Global Power Synergy
Global Power Synergy Outperform (16E TP Bt30.00)
Company Update
Close Bt23.30
Energy & Utilities November 12, 2015
Earnings upgrade / Earnings upgrade / Overview unchanged
Solid earnings prospects in long run Price Performance (%)
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
1.308
1.378
KT ZMICO vs. consensus Share data
‐2.9%
‐0.6%
Reuters / Bloomberg
GPSC.BK/GPSC TB
Paid‐up Shares (m)
1,498.30
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
35.00/974.00
Foreign limit / actual (%)
49.00/0.24
52 week High / Low (Bt)
28.25/21.50
Avg. daily T/O (shares 000) NVDR (%)
7,515.00 0.17
Estimated free float (%)
24.91
Beta
0.81
URL
www.gpscgroup.com/ir_th.aspx ‐
CGR
‐
Anti‐corruption
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
Growth stage of capacity expansion, with potential upside risk GPSC’s growth stage of capacity expansion (536MW during 2015‐19E) will make NP peak in 2019E; meanwhile, potential capacity additions with Myanmar‐exposure power projects will be upside risk; however, its demanding 16E PBV/ROE of 0.17x (vs. big domestic power operators at the average of 0.11x) causes us to just rate Outperform, and we roll over the 2016E SOTP‐based TP to Bt30/share. Reported 3Q15 NP of Bt566mn with dividend income as the cushion GPSC delivered NP of Bt566mn in 3Q15 (+11% YoY, +19.5% QoQ), with dividend income received from RPCL power plant (amounting Bt288mn) as the earnings cushion in the quarter despite the drop in its electricity sales and steam sales. Its electricity sales and steam sales significantly decreased to Bt2.95bn (‐20% YoY, ‐38% QoQ), and to Bt1.39bn (‐16% YoY, ‐9% QoQ) in 3Q15, respectively, largely blamed on 1) Sriracha power plant, with a scheduled shutdown and lower dispatch from EGAT (reserved shutdown) causing power generation to decrease to 542GWh (‐19% YoY, ‐58% QoQ); and 2) Rayong Central Utility Plant 1‐3 (CUP 1‐3), with its clients’ plant shutdowns as the key reason for lower electricity sales to 496GWh (‐13% YoY, ‐12% QoQ) and steam sales to 1,117k tons (‐10% YoY, ‐11% QoQ). 2015‐16E forecasts maintained; earnings to peak in 2019E The 9M15 core profit and NP represent 90% and 83% of our full‐year forecasts (both at Bt1.9bn), with an expected weakening 4Q15E performance given the lack of dividend income in the quarter and the continuing lower electricity sales and steam sales at its CUP 1‐3 following some cliens’ maintenance shutdowns. In light of the full contribution of the five projects in the pipeline with a combined 536MW equity capacity, we expect its earnings profile to be on an accelerating trend. Net profit is projected to peak at Bt3.5bn in 2019E, implying an 18% CAGR in NP growth during 2015‐19E. Growth story to continue with the risk on the upside Its equity capacity is set to increase by 536MW to 1,851MW in 2019E, representing 41% growth from its five projects in the pipeline. Meanwhile, its long‐term growth potential is on the upside with another 600‐1,000MW in capacity additions to reach its aspiration of 2,451‐2,851MW within 2019E, with its Myanmar‐exposure in terms of three power projects (gas‐fired and coal‐fired) as the significant upside risk (in the process of MOA negotiation with targeted run in 2020‐22E). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) – FD EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2013 25,703 1,148 1.02 na 0.00 21.29 2013 22.80 11.97 1.09 0.0% 4.8% 30.6%
2014 23,755 1,581 1.41 37.65 0.10 22.50 2014 16.57 12.99 1.04 0.4% 6.4% 41.1%
2015E 24,710 1,897 1.27 (9.97) 0.51 24.59 2015E 18.40 24.40 0.95 2.2% 6.1% 98.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2016E 25,962 2,056 1.37 8.37 0.55 25.45 2016E 16.98 34.65 0.92 2.4% 5.5% 176.6%
2017E 31,139 2,603 1.74 26.59 0.69 26.64 2017E 13.41 22.41 0.87 3.0% 6.7% 163.9%
Figure 1: GPSC’s 3Q15 earnings review Profit and Loss (Btmn) Year‐end 31 Dec
3Q14
2Q15
3Q15
% YoY
% QoQ
9M14
9M15
% YoY
2014
2015E
% YoY
YTD (% 15E)
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates Minority interests Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
5,671 630 735 (113) 27 23 (6) ‐ 72 (1) 509 515 0.45 11.1 13.0 9.0 na 4.5 na na na
6,609 709 858 (100) 36 (33) (48) (79) 79 24 474 601 0.39 10.7 13.0 7.2 3.2 5.9 0.4 23.8 5.3
4,654 434 550 (92) 346 (27) (15) ‐ 62 11 566 580 0.43 9.3 11.8 12.2 3.6 3.1 0.4 23.8 6.3
(17.9) (31.1) (25.2) (18.7) 1,171.
