A Long-Haul Ticket is Better for CKP

It seems like there is something good hiding inside the share price of CK Power Public Company Limited (CKP) after crossing over the resistance line at THB 6.00/share. However, the highlight of CKP is how far can it goes after breaking the ฿6 wall? Let’s say, taking a long-haul ticket is better, due to the timeline shows the possibility for both short and long term.

To begin with the 1Q19, CKP has a potential to gain more profit in this quarter, comparing to the first quarter in 2018 due to the result of higher water level in Nam Ngum 2 Hydropower Project, since last year, which led to a higher productivity, and the 2Q19 had been continuously presenting a good trend.

From Nam Ngum 2 Hydropower Project to Xayaburi Hydroelectric Power Project which CKP holds 37.5% stake with the production capacity of 1,285 Megawatt and will start the COD in this October 19. CKP will recognize the profit in the form of dividend which the project previously had been partially starting the operation. However, it could not be recognized as a revenue but recorded as deducted expenses to help decrease the operation cost.

The value of Xayaburi Hydroelectric Power Project is THB 130,000 million with the payback period of 18 years (exclude 8 years construction period).

The interesting point is debt rehabilitation plan of Xayaburi Hydroelectric Power Project by converting USD currency debt to THB currency debt.

Lately, CKP has more than USD 700 million of debt in US currency and THB 55,000 million of debt in Thai currency. The conversion will lower CKP’s interest cost from 4% to 3.6% which helps decrease the interest by THB 150 million per year, and net debt to equity ratio to 0.76x.

Mr. Thanawat Trivisvavet who is a Managing Director of CKP estimates the revenue will rise by 8-10% this year. Last year, CKP’s revenue was THB 9,100 million due to the electricity selling price of Nam Ngum 2 Hydropower Project to Electricity Generating Authority of Thailand (EGAT) adjusted to 8% and while recognized a full-year income from Bangpa-in Cogeneration Limited (Phase 2).

Another highlight of CKP is the new project which is in the process of negotiation with Laos for the development of 1,500-megawatt Hydropower Plant Project, and the deal will be more clearer in this year after negotiating more than 1 year.

This is a big project which could guarantee a stable revenue for CKP in the future.

The aforementioned projects still have not included Thailand Power Development Plan (PDP) which has to import hydropower from Myanmar and Laos, especially Myanmar which has the potential to produce the electricity approximately 100,000 megawatts in the whole country, this will be another opportunity for CKP to gain income.

To be concluded, CKP is appropriate to invest for both short and long terms, but if there is money left to spare, takes a long-haul for it!