Glow Energy

Glow Energy Plc (GLOW)
 

What’s new? Mr Chaiyot Wongphyat, the MD of Bangkok Synthetics Co (BST), announced that the entire complex has been closed for safety reasons. He also expects the BST Elastomers plant—the Bangkok Synthetics subsidiary in the complex where the explosion occurred on Saturday—to be shut for six months.
Lost IC sales … BST is one of GLOW’s industrial customers. The firm currently supplies 20MW of electricity and 1,200t/hr of steam to the group (equivalent to about 50MW)—implying 1.7% of its total electricity and steam capacity. Of total sales, GLOW supplies only the equivalent of 25MW to the BST Elastomers plant, just 0.9% of its total output.
…but negligible impact on the bottom-line: Our ballpark calculations indicate that the BST Elastomers plant’s closure will squeeze GLOW’s profit by Bt25m/month (and by up to Bt50m/month in the case of the entire complex being closed). We assume that the complex will be closed for a month (but the Elastomers plant for six months). As such, we expect 2.5% impact on GLOW’s FY12 profit. Under the worst-case scenario where the entire complex is closed for six months, it would squeeze GLOW’s bottom-line by a maximum of 4.5% this year.
Action: The explosion at the BST plant is a short-term hiccup for GLOW—we don’t expect a material impact on its profit. In our view, the recent retreat in oil prices will outweigh the effect of the plant’s closure, as mounting concerns about the risk of gas costs rising further should now ease.