Bualuang

The share price of Gulf Energy Development Public Company Limited (GULF) had reached an all-time high at ฿100.00/share today before lowered to ฿99.50/share. Bualuang Securities in the analytic has given a “BUY” recommendation with a target price for GULF at ฿108.00/share, indicated that GULF was its top pick among IPP plays. Bualuang Securities states that GULFs proven track record of winning new capacity and its raft of potential projects prompted us to partially value in those pending deals, rather than wait for news before updating Bualuang model (Bualuang expects at least several of the pending opportunities to fly). Because Bualuang had factored in some of the value of the potential projects, GULF’s YE19 DCF-derived target price rises from ฿87.00/share to ฿108.0/share. With regard to the next PDP, the PPAs for two potential 700MW IPPs in the Western area of Thailand may open to tender during 2019. GULF has good chances of winning the bids for this new capacity (scope for target price upside of about Bt7 per IPP), given its track record in the last two IPP tender rounds (2007 and 2013). Apart from potential IPP bids, the December 2018 public hearing for the next PDP mentioned the possibility of PPAs for five hydro projects in Laos, two which may be awarded soon. GULF said at its last analyst meeting that it may partner with Chinese firms to develop hydro projects in Laos. Note that one hydro project would mean scope for upside to Bualuang target price of THB 6-7. Apart from the potential power projects, should the GULF-PTT JV win its bid to develop Map Ta Phut LNG re-gas terminal phase-3, there would be scope for upside to Bualuang’s target price of THB 5. Moreover, the Oman Oil Company and Kuwait Petroleum International are building an oil refinery in the Duqm Special Economic Zone in Oman (Duqm SEZ, where GULF plans to build a power plant) and intend to add a petrochemical complex in the future. The Duqm SEZ Authority wants Duqm SEZ to eventually have a slew of industries that will consume 500-1,000MW of electricity, so GULF could potentially expand capacity in the SEZ in the future scope for upside to Bualuang target price of Bt2 for every 300MW expansion (GULF holds a 45% stake). The firm also has PPAs for solar farms in Vietnam and plans to expand its footprint in that country. Bualuang anticipates that Vietnams fast electricity demand growth will open substantial future opportunities for GULF to develop gas-fired projects (scope for target price upside of THB 3).