(29.6) (38.7) (35.9) (7.8) 861.0 (16.6) (69.7) (100.0) (21.5) (54.4) 19.5 (3.4) 10.3
17,894 1,549 2,035 (360) 109 (14) (7) 0 197 1 1,181 1,189 1.05 8.7 11.4 6.6 na 3.5 na na na
17,714 1,820 2,209 (295) 404 (80) (55) (79) 224 35 1,571 1,705 1.19 10.3 12.5 8.9 3.6 4.8 0.4 23.8 5.9
(1.0) 17.5 8.6 (17.9) 269.6 467.5 655.9 nm 14.1 6,551.
23,755 2,090 2,722 (470) 135 (27) (8) ‐ 268 3 1,581 1,588 1.41 8.8 11.5 6.7 1.6 3.6 0.5 22.5 6.4
24,710 2,213 2,876 (340) 212 (189) ‐ ‐ 407 21 1,897 1,897 1.27 9.0 11.6 7.7 0.3 5.3 1.1 24.6 6.1
4.0 5.9 5.7 (27.7) 56.6 587.6 (100.0) nm 51.8 721.3 20.0 19.4 (10.0)
71.7% 82.3% 76.8% 86.9% 190.7% 42.4% nm nm 55.1% 169.6% 82.8% 89.9% 94.0%
nm 143.7 nm (14.1) nm 11.2 12.7 (4.4)
33.0 43.5 13.3
Source: KT ZMICO Research
Figure 2: Summary of GPSC’s 2016E SOTP‐based TP
Source: KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: GPSC’s growth strategy Source: KT Zmico Research
Figure 4: GPSC’s valuation comparison with regional peers Name
Mkt Cap (USDmn)
CLP HOLDINGS LTD DATANG INTL POWER GEN CO‐H HUANENG POWER INTL INC‐H HUADIAN POWER INTL CORP‐H CHINA POWER INTERNATIONAL CHINA RESOURCES POWER HOLDIN Hong Kong KOREA ELECTRIC POWER CORP S. Korea TENAGA NASIONAL BHD YTL POWER INTERNATIONAL BHD PETRONAS GAS BHD Malaysia NTPC LTD TATA POWER CO LTD POWER GRID CORP OF INDIA LTD RELIANCE POWER LTD LANCO INFRATECH LTD India MANILA ELECTRIC COMPANY Philippines ELECTRICITY GENERATING PCL RATCHABURI ELEC GEN HODG PUB GLOW ENERGY PCL CK POWER PCL GLOBAL POWER SYNERGY PCL Thailand EDL‐GENERATION PCL Laos AVERAGE
26,170 12,484 24,547 13,275 5,344 12,382 28,183 16,953 2,668 10,375 16,332 2,765 10,122 1,994 157 8,227 2,201 2,132 3,303 510 973 947
PER (x) 15E 16E
PBV (x) 15E 16E
EV/EBITDA (x) 15E 16E
YLD (%) 15E 16E
ROE (%) 15E 16E
15.1 7.3 6.4 5.9 6.9 6.1 7.9 7.2 7.2 10.9 12.2 25.0 16.0 11.8 16.2 11.3 9.6 na 12.2 21.0 21.0 18.8 18.7 13.3 42.7 18.4 22.4 12.6 12.6 14.2
1.8 0.8 1.5 1.3 1.3 1.0 1.3 0.5 0.5 1.4 1.0 4.0 2.1 1.3 1.3 1.5 0.6 na 1.2 4.8 4.8 1.1 1.2 2.4 1.0 0.9 1.3 1.1 1.1 1.8
10.8 9.5 6.4 6.6 7.5 5.9 7.8 4.9 4.9 7.0 9.0 14.3 10.1 9.6 7.1 8.7 9.1 15.9 10.1 11.2 11.2 21.1 12.1 8.0 9.3 24.4 15.0 11.3 11.3 10.1
4.1 4.8 6.4 5.3 4.9 5.7 5.2 2.9 2.9 2.5 5.0 2.6 3.4 3.3 2.0 1.8 0.5 na 1.9 4.1 4.1 4.2 4.3 3.8 0.9 2.2 3.1 5.5 5.5 3.7
12.0 9.0 20.0 19.7 15.8 16.7 15.6 19.7 19.7 13.4 8.0 16.5 12.6 11.0 7.4 15.0 6.6 nm 10.0 23.2 23.2 5.7 6.6 18.7 2.9 6.1 8.0 10.7 10.7 14.3
14.4 6.7 7.0 6.2 8.0 6.3 8.1 5.8 5.8 10.5 11.1 24.3 15.3 10.8 13.3 9.7 8.6 na 10.6 21.6 21.6 9.6 10.4 13.0 38.8 17.0 17.8 10.1 10.1 12.8
