SUPER and the Illusive Profit

For the year 2019, the profit number of Super Energy Corporation Public Company Limited or SUPER showed an outstanding increase of net profit to hit 2,137 million baht or skyrocketed by 104.42% from the previous year. However, when taking a closer look at the management discussion, it appeared that the operating profit has dropped so far compared to the year 2018. 

The net profit, in reality, resulted from selling assets to the infrastructure fund in the amount of 1,289.923 million baht due to the transfer of net income from the operation of the solar power plant project of 17 Aunyawee Holding Co., Ltd. (17AYH) and Health Planet Management (Thailand) Co., Ltd. (HPM) to the Super Energy Power Plant Infrastructure Fund (SUPEREIF).

If exclude the aforementioned number, the profit would remain at 848 million baht, plunged by 1,045 million baht from 2018.

Actually SUPER should exercise a better performance as it already diminished approx. 4,000 million baht of financial cost debt by bringing the sale of the investment units of the fund to SUPEREIF, but on the other hand, the debt has turned to 5,000 million baht instantly due to the preparation for further investment in overseas, resulting SUPER to have a 1,495 million baht of an interest burden, which rose by 2.65%.

Moreover, the cost of the sale of goods jumped by 12.81% to 2,857 million baht, also an increase of administrative expenses from 505 million baht, up to 567 million baht. revenue from services fell 16.36% to 117 million baht plus loss on foreign exchange rates of 88.87 million baht, climbed by 828.12% from gain net of 12 million baht in 2018.

By considering all financial outlook number, it showed that the fabulous net profit would be only an illusion. 

Mr. Jormsup Lochaya, Chairman of SUPER has set a goal of this year performance to meet its new high both revenue and profit. Since 4 power plant project In Vietnam were already distributed full-year earnings and another one left power plant plans to commerce the commercial operation in the early of 2020 with an installed capacity of 50-megawatt, including 50-megawatt solar farm plant in Vietnam that SUPER has acquired on last January.

SUPER proposes to invest in other 4 wind power plant projects in Vietnam with the total capacity of 422-megawatt, which will push the operation near far recording a new high.

SUPER likely to introduce several mega project, but do not forget that SUPER still has an unsolvable problem in the matter of a huge debt to equity ratio that currently stays over double figures. 

As long As SUPER could not ease those D/E, the opportunity to increase by leaps and bounds as its expectation, might be impossible.