GULF Targets ฿140bn of Revenue by 2024, Doubling Power Portfolio with Mega Project in VN!

Bualuang Securities has stated that Gulf Energy Development Public Company Limited (GULF) proposing to the Vietnamese government to develop a 6,000MW of the gas-fired power plant and an LNG regasification terminal project in Ca Na, Vietnam with an approximately THB 240 billion of investment.

GULF has higher potential to acquire the project as the company has proven capability to develop big gas-fired power projects as it is now familiar in doing business in Vietnam after series of solar and wind farm projects there such as the recent solar power plant, TTCIZ-01, and TTCIZ-02.

Should GULF acquire the entire project, it would double GULF’s power capacity portfolio along with the massive scope of an upside. However, Bualuang Securities expects GULF to hold only 30% stake in a consortium. The acquisition in this project would put a value to GULF’s share by ฿10.90/share.

Moreover, there is also the acquisition of Map Ta Phut Phase 3 by a consortium consists of GULF (70% stake), and PTT (30% stake). Bualuang Securities has stated that the project has secured returned against only small risks. The most profitable point in this project would be a guaranteed annual payment from the government and the right to delay the building of LNG regasification terminal until the company sees that gas demand justifies an investment. The fair value for this project would be ฿7.10/share.

Bualuang Securities expects CAGR of Laem Chabang Port to grow 5% in 2018-30. Meanwhile, the GPC consortium, consisting of GULF (40% stake), PTT (30% stake), and  China Harbour (30% stake), is also a contender in the bidding for the Laem Chabang Phase 3. In case, GULF, as a consortium leader, acquires the project, it would add ฿4.90/share to the company. More importantly, GULF may have opportunities to further its investment in Laem Chabang  E1 and E2 terminals.

GULF’s revenue is expected to be at THB 26,138 million in 2019, THB 29,811 million in 2020, and THB 47,048 million in 2021. Its net profit would also show a constant increase with THB 3,931 million in 2019, THB 4,644 million in 2020, and THB 6,485 million in 2021.

Thus, Bualuang Securities has reiterated its “BUY” recommendation and increased the target price of GULF from ฿108.00/share to ฿126.00/share, using SOTP method.

 

Target THB 140 billion of revenue in five years
Ms. Yupapin Wangviwat, GULF’s Director, has stated that the company would focus on using internal cash flow as a primary fund for the new project in 2021-2023. GULF is available for a loan as the company has low D/E at 1.7x, making a debenture issuance and stock splitting unnecessary.

In 2020, GULF will fully recognize all of its 12 SPP projects and a COD of its Gul Chana Green biomass power plant as well. The company will continue to recognize revenue from a constant COD of its power plants. After the COD of 5,000MW IPP project in 2024, GULF expects a total revenue at THB 100-140 billion.