Equity Analysis /

Thailand: Utilities - Strategy for the power price timebomb

  • 2Q22 results will signal incipient recovery

  • If the power price surges today, we pay for just the gas, but …

  • …if it surges tomorrow, we pay interest too

Bualuang Securities
3 August 2022

The price of electricity will eventually surge, as EGAT’s gas cost burden is now huge. We expect SPP plays to lead this theme; firms with big VSPP (Adder and private PPA) capacity will be catch-up plays. Within Utilities space, BGRIM and GPSC are our top picks.

2Q22 results will signal incipient recovery

Our models point to an aggregate Utilities coverage 2Q22 core profit of Bt3,128m, down 30% YoY but up 7% QoQ, in tandem with gas price changes (a mean 2Q22 pooled gas price of Bt390/MM Btu, up 90% YoY but down 5% QoQ). BGRIM and GPSC look set to mark slim core earnings (down YoY but QoQ recoveries). GULF’s core number should rise YoY but decline QoQ, while GUNKUL’s core profit will probably decline YoY but rise QoQ. Note that the baht depreciated against the greenback, so power stocks will mark significant (non-cash) FX losses.