Company Update
21 February 2017
Energy & Utilities
Global Power Synergy
GPSC Current
Previous
Close
2017 TP
Exp Return
THAI CAC
CG 2016
HOLD
HOLD
36.25
38.00
+ 4.8%
Declared
5
Consolidated earnings BT (mn)
2015
2016
2017E
2018E
Normalized earnings
1,953
2,797
2,955
4,272
Net profit
1,907
2,700
2,955
4,272
Normalized EPS (Bt)
1.30
1.87
1.97
2.85
% growth Y-Y
22.9
43.2
5.7
44.5
EPS (Bt)
1.27
1.80
1.97
2.85
% growth Y-Y
20.6
41.6
9.5
44.5
EPS (Bt) – full dilution
1.27
1.80
1.97
2.85
% growth Y-Y
20.6
41.6
9.5
44.5
Dividend (Bt)
0.95
1.15
1.14
1.43
BV/share (Bt)
24.03
24.80
25.40
26.96
EV/EBITDA (x)
16.8
13.4
11.7
8.7
Normalized PER (x)
27.8
19.4
18.4
12.7
PER (x)
28.5
20.1
18.4
12.7
PBV (x)
1.5
1.5
1.4
1.3
Dividend yield (%)
2.6
3.2
3.2
3.9
YE No. of shares (million)
1,498
1,498
1,498
1,498
No. of shares – full dilution
1,498
1,498
1,498
1,498
Par (Bt)
10.00
10.00
10.00
10.00
Source: Company data, FSS estimates
Share data Close (20/02/2017) SET Index
36.25 1,578.47
Foreign limit/actual (%)
49.00/1.63
Paid up shares (million)
1,498.30
Free float (%)
24.89
Market cap (Bt m)
54,313.40
Avg daily T/O (Bt m) (2017 YTD) hi, lo, avg (Bt) (2017 YTD)
76.17 38.75, 35.25, 36.46
Source: Setsmarts SET Index
Price (Bt)
1,710.00
60.00
1,630.00
54.00 48.00
1,550.00
42.00 36.00
1,470.00 1,390.00
30.00 24.00
1,310.00 1,230.00 1,150.00
SET GPSC
1,070.00
May-15 Jun-15 Jun-15 Jun-15 Jul-15 Jul-15 Aug-15 Aug-15 Sep-15 Sep-15 Oct-15 Oct-15 Nov-15 Nov-15 Dec-15 Dec-15 Jan-16 Jan-16 Feb-16 Feb-16 Mar-16 Mar-16 Apr-16 Apr-16 May-16 May-16 Jun-16 Jun-16 Jul-16 Jul-16 Aug-16 Aug-16 Sep-16 Sep-16 Oct-16 Oct-16 Nov-16 Nov-16 Dec-16 Dec-16 Jan-17 Jan-17 Feb-17 Feb-17
990.00
Source: SET
Analyst: Parinth Nikornkittikosol Register No.: 085699 Tel.: +662 646 9817 email:
[email protected] www.fnsyrus.com
Challenging year We have cut our 2017-2018 profit estimate by 15%-5%, respectively, to factor in (1) the rising gas price outlook, (2) a decline in dividend earned from RPCL, (3) a higher tax bill, and (4) planned maintenance shutdown. However, we view that such downward revision is attributed only to medium-term factors and GPSC's long term growth remains intact thanks to its power plants that are currently under construction. Moreover, the company's capacity will increase by 149 MW this year and 45 MW next year. Currently, our forecast calls for normalized earnings to continue to grow by 6% in 2017 and jump by 45% Y-Y in 2018. What's more, there is upside to the company's long-term growth thanks to future power plant projects, in which one is possible to be concluded this year. Given all that, we retain our BUY rating on GPSC and our 2017 TP of Bt38. Several negative factors loom in 2017 Following yesterday's analyst meeting, we have bearish view about GPSC's 2017 operating outlook as it is pressured by a number of factors. First is its margin outlook after gas increases at a faster pace than electricity. Second is dividend earned from RPCL which is set to tumble 45% Y-Y because the company's power plant is very old. Third is a rise in tax bill after its tax benefit has expired. As a result, we expect effective tax rate to rise to 6%. Fourth is planned maintenance shutdown. With that, 2017 is a challenging