Underperform (17E TP Bt18.80) - Global Alliance Partners
TPC Power Holding Underperform (17E TP Bt18.80)
Company Update
Close Bt18.50
Mai ‐ Resources June 7, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Lots of opportunities but more cash needed Price Performance (%) Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.999
1.546
KT ZMICO vs. consensus Share data
‐3.9%
‐21.7%
Reuters / Bloomberg
TPCH.BK/TPCH TB
Paid‐up Shares (m)
401.20
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
7.00/218.00
Foreign limit / actual (%)
49.00/0.00
52 week High / Low (Bt)
20.90/15.10
Avg. daily T/O (shares 000)
4,097.00
NVDR (%)
4.39
Estimated free float (%)
57.52
Beta
1.39
URL
www.tpcpower.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6289
Unattractive upside…downgrade to Underperform Domestic expansion continues with delays to some projects but they will surely come as promised. For the growth prospects, there are still plenty of opportunities ahead but they might require an additional capital call due to the size. We revise down our net profit forecasts following the delay of two projects and downgrade our recommendation to Underperform as the upside is rather slim. Delay in COD of two projects Two projects are waiting to start commissioning this year, i.e., PGP and SGP. COD of PGP has been postponed from Apr‐17 to June‐17 while SGP is still on track. COD of the first phase (23MW) of PTG has been postponed from Jun‐18 to Mar‐19 due to the stability of the grid connection. We factor in the delays and revise down our net profit forecasts for 17E and 18E by 6% and 30%, respectively. Greater opportunities ahead Three potential projects are 1) waste‐to‐energy that is expected to be announced by ERC this year, 2) SPP Hybrid Firm and VSPP Semi‐Firm and 3) hydropower plant in Lao PDR, which has potential capacity of up to 80MW after running feasibility. We have not yet included the above potential projects in our forecasts and this should have some impact if they are confirmed.
Potential to raise more capital We estimate that the company will have to inject equity of around Bt1,000mn to Bt1,500mn for the hydropower plant, which is deemed excessive compared to its balance sheet. There are a few options including asset divestment, a joint venture, or a cash call, but we think additional capital looks likely due to the greater flexibility compared to the others. Lower TP to Bt18.80…downgrade to Underperform We revise down our 17E TP from Bt19.60 to Bt18.80, with upside of around 2%. The valuation looks unattractive while capital raising could potentially depress the stock performance, especially during the current soft market sentiment. We hence downgrade our recommendation from Outperform to Underperform. Financials and Valuation FY Ended 31 Dec 2014 Revenues (Btmn) 258 Net profit (Btmn) 29 EPS (Bt) 0.09 EPS growth (%) 80.0% Dividend (Bt) 0.00 BV (Bt) 4.31 FY Ended 31 Dec 2014 PER (x) 205.6 EV/EBITDA (x) 90.09 PBV (x) 4.30 Dividend yield (%) 0.0% ROE (%) 2.5% Net gearing (%) ‐24%
2015 305 47 0.12 29.2% 0.01 4.42 2015 159.1 78.81 4.19 0.1% 2.7% 11%
2016 672 201 0.50 331.3% 0.03 4.92 2016 36.89 27.18 3.76 0.2% 10.7% 45%
2017E 1,284 386 0.96 91.7% 0.05 5.45 2017E 19.25 12.48 3.39 0.3% 18.5% 70%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2018E 1,616 485 1.21 25.7% 0.10 5.99 2018E 15.31 9.66 3.09 0.5% 21.1% 132%
2019E 3,198 826 2.06 70.3% 0.82 6.91 2019E 8.99 5.12 2.68 4.5% 31.9% 93%
