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Banpu Public Company Limited (SET:BANPU) is one of the largest coal miners in Southeast Asia. It owns stakes in more than 20 coal assets around the world, including Laos, Indonesia, China, Australia and Mongolia, with a total reserves of 756.50 million tones, as of March 31, 2016. The company operates open-pit and underground coal mines, as well as coal-fired power plants.
Banpu controls a roughly 15% stake in Ratchaburi Electricity Generating Holding (RATCH), which was spun off from state-owned electricity giant Electricity Generating Authority of Thailand (EGAT), and Lao Holding State Enterprise (LHSE), a state-owned enterprise of Lao PDR.
In addition, according to its long-term corporate strategy, Banpu is exploring renewal energy opportunities, including bioenergy, wind power and solar energy. The company is aiming to raise solar investments in Japan and is looking for opportunities to invest in other renewable power projects in China and Indonesia. In April, Banpu said it plans to invest $170 million in seven solar projects in Japan with a combined capacity of 54 MW, according to Reuters report. A month later, the company agreed to buy four solar energy projects in the northeastern province of Shandong, China for $93 million. The plants have a total capacity of 78.5 MW and are scheduled to go online by mid-2016, according to Nikkei Asian Review.
Banpu said on May 10, 2016, that its revenues for the first-quarter 2016, ending March 31, 2016, were 19.69 billion baht, beating the 19.33 billion baht consensus estimate of 2 analysts, according to the Financial Times. The company posted first-quarter 2016 losses of 0.071 baht per share, missing the 0.15 baht per share profit consensus estimate of 2 analysts, due to the continuing decline in global coal prices and sales volumes. About 90% of Banpu total revenues came from its coal business. For 2015, the company reported a dividend of 1.2 baht a share, unchanged from 2014, according to Banpu’s website.
From our technical viewpoint, BANPU shares have been moving in a descending broadening triangle chart pattern with near-term head resistance at around 17 baht per share, and near-term support at around 15.2 baht per share. The stock could be under selling pressure, as financial analysts turned bearish on the stock. A major concern is that coal prices won't rebound anytime soon, based on supply surpluses. Investors need to be aware that Banpu is raising 12.9 billion baht by issuing new shares to increase its registered capital and for debt repayment. The company also plans to spin off its wholly owned Banpu Power unit and list it later this year.
According to the Financial Times, the consensus amongst 17 polled investment analysts covering BANPU gave the company a Hold rating, with the median 12-month price target of 11.95 baht per share, as of August 1.
Disclosure: No position and no recommendation. |