year for GPSC. However, the management aims to keep tight control on expenses, optimize its factory and reduce its financial cost. What's more, the company's three power plants will start commercial run in 2H17. All of which should help lessen impact from such negative factors. Cut profit estimate We have slashed our 2017-2018 profit estimate by 15%-5%, respectively, to factor in the aforementioned negative factors. After which, our forecast now calls for normalized earnings to amount to Bt3bn (+6% Y-Y) in 2017 and Bt4.3bn (+45% Y-Y) in 2018. Such gains should be made possible by electricity generating capacity which will gradually increase after its power plants begin commercial run. In this regard, we expect GPSC's electricity generating capacity to increase by 149 MW this year, in line with its stake in the three power plants that are about to start commercial run, and by 45 MW in 2018. They will send the company's capacity to 1,530 MW and 1,575 MW, respectively. As a result, we continue to like GPSC in terms of long-term growth and project the company to report profit growth of 26% CAGR during 2016-2018.
18.00 12.00
Long-term attractiveness remains intact
6.00 0.00
Although our profit estimate decreases, we retain our HOLD rating on GPSC and our 2017 TP of Bt38. We view that the negative factors do not have much impact on the company's long-term operating outlook because its long-term growth will come mainly from the power plant projects that are currently under construction. They have combined capacity of 541 MW and will be fully realized in 2019. As a result, we forecast GPSC's profit to grow at 18% CAGR during 2016-2020. What's more, there is upside from a number of new power plant projects, in line with the company's target to increase its electricity generating capacity to 2,800 MW within 2023. In this regard, it is possible that one will be concluded this year. Risks – unplanned maintenance shutdown, delay in its construction of power plants, a rise in the construction cost of its power plants
Page 1 of 4
GPSC Income Statement (Consolidated) (Bt mn)
Cash Flow Statement (Consolidated)
2014
2015
2016
2017E
2018E
(Bt mn)
2014
2015
2016
2017E
Revenue
23,654
22,444
20,675
23,083
28,330
Net profit
1,310
1,552
2,526
2,666
4,007
Cost of sales
21,571
20,177
17,365
19,533
23,304
Depre. & amortization
1,043
1,082
1,266
1,462
1,579
Gross profit
2,083
2,267
3,310
3,551
5,026
Change in working capital
1,184
-1,132
251
780
62
410
670
800
762
785
Other operating CF
1,066
1,130
86
195
175
1,673
1,597
2,510
2,789
4,241
142
485
671
422
401
SG&A Operating profit Other income
2018E
Cash flow from operations
4,603
2,632
4,129
5,103
5,823
Capital expenditure
7,347
5,404
8,077
12
3,888
EBIT
1,815
2,082
3,181
3,211
4,643
Other investing CF
-317
8,705
-6,887
-819
-1,222
EBITDA
3,126
3,503
4,793
5,243
7,050
Cash flow from investing
-7,030
-14,109
-1,190
807
-2,665
Interest charge
470
394
418
375
334
Free cash flow
-2,427
-11,477
2,939
5,911
3,158
Tax on income
27
90
140
170
302
Net borrowings
-206
2,197
1,219
-4,409
-1,595
1,310
1,552
2,526
2,666
4,007
3
16
-172
-280
-563
Earnings after tax Minority interest Net profit
Equity capital raised
0
9,916
0
0
0
Dividends paid
-112
