’t yet seem fully cognizant of the issue. Hence, IPPs and renewable plays remain our preferr-ed choices. For Industrial Estate stocks, we see a mixed impact.

Pooled gas price uptrend accelerated by war, while tariff is capped

The Russia-Ukraine war has pushed up commodity prices, including the price of gas. The pooled gas price in Jan was Bt384/MM btu, up 22% MoM (a decade-high), driven by sharply higher prices for LNG cargoes. Furthermore, LNG imports are much heavier this year because output has dived at the Erawan field. The ERC is unlikely to raise the Ft rate at anywhere near the scale of the spike in the pooled gas price (the ERC will raise the Ft rate by Bt0.23/kWh in May and we assume a Bt0.15/kWh increase in Sep).