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Electricity Generating Pcl (SET:EGCO), Thailand’s second largest private power producer and a holding company investing in the Independent Power Producer (IPP), Small Power Producer (SPP), Very Small Power Producer (VSPP), Coal Mining, Operating and Maintenance (O&M) and Management and Administrative Services (Management Services), which include maintenance, engineering and construction services to power plants and other industries, and water and water pipe network services.
As of March 31, 2016, EGCO Group’s portfolio consists of 23 operating power plants, with a total contracted capacity of 3,809 MW in 5 countries including Thailand, Laos, the Philippines, Indonesia and Australia. There are 7 projects under construction and development with total contracted capacity of 1,721 MW. EGCO Group’s power plants generate electricity using several fuel sources, such as natural gas, coal, biomass, waste, hydro, solar, wind, and geothermal.
Electricity Generating said on May 16, 2016, that its first-quarter 2016 revenues were up 24% year-on-year to 5.108 billion baht, compared to 4.13 billion baht during the same quarter 2015. EGCO posted first-quarter 2016 earnings of 4.92 baht per share, up 69.07% year-on-year and exceeded the 3.90 baht per share expectations of the one analyst covering the company, according to the Financial Times.
For 2015, EGCO reported a dividend of 6.25 baht a share, unchanged from 2014. The 13 analysts polled by Financial Times covering the company expect dividends of 6.51 baht a share for the upcoming fiscal year, representing a year-over-year increase of 4.14%.
Sweltering summer heat and a prolonged dry spell drove the demand for electricity consumption to record breaking levels. Electricity consumption broke the record for the 7th time this year, with usage peaking on May 11 at 29,600.8 MW, said Mr. Soonchai Kamnoonseth, governor of the Electricity Generating Authority of Thailand (EGAT). EGAT said they have the capacity to generate 32,000 MW of electricity, enough to meet domestic demand. In March, EGAT forecasted peak demand during March and May this year to be around 28,500-29,000 MW, a 4.1% increase year-on-year.
From our technical viewpoint, shares of EGCO have been moving in an ascending wedge chart pattern since 2008 and are trading at the top of the range. The stock was range-bound between 150 and 160 baht for almost the entire 2015, as the company reported a decline in its fiscal 2015 revenues of 7.5% year-on-year, with EPS that plunged 51.4% during the same period. EGCO shares are now having difficulty to break out the 190 baht level and could pull back to 164 baht, a near-term support level.
According to the Financial Times, the consensus amongst 14 polled investment analysts covering Electricity Generating gave the company an Outperform rating, with the median 12-month price target of 190 baht a share, as of May 26, 2016.
Disclosure: No position and no recommendation. |