-1,120
-1,572
-1,906
-1,925
Other CF from financing
-224
-72
-29
-952
-803
Cash flow from financing
-542
10,921
-382
-7,267
-4,322
1,581
1,907
2,700
2,955
4,272
Extraordinary items
-8
-46
-97
0
0
Normalized earnings
1,589
1,953
2,797
2,955
4,272
Other adjustments
0
0
0
100
233
268
339
346
569
828
Net change in cash
-2,969
-556
2,557
-1,256
-932
2015
2016
2017E
2018E 22.7
Profit sharing
Balance Sheet (Consolidated)
Important Ratios (Consolidated)
(Bt mn)
2014
2015
2016
2017E
2018E
Cash and equivalent
3,421
2,865
5,422
4,166
3,234
Growth (%)
ST investment Accounts receivable Inventory
2014
182
8,556
2,391
2,556
2,556
Revenue
3,013
2,848
2,180
2,929
3,595
EBITDA
-7.6
-5.1
-7.9
11.6
9.7
12.0
36.8
9.4
359
406
458
393
469
34.5
Net profit
37.7
20.6
41.6
9.5
44.5
Normalized earnings
26.0
22.9
43.2
5.7
44.5
Other current asset
1,171
1,640
1,215
1,544
1,544
Total current assets
8,146
16,315
11,666
11,588
11,398
Profitability (%)
PPE
20,048
23,468
26,128
28,466
30,386
Gross profit margin
Other assets
14,738
16,084
20,234
15,276
15,227
EBITDA margin
Total Assets
42,932
55,867
58,028
55,330
57,011
EBIT margin
7.7
9.3
15.4
13.9
16.4
0
0
0
0
0
Normalized profit margin
6.7
8.7
13.5
12.8
15.1 15.1
Short-term loans
8.8
10.1
16.0
15.4
17.7
13.2
15.6
23.2
22.7
24.9
Account payable
2,276
1,960
1,140
1,897
2,264
Net profit margin
6.7
8.5
13.1
12.8
Current maturities
1,595
1,595
1,913
1,595
1,595
Normalized ROA
3.7
3.5
4.8
5.3
7.5
Other current lia.
1,332
1,014
1,142
1,014
1,014
Normalize ROE
6.3
5.4
7.5
7.8
10.6
4.8
4.1
5.9
6.3
8.9
D/E
0.65
0.50
0.50
0.39
0.33
Net D/E
0.51
0.20
0.30
0.22
0.20
4.26
2.09
2.39
1.67
1.20
Total current lia. Long-term debt
5,203
4,569
4,195
4,506
4,873
Normalized ROCE
11,197
13,394
14,295
10,204
8,609
Risk (x)
Other LT liabilities
514
777
783
777
777
Total LT liabilities
11,711
14,171
15,078
10,981
9,386
Total liabilities
16,914
18,740
19,273
15,487
14,259
Net debt/EBITDA
Paid-up capital
11,237
14,983
14,983
14,983
14,983
Per share data (Bt)
Share premium
3,393
9,563
9,563
9,563
9,563
344
439
566
439
439
Unappropriated
11,508
12,188
13,187
14,237
Others
-1,197
-1,168
-1,148
-1,168
733
1,122
1,604
1,789
2,352
26,018
37,127
38,755
39,842
42,752
Legal reserve
Minority Interest Shareholders' equity
Reported EPS
1.41
1.27
1.80
1.97
2.85
EPS - Full Dilution
1.41
1.27
1.80
1.97
2.85
16,583
Normalized EPS
1.41
1.30
1.87
1.97
2.85
-1,168
EBITDA
2.78
2.34
3.20
3.50
4.71
22.50
24.03
24.80
25.40
26.96
Book value Dividend
0.00
0.95
1.15
1.14
1.43
10.00
10.00
10.00
10.00
10.00
P/E
25.8
28.5
20.1
18.4
12.7
Norm P/E
25.6
27.8
19.4
18.4
12.7
1.6
1.5
1.5
1.4
1.3
16.2
16.8
13.4
11.7
8.7
0.0
2.6
3.2
3.2
3.9
Par Valuations (x)
P/BV EV/EBITDA Dividend yield (%) Source: Company data, FSS research
Page 2 of 4
Finansia Syrus Securities Public Company Limited Head Office
Thaisummit Tower
Alma Link
Amarin Tower
Central Pinklao 1
999/9 The offices at Central World 18th, 25th Fl., Rama 1 Rd., Patumwan, Bangkok
1768 Thaisammit Tower Building, 5th, 31th Fl., New Petchburi Road, Bangkapi, Huaykwang, Bangkok
9th, 14th, 15th Fl., Alma Link Building 25 Soi Chidlom, Ploenchit, Lumpini, Patumwan, Bangkok
496-502 Amarin Tower 20th Floor, Pleonchit, Lumpini, Pathumwan, Bangkok
