Power Stocks Jump in Hopes for Biden’s Win, Analysts Raise GULF-BGRIM as Growth Plays

As of 11:43 local time in Thailand, 4 stocks under the power sector including GULF, BGRIM, GPSC and RATCH edged higher due to an expectation of an improving revenues in 3Q20 driven by a drop in natural gas cost. The hopes for Biden’s win also skyrocketed the sentiment for the sector as the Demecrat’s candidate supported clean fuel energy.

 

Gulf Energy Development Public Company Limited (GULF) rose ฿1.75/share or 5.60% to ฿33.00/share with a trading value of 1,966 million baht

 

B.Grimm Power Public Company Limited (BGRIM) rose ฿1.75/share or 3.85% to ฿47.25/share with a trading value of 953 million baht.

Global Power Synergy Public Company Limited (GPSC) rose ฿4.25/share or 7.08% to ฿64.25/share with a trading value of 2,248 million baht.

Ratch Group Public Company Limited (RATCH) rose ฿0.50/share or 0.98% to ฿51.75/share with a trading value of 145 million baht.

 

KGI Securities (Thailand) expected the Power sector’s 3Q20 core earnings to come in at 10.8 billion baht (+21.1%YoY, +20.0% QoQ). The increase YoY would be due to i) lower SPP gas cost for GPSC, GULF and BGRIM. The increase QoQ would be due to i) lower SPP gas

cost , ii) peak season for hydropower plants of BCPG and CKP. Including extra items, 3Q20F sector net profit is expected to be 9.2 billion baht (+5.4% YoY, -24.3% QoQ) lower mainly due to unrealized FX loss. 

 

KGI maintained a Neutral rating on the Power sector. BGRIM and GULF are the top picks as growth plays. EGCO and RATCH are our top picks as dividend plays.

 

Trinity Securities assessed Joe Biden’s policy for clean energy, a flagship plan of Democrats, will weigh investor attitudes toward renewable energy investment. Therefore Trinity recommended investing in GULF, GPSC, EA and BGRIM.

 

Capital Nomura Securities saw a growth in GULF both short-term and long-term, expecting the firm to double a COD from a current installed capacity of 2,700MW to 6,200MW by 2023 and estimating a compound annual growth rate (CAGR) to increase by 44% within 3 years. CNS expected GULF to report a net profit of 1,260 million baht in 3Q20, an increase of 26% YoY due to an improving economic activities that would support industrial users (IU).  

Tisco Securities expected an outstanding profit of BGRIM in 3Q20 driven by a 10% drop in natural gas cost and a recovery of industrial users (IU). However, BGRIM’s profit will be affected by FX loss of 295 million baht, overall, net profit would stand at 493 million baht, decreasing 52% YoY and will continue to slow down in 4Q20, but having a growth trend in the long-run. TISCO recommended “BUY” at a target price of ฿50.00/share.