SPCG pursues leasing JV to boost earnings from rooftop solar project

The move came after the government made a final call for applications for this round of licences to generate electricity with solar cells on rooftops – 400 megawatts for residents – and set June end as the deadline.
SPCG, which owns 36 solar farms with total capacity of 260 megawatts, has been holding urgent talks with many parties, including financial institutions, property developers and insurance firms, in a bid find solutions with good financial conditions to offer those who want to install rooftop solar panels easily.
“The company is closing the deal soon and expects to launch packages for rooftop solar installation within the next 30 days so that it can have an enough time to seek clients before June,” said chairwoman and chief executive officer Wandee Khunchornyakong.
She said SPCG foresaw plenty of room for growth of sales of rooftop solar energy and had positioned itself to take advantage of this development. This year, the company estimates that there could be 15,000 households interested in installing rooftop solar systems. If the company took on only 1,000 households as its initial phase, out of its total target of 3,000, it would generate revenue of about Bt300 million.
The reason the government has failed to get many people interested in the rooftop solar project is the cost, Wandee said. Installing a rooftop solar system with capacity of 10 kilowatts would cost about Bt800,000.
She said many property developers had also been reluctant to join with SPCG in launching residential projects equipped with rooftop solar systems, as they could force home prices too high to attract buyers.
However, Wandee said the company had tried to resolve all the weaknesses holding back the rooftop solar scheme. For example, loans should have terms longer than eight years – by which time the investment would be recouped – with an interest rate of no more than 10 per cent per annum. The leasing joint venture, in which SPCG is expected to hold 50 per cent while its insurance partner holds the rest, could be a way to achieve this.
“At the same time, the company will educate the public about the worthiness of investment in rooftop solar systems,” she said.
SPCG has a registered capital of Bt923.99 million and market capitalisation of Bt26.33 billion.
The company provides solutions for solar farms and rooftop solar installation as well as maintenance services via subsidiaries.
The company posted a net profit of Bt1.65 billion on revenue of Bt4.4 billion last year, up from Bt449.32 million in net profit on revenue of Bt2.52 billion in 2013.
Maybank Kim Eng Securities has reported that SPCG’s earnings last year were solid as expected. The company also was able to reduce interest costs by repaying an equity-bridging loan.
“SPCG’s earnings for this full year are likely to expand by 47 per cent with an expectation that it can realise earnings from all of 36 solar farms and sales from the rooftop solar project jointly marketed with Home Product Center,” Kimbank Kim Eng said in a research paper.
The broker said that though SPCG’s earnings growth tended not to be exciting, its stock rated a “buy” given that there was still an upside gain from a possibility of being granted licences for solar farms with 200MW capacity. The government is expected to open licence applications for 3,000MW worth next month.