1.7 0.8 1.4 1.2 1.3 0.9 1.2 0.5 0.5 1.3 0.9 3.8 2.0 1.2 1.2 1.4 0.6 na 1.1 4.7 4.7 1.0 1.1 2.2 1.0 0.9 1.2 1.1 1.1 1.7
10.4 9.3 6.7 6.4 7.5 5.9 7.7 4.8 4.8 6.7 8.7 13.9 9.8 8.5 6.8 7.5 8.3 11.6 8.5 11.6 11.6 15.8 11.7 7.4 9.9 34.7 15.9 9.4 9.4 9.7
Source: KT ZMICO Research, Bloomberg REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
4.2 5.7 5.8 5.2 4.4 5.6 5.2 2.9 2.9 2.8 4.7 2.7 3.4 3.6 2.1 2.0 0.7 na 2.1 4.0 4.0 4.3 4.8 3.9 1.0 2.4 3.3 5.9 5.9 3.8
12.0 11.1 16.6 16.5 13.4 14.8 14.1 8.4 8.4 12.6 8.5 16.0 12.4 11.3 9.3 16.0 7.0 nm 10.9 21.9 21.9 10.7 11.3 17.4 2.6 5.5 9.5 10.9 10.9 12.6
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Minority interests Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) (FD) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013 25,703 (23,750) 1,953 (281) 2,663 991 1,672 (601) 185 1,256 (2) (23) (90) 2 5 1,148 1.32 1.02 1,261 1.12 0.00
2014 23,755 (21,665) 2,090 (410) 2,722 1,043 1,680 (470) 135 1,345 (27) (8) 0 268 3 1,581 1.41 1.41 1,588 1.41 0.10
2015E 24,710 (22,498) 2,213 (427) 2,876 1,091 1,786 (340) 212 1,658 (189) 0 0 407 21 1,897 1.40 1.27 1,897 1.27 0.51
2016E 25,962 (23,728) 2,234 (439) 2,923 1,128 1,794 (270) 205 1,729 (195) 0 0 493 29 2,056 1.37 1.37 2,056 1.37 0.55
2017E 31,139 (27,809) 3,330 (467) 4,439 1,575 2,863 (531) 180 2,513 (204) 0 0 636 (342) 2,603 1.74 1.74 2,603 1.74 0.69
2013 7,296 4,999 389 18,178 12,482 43,344 2,614 10,384 18,983 11,237 23,927 434 43,344
2014 3,603 3,013 359 20,048 15,909 42,932 1,595 11,197 16,914 11,237 25,285 733 42,932
2015E 3,592 2,708 308 29,728 44,546 80,882 21,939 16,918 43,330 14,983 36,840 712 80,882
2016E 3,772 3,201 390 28,978 76,794 113,135 54,627 15,524 74,315 14,983 38,137 683 113,135
2017E 3,960 3,839 457 27,785 77,893 113,934 55,290 13,212 72,992 14,983 39,918 1,024 113,934
2013 1,148 23 991 (1,762) 400 (22,053)
2014 1,581 8 1,043 549 3,180 (7,370)
2015E 1,897 0 1,091 789 3,777 (40,320)
2016E 2,056 0 1,128 (1,367) 1,817 (33,054)
2017E 2,603 0 1,575 (639) 3,540 (1,894)
(22,053) 12,998 22,786 0 (6,835) 28,949 7,296 (21,653) (19.27)
(7,370) (207) 48 0 656 497 (3,693) (4,190) (3.73)
(40,320) 26,065 10,198 (112) 382 36,532 (11) (36,543) (24.39)
(33,054) 31,294 522 (759) 360 31,416 180 (31,237) (20.85)
(1,894) (1,648) 294 (822) 719 (1,457) 189 1,645 1.10
2013 na na na 7.6 10.4 6.5 4.5 4.9 0.1
2014 (7.6) 2.2 37.6 8.8 11.5 7.1 6.7 6.7 2.0
2015E 4.0 5.7 (10.0) 9.0 11.6 7.2 7.7 7.7 11.4
2016E 5.1 1.6 8.4 8.6 11.3 6.9 7.9 7.9 11.3
2017E 19.9 51.9 26.6 10.7 14.3 9.2 8.4 8.4 8.1
