DBS Vickers Recomm. BGRIM-GPSC-GULF for Peak Electricity Consumption Season
As 2Q21 is simply a peak season for electricity consumption, DBSVS has selected three energy stocks for investors to consider.
Manufacturing PMIs in the United States and the United Kingdom have soared to a fresh record of 68.1 and 62.0 in May 2021, respectively. Meanwhile, the Eurozone PMI increased to a 39-month high of 56.9. These figures demonstrated the global economic recovery.
Additionally, the US and the majority of European countries are progressively loosening their lockdown measures.
Along with domestic factors such as 1) the addition of Covid vaccines to Thailand, 2) expediting negotiations with other vaccine production firms, 3) enabling private hospitals to import vaccines, and 4) a new stimulus package that includes debt relief for individuals and SMEs and boost public consumption.
DBS Vickers Securities (DBSVS) believes that the aforementioned issues would have an effect on the stock exchange’s movement. Other factors, however, could exert downward pressure on the Thai market including the following: 1) concerns about the Federal Reserve’s monetary policy despite the US economy’s strong recovery; 2) the number of new daily Covid cases in Thailand remains high; 3) the report of confirmed Indian and African coronavirus variant cases; 4) MSCI reduced its weight on Thai market by 0.1% to 1.73%, 5) conflict between Israel and Palestine, and 6) unprofessional vaccine management by the government.
Noticeably, DBSVS anticipated that MSCI’s weighing down on the Thai market would be negative to Big Cap stocks.
Factors to follow include Thailand’s management of the COVID vaccine, progress on hemp-cannabis licenses, and key economic figures. Expecting the SET Index this week to move in the range of 1,500-1,580 points.
In addition, DBSVS has selected three power generation stocks for investors to consider as 2Q21 is simply a peak season for electricity consumption.
BGRIM : “BUY” rating and target price of ฿58.00/share with 45% upside
B.Grimm Power Public Company Limited (BGRIM) stated that electricity demand would increase due to seasonal factors in 2Q21, and the company has commenced the COD of a 14.8MW wind farm. Furthermore, steam rates have risen. Thus, margins are projected to rise in 2Q21 as compared to a year earlier.
The year 2022 is being driven by the authorization to import 650,000 tons of LNG per year beginning in 2022. It is intended to help manage energy production costs more effectively.
However, there are risks associated with the following: 1) power plants being completed later than anticipated; 2) generating less energy than anticipated; 3) decelerating electricity demand; and 4) gas delivery from PTT.
GPSC : “BUY” rating and target price of ฿95.00/share with 39% upside
Global Power Synergy Public Company Limited (GPSC)’s earnings are projected to be solid in the second quarter due to seasonal factors and the COD of the VSPP power plant and battery plant.
Additionally, the company will concentrate on the battery market in 2021.
GULF : “BUY” rating and target price of ฿39.25/share with 20% upside
Gulf Energy Development Public Company Limited (GULF) will enter the digital market following the acquisition of 606.878 million shares, equivalent to 18.93% of Intouch Holdings Public Company Limited’s total issued and paid-up shares (INTUCH).