glow

2Q12's net profit to plunge 63.5%qoq due to loss from Ghecoone
We project 2Q12’s net profit of GLOW at B565m, plunging as large as
63.5%qoq due mainly to recognition of B682m in loss from Gheco-one
(GLOW holds 65% stake in the power plant). The loss was divided into 1)
penalty fine of B422m to the EGAT for the plant's inability to start a
commercial run during 9 November 2011 - 25 July 2012 as it had planned
and 2) a FX loss of B260m. However, norm profit in 2Q12 would still grow by
11%qoq due to following contributions. 1) Profit from Huay Ho power plant is
anticipated to double qoq to stand at B160m from an increase in utilization
rate. 2) GLOW's independent power plant (IPP) has resumed a normal
utilization rate of 98% after it had been decreased to 50% in 1Q12 from a
45-day major turnaround. 3) Profit from a cogeneration power plant would
increase by 16%qoq from an operation of a 7-MW small power plant (SPP) as
a firm since 1 June 2012 which allowed the company to recognize revenue
from both capacity charge and energy charge (during 5 March to 31 May
2012 while the power plant was being operated as a non-firm, the company
could recognize only revenue from energy charge) as well as a rise in Ft
charge to B0.30/kWh since June 2012. According to the Ft charge hike, gross
margin of a gas and coal power plant has increased to B0.23 and B1.45/kWh
from B0.22 and B1.43/kWh respectively in 1Q12. 4) Utilization rate of a coal
power plant which has higher margin than a gas power plant has increased to
90% from 82% in 1Q12. Consequently, overall, net profit in 1H12 would
stand at B2.1bn, rising 15% from the same period last year and comprising
33% of our FY2012's forecast.