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO is a partnership between KTB and ZMICO. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, KBS, PSL, SVH, VNG, ZMICO, CPI . KT ZMICO is a financial advisor for U, LOXLEY, SUTHA, ZMICO, MAKRO, CPALL, PLE, SAFARI, PACE, TPOLY, TFG, BRR. KT ZMICO is a co‐underwriter of SCI, SR, J, TKN.
Anti‐corruption Progress Indicator
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Company Update
Close Bt23.30
Energy & Utilities November 12, 2015
Earnings upgrade / Earnings upgrade / Overview unchanged
Solid earnings prospects in long run Price Performance (%)
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
1.308
1.378
KT ZMICO vs. consensus Share data
‐2.9%
‐0.6%
Reuters / Bloomberg
GPSC.BK/GPSC TB
Paid‐up Shares (m)
1,498.30
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
35.00/974.00
Foreign limit / actual (%)
49.00/0.24
52 week High / Low (Bt)
28.25/21.50
Avg. daily T/O (shares 000) NVDR (%)
7,515.00 0.17
Estimated free float (%)
24.91
Beta
0.81
URL
www.gpscgroup.com/ir_th.aspx ‐
CGR
‐
Anti‐corruption
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
Growth stage of capacity expansion, with potential upside risk GPSC’s growth stage of capacity expansion (536MW during 2015‐19E) will make NP peak in 2019E; meanwhile, potential capacity additions with Myanmar‐exposure power projects will be upside risk; however, its demanding 16E PBV/ROE of 0.17x (vs. big domestic power operators at the average of 0.11x) causes us to just rate Outperform, and we roll over the 2016E SOTP‐based TP to Bt30/share. Reported 3Q15 NP of Bt566mn with dividend income as the cushion GPSC delivered NP of Bt566mn in 3Q15 (+11% YoY, +19.5% QoQ), with dividend income received from RPCL power plant (amounting Bt288mn) as the earnings cushion in the quarter despite the drop in its electricity sales and steam sales. Its electricity sales and steam sales significantly decreased to Bt2.95bn (‐20% YoY, ‐38% QoQ), and to Bt1.39bn (‐16% YoY, ‐9% QoQ) in 3Q15, respectively, largely blamed on 1) Sriracha power plant, with a scheduled shutdown and lower dispatch from EGAT (reserved shutdown) causing power generation to decrease to 542GWh (‐19% YoY, ‐58% QoQ); and 2) Rayong Central Utility Plant 1‐3 (CUP 1‐3), with its clients’ plant shutdowns as the key reason for lower electricity sales to 496GWh (‐13% YoY, ‐12% QoQ) and steam sales to 1,117k tons (‐10% YoY, ‐11% QoQ). 