Delay of COD of two projects Two projects are waiting to start commissioning this year, i.e., Patthalung Green Power and Satun Green Power (PGP and SGP). PGP is expected to COD in late June (slower than we previously expected in April) while SGP is still on track (expected COD around 3Q17). COD of the first phase (23MW) of the biggest project “Patthani Green Power” (PTG) will be postponed from Jun‐18 to Mar‐19 due to the stability of the grid connection. We therefore revise down our net profit forecasts for 17E and 18E by 6% and 30% to reflect the delay of PGP and PTG. Figure 1: Capacity expansion plan PTG1
160
132 132
140
TPCH1,2,5
120 PGP
60 40 20
10
0
7
20
20
16
16
86
TSG
MGP
MWE
142
109
SGP
100 80
SP
PTG2
(MW)
30 20
30 20
40 27
40 27
50
33
60
38
60
38
60
38
60
38
60
38
55
70
85
85
90
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Equity MW
Consolidated
Sources: TPCH, KT Zmico Research
Greater opportunities ahead The company expects to acquire 10‐20 MW of waste‐to‐energy PPA, which should be announced by ERC this year. In the meantime, its RDF facility will produce RDF for sale but we expect additional revenue to be insignificant. The waste‐to‐energy project will be run under Siam Power, which is owned by TPCH at 50%. The plant will be located in Nonthaburi, which has high potential of getting PPA due to the amount of daily MSW. TPCH has also expressed strong interest in bidding for the SPP Hybrid Firm and VSPP Semi‐Firm licenses, which should come as a JV with its partners. In addition, there are better prospects for the hydropower plant project in Lao PDR as the company sees the potential capacity rising from 52 MW to 80 MW after running feasibility. Note that the hydropower project is still under the study phase and its prospects should be clearer within the next 6 – 12 months. We have not yet included the above potential projects in our forecasts and this should have an impact if they are confirmed.
Potential to raise more capital While there is still enough cash for domestic expansion for another 40MW, growing outside Thailand will require much more capital given the current prospects. We estimate that investment in the hydropower plant will need Capex of around Bt3,500mn to Bt5,200mn (depending on the size of the plant, i.e., 50MW – 80MW). The company will have to inject equity of around Bt1,000mn to Bt1,500mn (assuming a 70% financing portion and 100% holding in the project), which is deemed excessive compared to its current balance sheet. There are a few options including asset divestment, a joint venture, or a cash call, but we think additional capital looks likely due to the greater flexibility compared to the other choices. REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 2: Chang Raek Biomass (CRB)
Figure 3: Maewong Energy (MWE)
(GWh) 25.0
105.0%
(GWh) 20.0
100.0%
18.0
23.0
95.0%
21.0
100.0% 95.0% 90.0%
16.0
90.0% 19.0
85.0%
85.0% 14.0
80.0%
Energy output
Capacity factor
Energy output
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
70.0%
2Q15
10.0
1Q15
75.0% 4Q14
75.0%
15.0 3Q14
12.0
2Q14
80.0% 1Q14
17.0
Capacity factor
Sources: TPCH, KT Zmico Research
Sources: TPCH, KT Zmico Research
Figure 4: Mahachai Green Power (MGP)
Figure 5: Thungsung Green Power (TSG)
(GWh) 25.0
120.0%
(GWh) 25.0
90.0%
20.0
100.0%
20.0
85.0%
80.0%
15.0
80.0%
15.0
60.0%
Energy output
70.0% 65.0%
0.0%
0.0
60.0%
4Q16
20.0%
5.0
Capacity factor
Energy output
Capacity factor
Sources: TPCH, KT Zmico Research
Sources: TPCH, KT Zmico Research
Figure 6: TPCH’s PER band
Figure 7: TPCH’s PBV band
(X)
(X)
300
6.5
+2.0 S.D.
5.5
+1.0 S.D.
+1.0 S.D.
4.5 Avg.
4.0 3.5
-1.0 S.D.
3.0
Source: Bloomberg, KT Zmico Research
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Jan-17
Dec-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Jan-16
Mar-16
Dec-15
Oct-15
Nov-15
-2.0 S.D.
