FRIDAY, March 29, 2024
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Gulf Energy expects Bt700m dividend boost from hiking its stake in Intouch

Gulf Energy expects Bt700m dividend boost from hiking its stake in Intouch

Gulf Energy Development (Gulf) is expected to reap dividends of around Bt700 million per year after securing a 10-per-cent stake in Intouch Holdings, experts said.

Recently, Gulf became the second-largest shareholder in Intouch after approved spending of up to Bt19 billion to boost its shareholding from 7.99 per cent to 10 per cent.

Also, Gulf's board of directors approved the setting up of Gulf 1 to operate all forms of solar energy businesses, such as solar farms and solar rooftop panels, as well as providing maintenance services for the said renewable energy systems. The new company will have a registered capital of Bt100 million in which the holding company will have a 99.99 per cent stake.

Theethanat Jindarat, an analyst at Yuanta Securities, expected Gulf to receive dividend of approximately Bt700 million per year from investment in Intouch shares. Meanwhile, he expected Gulf to increase its shareholding in Intouch shares if Gulf has a strong financial position, and Intouch aims to expand its business in other infrastructure areas.

"At the end of July, Gulf's electricity production capacity was 6,409MW, while electricity production capacity according to the company's shareholding was 2,959MW in which 46 per cent of production capacity came from independent power producers, 42 per cent from small power producers, and 12 per cent from alternative energy," he explained

"Meanwhile, 90 per cent of Gulf's domestic electricity production capacity is being distributed to the Electricity Generating Authority of Thailand (Egat) and 10 per cent is being distributed to the private sector. Gulf will distribute 95 per cent of electricity to Egat from 2027."

According to Gulf's plan to open power plants for commercial use, he said electricity production capacity according to the company's shareholding would increase by 42 per cent to 4,200MW in 2021 and increase by approximately 22 per cent yearly from 2020 to 2025.

"Gulf's profit in 2021 is expected to increase sharply by 76 per cent from two phases of GSRC's power plants with production capacity totalling 2,650MW, which will be operated in 2021 and 2022. The company's profit is expected to increase continuously until 2027 from the opening of new power plants," he said

He added that Gulf's share price was currently around Bt31 per share, with price to earnings in 2021 at 46.3 times.

"However, the company's price/earnings to growth ratio in 2021 is expected to be at 0.61 times due to the 76 per cent increase in profit forecast and acquisition of power plants, so this is a chance to invest in the company's shares," he said.

"Also, we assumed the company's natural gas price at Bt260 per million British Thermal Unit. When natural gas price drops every Bt10 from the assumption, the target price of the company's share will increase by Bt1.50 per share."

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