7/129-221 Central Pinklao Office Building, Room 1404, 14th Fl., Baromratchonnanee Road, Arunamarin, Bangkoknoi, Bangkok
Bangkapi
Bangna
Sindhorn 1
Kian Gwan (Sindhorn 2)
Sindhorn 3
3105 N Mark Building, 3rd Floor, Room A3 R02, Ladprao Road, Klongjan, Bangkapi, Bangkok
1093 Tower 1 Office, 19th Floor, Room 1093/105 Moo 12, Bangna-Trad Road, Bangna, Bangkok
130-132 Sindhorn Building 1, 2rd Floor, Wireless Road, Lumpini, Pathumwan, Bangkok
140/1 Kian Gwan House II 18th Floor, Wireless Road, Lumpini, Pathumwan, Bangkok
130-132 Sindhorn Building 3, 19th Floor, Wireless Road, Lumpini, Pathumwan, Bangkok
Ladprao
Prachachuen
Rang sit
Thaisummit Tower
Rattanatibet
555 Rasa Tower 2, 11st Floor, Unit 1106, Phaholyothin Road, Chatuchak, Bangkok
105/1 B Building, 4th Floor, Thessabansongkhrao Road, Ladyao, Jutujak, Bangkok
1/832 Phaholyothin 60 Kukod, Lumlookka Pratumtanee
1768 Thaisammit Tower Building, 2nd Floor, New Petchburi Road Bangkapi, Huaykwang, Bangkok
68/127 Moo 8 Rattanatibet Road, Tumbon Banggrasor, Aumphoe Muang, Nonthaburi
Sriracha
Khonkaen 1
Khonkaen 3
Udonthani
Chiangmai 1
135/99 (G fl.) Sukumvit Road, Tumbon Sriracha Aumphoe Sriracha, Chonburi
311/16 2nd Floor, Klangmeung Road, Tumbon Nai Meung, Aumphoe Meung, Khonkaen
311/1 Khang Meung Road, Tumbon Nai Meung, Aumphoe Meung Khonkaen, Khonkaen
104/6, 2 fl., ICBC Bank Tower Udon Dusadee Road, Tumbon Mak Khaeng, Aumphoe Muang Udon Thani, Udon Thani
308 Chiang Mai Land, Chang Klan R., Chang Klan
Muang Chiangmai
Chiangmai 2
Chiangmai 3
Chiangrai
Measai
Nakornratchasima
310 Chiang Mai Land,
Maliplace Building 32/4 moo 2
Chang Klan R., Chang Klan
1 fll., B1-1, B1-2 room
Tumbon Maehia Chiangmai
119 Moo 10, Tumbon Maesai, Aumphoe Muang, Cheangrai
1242/2 A3 room, 7 fl., The Mall Ratchasima
Muang Chiangmai
353/15 Moo 4, Tumbon Rimkok Aumphoe Muang, Cheangrai
Mittraphap rood Tumbon Nai Muang Aumphoe Muang Nakornratchasima
Nakornratchasima Samutsakorn
Nakornpathom
Phuket
Hatyai 1
Hatyai 2
1045/16-17 Vichienchodok, Tumbon Mhachai, Aumphoe Meungsamutsakorn, Samutsakorn
28/16-17 Yingpao Road, Tumbon Sanamjan, Aumphoe Muang, Nakornpathom
22/18 Vanish Plaza Shopping Mall, Luangporwatchalong Road, Tumbon Talad Yai,
200/222, 200/224, 200/226 Juldis Hadyai Plaza, 2rd Floor, Building, Niphat Uthit 3 Road, Aumphoe Hadyai, Songkhla
106 Prachathipat Road, Aumphoe Hadyai, Songkhla
Hatyai 3
Krabi
Trang
Suratthani
Pattane
200/222, 200/224, 200/226 Juldis Hadyai Plaza, 2rd Floor, Building, Niphat Uthit 3 Road, Aumphoe Hadyai, Songkhla
223/20 Mharaj Road, Tumbon Paknam, Aumphoe Meung, Krabi
59/28 Huaiyod Road, Tumbon Thaptieng, Aumphoe Meungtrang, Trang
173/83-84 Moo 1 Watpho-Bangyai Road., Tumbon Makamtia, Aumphoe Mueang, Suratthani
300/69-70 Moo 4, Tumbon Rusamirae, Aumphoe Meung, Pattane
Recommendation Definitions BUY HOLD SELL TRADING BUY OVERWEIGHT NEUTRAL UNDERWEIGHT
The The The The The The The
latest close is below our target price and the estimated upside is 10% or more. latest close is below our target price and the estimated upside is 0-10%. latest close is above our target price. latest close is above our target price but the price is expected to be driven by short-term positive factors estimated return is higher than the market average. estimated return is the same as the market average. estimated return is lower than the market average