2.0
Jul-15
Jan-17
Dec-16
Nov-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Jan-16
Mar-16
Dec-15
Nov-15
Oct-15
Sep-15
2.5
Aug-15
Jul-15
Apr-15
Mar-15
Jan-15
Feb-15
-50
May-15
-2.0 S.D.
Jan-15
0
Aug-15
-1.0 S.D.
50
May-15
Avg.
Sep-15
150 100
+2.0 S.D.
5.0
Apr-15
200
+3.0 S.D.
6.0
Mar-15
250
Feb-15
75.0% 10.0
1Q17
4Q16
3Q16
0.0 2Q16
5.0
40.0%
1Q17
10.0
FINANCIAL TABLE
PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Gain (loss) from affiliates Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Accounts payable Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Non‐cash adjustment 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 (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 258 (146) 112 (42) 97 (27) 69 (28) 4 45 7 (2) 0 (21) 29 0.09 29 0.09 0.00
2015 305 (181) 124 (47) 110 (34) 76 (27) 18 67 4 (2) 0 (22) 47 0.12 47 0.12 0.01
2016 672 (345) 327 (69) 320 (62) 258 (45) 16 230 2 28 0 (59) 201 0.50 201 0.50 0.03
2017E 1,284 (634) 650 (71) 698 (118) 579 (96) 0 483 0 65 0 (162) 386 0.96 386 0.96 0.05
2014 1,365 45 0 58 1,256 241 2,966 174 24 730 1,019 400 1,948 2,966
2015 754 95 0 107 1,847 491 3,294 137 43 859 1,157 401 2,137 3,294
2016 595 127 0 345 2,853 532 4,453 137 73 1,544 2,015 401 2,437 4,453
2017E 1,228 211 0 385 4,285 532 6,641 329 87 2,992 3,669 401 2,973 6,641
2014 50 5 27 (0) 82 (844) (46) (891) 526 1,140 0 197 1,864 1,055 (809) (2.60)
2015 68 (5) 34 (91) 6 (731) (657) (1,387) 89 4 0 116 209 (1,173) (1,382) (3.44)
2016 260 (28) 62 100 394 (1,066) 0 (1,066) 685 0 (40) 6 652 (21) (673) (1.68)
2017E 547 (65) 118 (70) 531 (1,550) 24 (1,526) 1,640 0 (46) 35 1,628 633 (995) (2.48)
2014 43.3% 118.5% 80.0% 43.3% 37.4% 26.9% 11.1% 11.1% ‐14.7%
2015 18.1% 14.3% 29.2% 40.5% 36.2% 25.0% 15.3% 15.3% ‐6.0%
2016 120.5% 190.0% 331.3% 48.6% 47.6% 38.4% 29.9% 29.9% ‐0.8%
2017E 90.9% 117.8% 91.7% 50.6% 54.3% 45.1% 30.0% 30.0% 0.0%
2018E 1,616 (777) 839 (71) 901 (133) 768 (94) 0 674 0 59 0 (248) 485 1.21 485 1.21 0.10
2018E 532 266 0 405 6,753 532 8,486 650 108 4,199 5,218 401 3,269 8,486
2019E 3,198 (1,714) 1,484 (94) 1,698 (308) 1,390 (216) 0 1,174 0 70 0 (419) 826 2.06 826 2.06 0.82 2019E 608 526 0 434 6,444 532 8,544 696 233 3,503 4,693 401 3,851 8,544
2018E 733 (59) 133 (34) 773 (2,600) 40 (2,560) 1,528 0 (189) (248) 1,091 (696) (1,788) (4.46)
2019E 1,245 (70) 308 (135) 1,348 0 41 41 (650) 0 (243) (419) (1,312) 77 1,389 3.46
2018E 25.8% 29.1% 25.7% 51.9% 55.7% 47.5% 30.0% 30.0% 0.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
2019E 98.0% 88.6% 70.3% 46.4% 53.1% 43.5% 25.8% 25.8% 0.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TFD, TTL, NMG, SAWAD, NUSA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) 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
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Company Update
Close Bt18.50
Mai ‐ Resources June 7, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Lots of opportunities but more cash needed Price Performance (%) Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.999
1.546
KT ZMICO vs. consensus Share data
‐3.9%
‐21.7%
Reuters / Bloomberg
TPCH.BK/TPCH TB
Paid‐up Shares (m)
401.20
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
7.00/218.00
Foreign limit / actual (%)
49.00/0.00
52 week High / Low (Bt)
20.90/15.10
Avg. daily T/O (shares 000)
4,097.00
NVDR (%)
4.39