2015‐16E forecasts maintained; earnings to peak in 2019E The 9M15 core profit and NP represent 90% and 83% of our full‐year forecasts (both at Bt1.9bn), with an expected weakening 4Q15E performance given the lack of dividend income in the quarter and the continuing lower electricity sales and steam sales at its CUP 1‐3 following some cliens’ maintenance shutdowns. In light of the full contribution of the five projects in the pipeline with a combined 536MW equity capacity, we expect its earnings profile to be on an accelerating trend. Net profit is projected to peak at Bt3.5bn in 2019E, implying an 18% CAGR in NP growth during 2015‐19E. Growth story to continue with the risk on the upside Its equity capacity is set to increase by 536MW to 1,851MW in 2019E, representing 41% growth from its five projects in the pipeline. Meanwhile, its long‐term growth potential is on the upside with another 600‐1,000MW in capacity additions to reach its aspiration of 2,451‐2,851MW within 2019E, with its Myanmar‐exposure in terms of three power projects (gas‐fired and coal‐fired) as the significant upside risk (in the process of MOA negotiation with targeted run in 2020‐22E). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) – FD EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2013 25,703 1,148 1.02 na 0.00 21.29 2013 22.80 11.97 1.09 0.0% 4.8% 30.6%
2014 23,755 1,581 1.41 37.65 0.10 22.50 2014 16.57 12.99 1.04 0.4% 6.4% 41.1%
2015E 24,710 1,897 1.27 (9.97) 0.51 24.59 2015E 18.40 24.40 0.95 2.2% 6.1% 98.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2016E 25,962 2,056 1.37 8.37 0.55 25.45 2016E 16.98 34.65 0.92 2.4% 5.5% 176.6%
2017E 31,139 2,603 1.74 26.59 0.69 26.64 2017E 13.41 22.41 0.87 3.0% 6.7% 163.9%
Figure 1: GPSC’s 3Q15 earnings review Profit and Loss (Btmn) Year‐end 31 Dec
3Q14
2Q15
3Q15
% YoY
% QoQ
9M14
9M15
% YoY
2014
2015E
% YoY
YTD (% 15E)
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates Minority interests Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
5,671 630 735 (113) 27 23 (6) ‐ 72 (1) 509 515 0.45 11.1 13.0 9.0 na 4.5 na na na
6,609 709 858 (100) 36 (33) (48) (79) 79 24 474 601 0.39 10.7 13.0 7.2 3.2 5.9 0.4 23.8 5.3
4,654 434 550 (92) 346 (27) (15) ‐ 62 11 566 580 0.43 9.3 11.8 12.2 3.6 3.1 0.4 23.8 6.3
(17.9) (31.1) (25.2) (18.7) 1,171.
(29.6) (38.7) (35.9) (7.8) 861.0 (16.6) (69.7) (100.0) (21.5) (54.4) 19.5 (3.4) 10.3
17,894 1,549 2,035 (360) 109 (14) (7) 0 197 1 1,181 1,189 1.05 8.7 11.4 6.6 na 3.5 na na na
17,714 1,820 2,209 (295) 404 (80) (55) (79) 224 35 1,571 1,705 1.19 10.3 12.5 8.9 3.6 4.8 0.4 23.8 5.9
(1.0) 17.5 8.6 (17.9) 269.6 467.5 655.9 nm 14.1 6,551.
