GLOW Shares Need Catalysts to Move Higher After Mixed Q4 Results

Witawat (Ed) Wijaranakula, Ph.D.
Thu Feb 9, 2017

Glow Energy PCL (SET:GLOW), 47.34% stake owned by ENGIE Holding (Thailand) Co., Ltd. and a 21.77% stake owned by ENGIE Global Developments B.V., as of August 26, 2016, is a Thailand-based company with its core business in generating and supplying electricity, steam, and water for industrial uses. ENGIE Holding, formally known as GDF SUEZ Energy, and Overijssel-based, ENGIE Global Developments B.V., formally known as The Netherlands GDF SUEZ Energy International Global Developments B.V., are part of French multinational electric utility company Engie, previously known as GDF SUEZ. The company operates its independent power producer (IPP) business alongside cogeneration facilities, amounting to a total generating capacity of 3,207 MW of electricity and 1,206 tons per hour of steam, as of March 31, 2016.

Glow Energy’s core business is the generation and supply of electricity, about 1,525 MW, to the Electricity Generating Authority of Thailand (EGAT) under Thailand’s IPP program, and electricity to Electricite du Laos (EDL). The company operates its own production facilities, which are located in the Rayong and Chonburi provinces of Thailand, as well as in the Attapeu Province of Laos. The company also owns and operates a Glow Energy Solar power plant in the Rayong province with an installed capacity of 1.55 MW.

On January 30, the company reported fourth-quarter 2016 revenues of 11.85 billion baht, down 23.11% year-over-year, missing the estimate of one analyst of 12.90 billion baht, according to Thomson Reuters. For the full year 2016, total revenues came in at 53.09 billion baht, an 18.8% decline from 65.37 billion in 2015. The company blamed, among other things, the 33% plunge in revenues received by Glow IPP from EGAT, under the IPP scheme, due to lower availability payments and lower energy payments. 

GLOW reported a fourth-quarter 2016 EPS of 0.82 baht per share, below the same quarter the previous year by 36.43% but exceeding the estimate by two analysts of 0.61 baht per share. For the full year 2016, GROW said its net profit was 8.95 billion baht in 2016, an increase of 7.2% from 8.36 billion baht in 2015.

From our technical viewpoint, GLOW shares have been trading in a descending wedge chart pattern since the second half of 2014. The stock is bumping along the 10-year trendline support of the ascending channel in a narrow range between 76 and 81 baht. GLOW is near-term neutral to slightly bearish due to the lack of catalysts. Stocks in the Utilities sector tend to underperform the index in a risk-on trading environment, seeing that the sector is considered to be a safe-haven. 

According to Thomson Reuters, the consensus amongst 13 polled investment analysts covering Glow Energy gave the company a Hold rating, with the median 12-month price target of 87 baht per share, as of February 4. 

Disclosure: No position and no recommendation.


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