Estimated free float (%)
57.52
Beta
1.39
URL
www.tpcpower.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6289
Unattractive upside…downgrade to Underperform Domestic expansion continues with delays to some projects but they will surely come as promised. For the growth prospects, there are still plenty of opportunities ahead but they might require an additional capital call due to the size. We revise down our net profit forecasts following the delay of two projects and downgrade our recommendation to Underperform as the upside is rather slim. Delay in COD of two projects Two projects are waiting to start commissioning this year, i.e., PGP and SGP. COD of PGP has been postponed from Apr‐17 to June‐17 while SGP is still on track. COD of the first phase (23MW) of PTG has been postponed from Jun‐18 to Mar‐19 due to the stability of the grid connection. We factor in the delays and revise down our net profit forecasts for 17E and 18E by 6% and 30%, respectively. Greater opportunities ahead Three potential projects are 1) waste‐to‐energy that is expected to be announced by ERC this year, 2) SPP Hybrid Firm and VSPP Semi‐Firm and 3) hydropower plant in Lao PDR, which has potential capacity of up to 80MW after running feasibility. We have not yet included the above potential projects in our forecasts and this should have some impact if they are confirmed.
Potential to raise more capital We estimate that the company will have to inject equity of around Bt1,000mn to Bt1,500mn for the hydropower plant, which is deemed excessive compared to its balance sheet. There are a few options including asset divestment, a joint venture, or a cash call, but we think additional capital looks likely due to the greater flexibility compared to the others. Lower TP to Bt18.80…downgrade to Underperform We revise down our 17E TP from Bt19.60 to Bt18.80, with upside of around 2%. The valuation looks unattractive while capital raising could potentially depress the stock performance, especially during the current soft market sentiment. We hence downgrade our recommendation from Outperform to Underperform. Financials and Valuation FY Ended 31 Dec 2014 Revenues (Btmn) 258 Net profit (Btmn) 29 EPS (Bt) 0.09 EPS growth (%) 80.0% Dividend (Bt) 0.00 BV (Bt) 4.31 FY Ended 31 Dec 2014 PER (x) 205.6 EV/EBITDA (x) 90.09 PBV (x) 4.30 Dividend yield (%) 0.0% ROE (%) 2.5% Net gearing (%) ‐24%
2015 305 47 0.12 29.2% 0.01 4.42 2015 159.1 78.81 4.19 0.1% 2.7% 11%
2016 672 201 0.50 331.3% 0.03 4.92 2016 36.89 27.18 3.76 0.2% 10.7% 45%
2017E 1,284 386 0.96 91.7% 0.05 5.45 2017E 19.25 12.48 3.39 0.3% 18.5% 70%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2018E 1,616 485 1.21 25.7% 0.10 5.99 2018E 15.31 9.66 3.09 0.5% 21.1% 132%
2019E 3,198 826 2.06 70.3% 0.82 6.91 2019E 8.99 5.12 2.68 4.5% 31.9% 93%
Delay of COD of two projects Two projects are waiting to start commissioning this year, i.e., Patthalung Green Power and Satun Green Power (PGP and SGP). PGP is expected to COD in late June (slower than we previously expected in April) while SGP is still on track (expected COD around 3Q17). COD of the first phase (23MW) of the biggest project “Patthani Green Power” (PTG) will be postponed from Jun‐18 to Mar‐19 due to the stability of the grid connection. We therefore revise down our net profit forecasts for 17E and 18E by 6% and 30% to reflect the delay of PGP and PTG. Figure 1: Capacity expansion plan PTG1