23,755 2,090 2,722 (470) 135 (27) (8) ‐ 268 3 1,581 1,588 1.41 8.8 11.5 6.7 1.6 3.6 0.5 22.5 6.4
24,710 2,213 2,876 (340) 212 (189) ‐ ‐ 407 21 1,897 1,897 1.27 9.0 11.6 7.7 0.3 5.3 1.1 24.6 6.1
4.0 5.9 5.7 (27.7) 56.6 587.6 (100.0) nm 51.8 721.3 20.0 19.4 (10.0)
71.7% 82.3% 76.8% 86.9% 190.7% 42.4% nm nm 55.1% 169.6% 82.8% 89.9% 94.0%
nm 143.7 nm (14.1) nm 11.2 12.7 (4.4)
33.0 43.5 13.3
Source: KT ZMICO Research
Figure 2: Summary of GPSC’s 2016E SOTP‐based TP
Source: KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: GPSC’s growth strategy Source: KT Zmico Research
Figure 4: GPSC’s valuation comparison with regional peers Name
Mkt Cap (USDmn)
CLP HOLDINGS LTD DATANG INTL POWER GEN CO‐H HUANENG POWER INTL INC‐H HUADIAN POWER INTL CORP‐H CHINA POWER INTERNATIONAL CHINA RESOURCES POWER HOLDIN Hong Kong KOREA ELECTRIC POWER CORP S. Korea TENAGA NASIONAL BHD YTL POWER INTERNATIONAL BHD PETRONAS GAS BHD Malaysia NTPC LTD TATA POWER CO LTD POWER GRID CORP OF INDIA LTD RELIANCE POWER LTD LANCO INFRATECH LTD India MANILA ELECTRIC COMPANY Philippines ELECTRICITY GENERATING PCL RATCHABURI ELEC GEN HODG PUB GLOW ENERGY PCL CK POWER PCL GLOBAL POWER SYNERGY PCL Thailand EDL‐GENERATION PCL Laos AVERAGE
26,170 12,484 24,547 13,275 5,344 12,382 28,183 16,953 2,668 10,375 16,332 2,765 10,122 1,994 157 8,227 2,201 2,132 3,303 510 973 947
PER (x) 15E 16E
PBV (x) 15E 16E
EV/EBITDA (x) 15E 16E
YLD (%) 15E 16E
ROE (%) 15E 16E
15.1 7.3 6.4 5.9 6.9 6.1 7.9 7.2 7.2 10.9 12.2 25.0 16.0 11.8 16.2 11.3 9.6 na 12.2 21.0 21.0 18.8 18.7 13.3 42.7 18.4 22.4 12.6 12.6 14.2
1.8 0.8 1.5 1.3 1.3 1.0 1.3 0.5 0.5 1.4 1.0 4.0 2.1 1.3 1.3 1.5 0.6 na 1.2 4.8 4.8 1.1 1.2 2.4 1.0 0.9 1.3 1.1 1.1 1.8
10.8 9.5 6.4 6.6 7.5 5.9 7.8 4.9 4.9 7.0 9.0 14.3 10.1 9.6 7.1 8.7 9.1 15.9 10.1 11.2 11.2 21.1 12.1 8.0 9.3 24.4 15.0 11.3 11.3 10.1
4.1 4.8 6.4 5.3 4.9 5.7 5.2 2.9 2.9 2.5 5.0 2.6 3.4 3.3 2.0 1.8 0.5 na 1.9 4.1 4.1 4.2 4.3 3.8 0.9 2.2 3.1 5.5 5.5 3.7
12.0 9.0 20.0 19.7 15.8 16.7 15.6 19.7 19.7 13.4 8.0 16.5 12.6 11.0 7.4 15.0 6.6 nm 10.0 23.2 23.2 5.7 6.6 18.7 2.9 6.1 8.0 10.7 10.7 14.3
14.4 6.7 7.0 6.2 8.0 6.3 8.1 5.8 5.8 10.5 11.1 24.3 15.3 10.8 13.3 9.7 8.6 na 10.6 21.6 21.6 9.6 10.4 13.0 38.8 17.0 17.8 10.1 10.1 12.8
1.7 0.8 1.4 1.2 1.3 0.9 1.2 0.5 0.5 1.3 0.9 3.8 2.0 1.2 1.2 1.4 0.6 na 1.1 4.7 4.7 1.0 1.1 2.2 1.0 0.9 1.2 1.1 1.1 1.7
10.4 9.3 6.7 6.4 7.5 5.9 7.7 4.8 4.8 6.7 8.7 13.9 9.8 8.5 6.8 7.5 8.3 11.6 8.5 11.6 11.6 15.8 11.7 7.4 9.9 34.7 15.9 9.4 9.4 9.7
Source: KT ZMICO Research, Bloomberg REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
