Analysts Remain Positive on GULF, Expecting 20% NP Growth in 2021 with a TP at ฿47

Finansia Syrus Securities (FSS) has given a “BUY” recommendation on Gulf Energy Development Public Company Limited (GULF) with a target price at ฿47.00/share, expecting an increase of net profit by 20% in 2021 from additional recently-acquired growth projects.

 

FSS stated that it remained positive on GULF’s 10% capital increase, since 1) the 10% EPS dilution should be more than offset by a 20% YoY higher net profit in 2021 from additional recently-acquired growth projects , including a net profit of 1.2 billion baht from its 50% stake in a 450MW operating wind farm in Germany and a profit of 400 million baht from higher LNG imports; 2) the capital increase of 32 billion baht will be used to fund GULF’s multiple growth projects.

On top of GULF’s committed growth projects of two large IPPs (5GW capacity), scheduled to start operations in 2022-2024, to drive its EPS growth by 63% YoY, based on the committed capacity pre-capital increase, FSS thought that GULF is ready to fund its multiple new growth projects that will come on stream post 2020 and are estimated to required 110 billion baht in equity investments.

FSS expected GULF’s net profit growth to accelerate starting in 2Q20 onward, driven by the projected lower gas cost, the commencement of its newly-awarded shipper licence for LNG imports, and the consolidation of the BKR2 wind farm by 4Q20.

 

In the meantime, KGI Securities has given an “Outperform” rating on GULF with a target price at ฿40.25/share.

KGI maintained a rating of Outperform with a 1H21 target price of Bt40.25 (before XR) or Bt37.25 after XR. The security company stated that it had not yet included upside of Bt1.25/sh from recent acquisition in Borkum 2 Wind farm and Ia Pech 1,2 Wind farm. KGI stated that it had a positive view on the capital increase as potential upside from implied further expansion through M&A/green field development is greater than the impact from share price dilution. Lastly, KGI pointed out that there would be a dilution effect of 1.1% from the current share price after XR.