160
132 132
140
TPCH1,2,5
120 PGP
60 40 20
10
0
7
20
20
16
16
86
TSG
MGP
MWE
142
109
SGP
100 80
SP
PTG2
(MW)
30 20
30 20
40 27
40 27
50
33
60
38
60
38
60
38
60
38
60
38
55
70
85
85
90
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Equity MW
Consolidated
Sources: TPCH, KT Zmico Research
Greater opportunities ahead The company expects to acquire 10‐20 MW of waste‐to‐energy PPA, which should be announced by ERC this year. In the meantime, its RDF facility will produce RDF for sale but we expect additional revenue to be insignificant. The waste‐to‐energy project will be run under Siam Power, which is owned by TPCH at 50%. The plant will be located in Nonthaburi, which has high potential of getting PPA due to the amount of daily MSW. TPCH has also expressed strong interest in bidding for the SPP Hybrid Firm and VSPP Semi‐Firm licenses, which should come as a JV with its partners. In addition, there are better prospects for the hydropower plant project in Lao PDR as the company sees the potential capacity rising from 52 MW to 80 MW after running feasibility. Note that the hydropower project is still under the study phase and its prospects should be clearer within the next 6 – 12 months. We have not yet included the above potential projects in our forecasts and this should have an impact if they are confirmed.
Potential to raise more capital While there is still enough cash for domestic expansion for another 40MW, growing outside Thailand will require much more capital given the current prospects. We estimate that investment in the hydropower plant will need Capex of around Bt3,500mn to Bt5,200mn (depending on the size of the plant, i.e., 50MW – 80MW). The company will have to inject equity of around Bt1,000mn to Bt1,500mn (assuming a 70% financing portion and 100% holding in the project), which is deemed excessive compared to its current balance sheet. There are a few options including asset divestment, a joint venture, or a cash call, but we think additional capital looks likely due to the greater flexibility compared to the other choices. REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 2: Chang Raek Biomass (CRB)
Figure 3: Maewong Energy (MWE)
(GWh) 25.0
105.0%
(GWh) 20.0
100.0%
18.0
23.0
95.0%
21.0
100.0% 95.0% 90.0%
16.0
90.0% 19.0
85.0%
85.0% 14.0
80.0%
Energy output
Capacity factor
Energy output
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
70.0%
2Q15
10.0
1Q15
75.0% 4Q14
75.0%
15.0 3Q14
12.0
2Q14
80.0% 1Q14
17.0
Capacity factor
Sources: TPCH, KT Zmico Research
Sources: TPCH, KT Zmico Research
Figure 4: Mahachai Green Power (MGP)
Figure 5: Thungsung Green Power (TSG)
(GWh) 25.0
120.0%
(GWh) 25.0
90.0%
20.0
100.0%
20.0
85.0%
80.0%
15.0
80.0%
15.0
60.0%
Energy output
70.0% 65.0%
0.0%
0.0
60.0%
4Q16
20.0%
5.0
Capacity factor
Energy output
Capacity factor
Sources: TPCH, KT Zmico Research
Sources: TPCH, KT Zmico Research
Figure 6: TPCH’s PER band
Figure 7: TPCH’s PBV band
(X)
(X)
300
6.5
+2.0 S.D.
5.5
+1.0 S.D.
+1.0 S.D.
4.5 Avg.
4.0 3.5
-1.0 S.D.
3.0
Source: Bloomberg, KT Zmico Research
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Jan-17
Dec-16
Nov-16
Sep-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Jan-16
Mar-16
Dec-15
Oct-15
Nov-15
-2.0 S.D.