4.2 5.7 5.8 5.2 4.4 5.6 5.2 2.9 2.9 2.8 4.7 2.7 3.4 3.6 2.1 2.0 0.7 na 2.1 4.0 4.0 4.3 4.8 3.9 1.0 2.4 3.3 5.9 5.9 3.8
12.0 11.1 16.6 16.5 13.4 14.8 14.1 8.4 8.4 12.6 8.5 16.0 12.4 11.3 9.3 16.0 7.0 nm 10.9 21.9 21.9 10.7 11.3 17.4 2.6 5.5 9.5 10.9 10.9 12.6
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Minority interests Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) (FD) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013 25,703 (23,750) 1,953 (281) 2,663 991 1,672 (601) 185 1,256 (2) (23) (90) 2 5 1,148 1.32 1.02 1,261 1.12 0.00
2014 23,755 (21,665) 2,090 (410) 2,722 1,043 1,680 (470) 135 1,345 (27) (8) 0 268 3 1,581 1.41 1.41 1,588 1.41 0.10
2015E 24,710 (22,498) 2,213 (427) 2,876 1,091 1,786 (340) 212 1,658 (189) 0 0 407 21 1,897 1.40 1.27 1,897 1.27 0.51
2016E 25,962 (23,728) 2,234 (439) 2,923 1,128 1,794 (270) 205 1,729 (195) 0 0 493 29 2,056 1.37 1.37 2,056 1.37 0.55
2017E 31,139 (27,809) 3,330 (467) 4,439 1,575 2,863 (531) 180 2,513 (204) 0 0 636 (342) 2,603 1.74 1.74 2,603 1.74 0.69
2013 7,296 4,999 389 18,178 12,482 43,344 2,614 10,384 18,983 11,237 23,927 434 43,344
2014 3,603 3,013 359 20,048 15,909 42,932 1,595 11,197 16,914 11,237 25,285 733 42,932
2015E 3,592 2,708 308 29,728 44,546 80,882 21,939 16,918 43,330 14,983 36,840 712 80,882
2016E 3,772 3,201 390 28,978 76,794 113,135 54,627 15,524 74,315 14,983 38,137 683 113,135
2017E 3,960 3,839 457 27,785 77,893 113,934 55,290 13,212 72,992 14,983 39,918 1,024 113,934
2013 1,148 23 991 (1,762) 400 (22,053)
2014 1,581 8 1,043 549 3,180 (7,370)
2015E 1,897 0 1,091 789 3,777 (40,320)
2016E 2,056 0 1,128 (1,367) 1,817 (33,054)
2017E 2,603 0 1,575 (639) 3,540 (1,894)
(22,053) 12,998 22,786 0 (6,835) 28,949 7,296 (21,653) (19.27)
(7,370) (207) 48 0 656 497 (3,693) (4,190) (3.73)
(40,320) 26,065 10,198 (112) 382 36,532 (11) (36,543) (24.39)
(33,054) 31,294 522 (759) 360 31,416 180 (31,237) (20.85)
(1,894) (1,648) 294 (822) 719 (1,457) 189 1,645 1.10
2013 na na na 7.6 10.4 6.5 4.5 4.9 0.1
2014 (7.6) 2.2 37.6 8.8 11.5 7.1 6.7 6.7 2.0
2015E 4.0 5.7 (10.0) 9.0 11.6 7.2 7.7 7.7 11.4
2016E 5.1 1.6 8.4 8.6 11.3 6.9 7.9 7.9 11.3
2017E 19.9 51.9 26.6 10.7 14.3 9.2 8.4 8.4 8.1
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO is a partnership between KTB and ZMICO. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, KBS, PSL, SVH, VNG, ZMICO, CPI . KT ZMICO is a financial advisor for U, LOXLEY, SUTHA, ZMICO, MAKRO, CPALL, PLE, SAFARI, PACE, TPOLY, TFG, BRR. KT ZMICO is a co‐underwriter of SCI, SR, J, TKN.
Anti‐corruption Progress Indicator
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
