Equity Analysis /

Thailand: Utilities - Soaring gas price—shift to wind and solar

  • Gas price hit a new record in 3Q22, but …

  • …is likely to decline in 4Q22

  • Renewables the best play for the long haul

Bualuang Securities
31 October 2022

The pooled gas price will decline soon. But the elec-tricity price will remain high through 2023. We suggest trading SPP stocks and buying-and-holding renewa-bles. GUNKUL is currently our top Utilities pick. Note that we have shifted our investment horizon to YE23.

Gas price hit a new record in 3Q22, but …

The pooled gas price hit a new high in Sep of Bt649/MM btu, up by 177% YoY and 20% MoM (Figure 2). The 3Q22 mean gas price was Bt534/MM btu, up by 127% YoY and 37% QoQ. A soaring gas price will have squeezed the 3Q22 GMs of SPPs. BGRIM looks set to report a core loss. But GPSC may mark a slim core profit (greater YoY and QoQ power dispatch at XPCL should have mitigated the impact of a high gas price). We estimate aggregate 3Q22 Utilities coverage core earnings of Bt3,065m, down by 43% YoY and 29% QoQ. And most power operators will mark big FX losses tied to a weak baht, so our aggregate NPAT estimate is Bt1,226m, down by 73% YoY and 29% QoQ.