Note: The expected return may change as market risks increase or decline. DISCLAIMER: This report has been prepared by Finansia Syrus Securities Public Company Limited (FSS). The information herein has been obtained from sources believed to be reliable and accurate; however FSS makes no representation as to the accuracy and completeness of such information. Information and opinions expressed herein are subject to change without notice. FSS has no intention to solicit investors to buy or sell any security in this report. In addition, FSS does not guarantee returns nor price of the securities described in the report nor accept any liability for any loss or damage of any kind arising out of the use of such information or opinions in this report. Investors should study this report carefully in making investment decisions. All rights are reserved. This report may not be reproduced, distributed or published by any person in any manner for any purpose without permission of FSS. Investment in securities has risks. Investors are advised to consider carefully before making investment decisions. Finansia Syrus Securities Public Company Limited may act as market maker and issuer of DWs. The company may prepare the research reports on those underlying securities. Investors should carefully read the details of the derivative warrants in the prospectus before making investment decisions.
Page 3 of 4
Thai Institute of Directors Association (IOD) – Corporate Governance Report Rating 2016
Sc ore Range
Rating
Desc ription
100-90
Excellent
80-89
Very Good
70-79
Good
60-69
Satisfactory
50-59
Pass
<50
no logo given
n/a
IOD (IOD Disclaimer) The Corporate Governance Report (CGR) of Thai listed Companies is based on a survey and assessment of information which companies listed on the Stock Exchange of Thailand and the Market for Alternative Investment (“listed companies”) disclose to the public. The CGR is a presentation of information from the perspective of outsiders on the standards of corporate governance of listed companies. It is not any assessment of the actual practices of the listed companies, and the CGR does not use any non-public information. The CGR is not therefore an endorsement of the practices of the listed companies. It is not a recommendation for investment in any securities of any listed companies or any recommendation whatsoever. Investors should exercise their own judgment to analyze and consider any information relating to the listed companies presented in this CGR report. No representation or warranty is made by the Institute of Directors or any of its personnel as to the completeness or accuracy of the CGR report or the information used.
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Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) 1 CG Score 2016 from Thai Institute of Directors Association (IOD) 2 Companies participating in Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) under Thai Institute of Directors (as of October 28, 2016) are categorised into: - companies that have declared their intention to join CAC, and - companies certified by CAC.
Page 4 of 4
