Equity Analysis /

Thailand: Utilities - Who wins most from a higher Ft?

  • EGAT’s huge gas cost burden …

  • … means high electricity prices through 2023

  • SPPs will recover, VSPPs will fly

Bualuang Securities
5 September 2022

The pooled gas price will not fall soon. Given EGAT’s huge financial burden, the electricity price will catch up fast. In 4Q22, the market will see recoveries among SPPs—and—strong profit expansion among VSPPs. Hence, we regard the recent share price falls of BGRIM, GPSC, and GUNKUL as sweet entry points.

EGAT’s huge gas cost burden …

PTT’s gas pool will still require big LNG imports in 2023, as declining output at the Yadana gas field in Myanmar (TotalEnergies is exiting) is likely to offset or outweigh the effect of higher production at the Erawan gas field. The ongoing energy crisis in Europe will keep LNG prices high, making for a persisting high pooled gas price. The ERC has raised the power price for the Sep-Dec 2022 period from Bt4.00/kWh to Bt4.72/kWh. But that rate factors in only the expected high gas price for Sep-Dec (Bt420-487/MM btu), not EGAT’s financial burden, which we preliminarily forecast will hit Bt123bn by end-Sep.