2.0
Jul-15
Jan-17
Dec-16
Nov-16
Sep-16
Aug-16
Jul-16
Jun-16
May-16
Apr-16
Jan-16
Mar-16
Dec-15
Nov-15
Oct-15
Sep-15
2.5
Aug-15
Jul-15
Apr-15
Mar-15
Jan-15
Feb-15
-50
May-15
-2.0 S.D.
Jan-15
0
Aug-15
-1.0 S.D.
50
May-15
Avg.
Sep-15
150 100
+2.0 S.D.
5.0
Apr-15
200
+3.0 S.D.
6.0
Mar-15
250
Feb-15
75.0% 10.0
1Q17
4Q16
3Q16
0.0 2Q16
5.0
40.0%
1Q17
10.0
FINANCIAL TABLE
PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Gain (loss) from affiliates Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Accounts payable Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Non‐cash adjustment 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 (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 258 (146) 112 (42) 97 (27) 69 (28) 4 45 7 (2) 0 (21) 29 0.09 29 0.09 0.00
2015 305 (181) 124 (47) 110 (34) 76 (27) 18 67 4 (2) 0 (22) 47 0.12 47 0.12 0.01
2016 672 (345) 327 (69) 320 (62) 258 (45) 16 230 2 28 0 (59) 201 0.50 201 0.50 0.03
2017E 1,284 (634) 650 (71) 698 (118) 579 (96) 0 483 0 65 0 (162) 386 0.96 386 0.96 0.05
2014 1,365 45 0 58 1,256 241 2,966 174 24 730 1,019 400 1,948 2,966
2015 754 95 0 107 1,847 491 3,294 137 43 859 1,157 401 2,137 3,294
2016 595 127 0 345 2,853 532 4,453 137 73 1,544 2,015 401 2,437 4,453
2017E 1,228 211 0 385 4,285 532 6,641 329 87 2,992 3,669 401 2,973 6,641
2014 50 5 27 (0) 82 (844) (46) (891) 526 1,140 0 197 1,864 1,055 (809) (2.60)
2015 68 (5) 34 (91) 6 (731) (657) (1,387) 89 4 0 116 209 (1,173) (1,382) (3.44)
2016 260 (28) 62 100 394 (1,066) 0 (1,066) 685 0 (40) 6 652 (21) (673) (1.68)
2017E 547 (65) 118 (70) 531 (1,550) 24 (1,526) 1,640 0 (46) 35 1,628 633 (995) (2.48)
2014 43.3% 118.5% 80.0% 43.3% 37.4% 26.9% 11.1% 11.1% ‐14.7%
2015 18.1% 14.3% 29.2% 40.5% 36.2% 25.0% 15.3% 15.3% ‐6.0%
2016 120.5% 190.0% 331.3% 48.6% 47.6% 38.4% 29.9% 29.9% ‐0.8%
2017E 90.9% 117.8% 91.7% 50.6% 54.3% 45.1% 30.0% 30.0% 0.0%
2018E 1,616 (777) 839 (71) 901 (133) 768 (94) 0 674 0 59 0 (248) 485 1.21 485 1.21 0.10
2018E 532 266 0 405 6,753 532 8,486 650 108 4,199 5,218 401 3,269 8,486
2019E 3,198 (1,714) 1,484 (94) 1,698 (308) 1,390 (216) 0 1,174 0 70 0 (419) 826 2.06 826 2.06 0.82 2019E 608 526 0 434 6,444 532 8,544 696 233 3,503 4,693 401 3,851 8,544
2018E 733 (59) 133 (34) 773 (2,600) 40 (2,560) 1,528 0 (189) (248) 1,091 (696) (1,788) (4.46)
2019E 1,245 (70) 308 (135) 1,348 0 41 41 (650) 0 (243) (419) (1,312) 77 1,389 3.46
2018E 25.8% 29.1% 25.7% 51.9% 55.7% 47.5% 30.0% 30.0% 0.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
2019E 98.0% 88.6% 70.3% 46.4% 53.1% 43.5% 25.8% 25.8% 0.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TFD, TTL, NMG, SAWAD, NUSA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) 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
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
