BANPU

Banpu Plc (BANPU)
- Appeal Court overturns Hongsa case ruling
The Appeal Court yesterday overturned a ruling of the Civil Court on
September 20, 2012 that had ordered BANPU to pay compensation to Siva
Nganthavee and his group over a case of Hongsa power plant project.
Accordingly, BANPU is no longer required to pay the damage claim of B31bn
to the plaintiff. However, there is still a good chance that Nganthavee’s
group will push the case further to the Supreme Court to object the Appeal
Court’s ruling, which has to be done within one month after the ruling is
announced.
- No impact on earnings forecast
We maintain 2014-2015 earnings forecast since the damage claim provision
was not included in our forecast in the first place; this means the current
forecast only reflects the real fundamental factors of BANPU’s businesses of
coal and power plant. 2H14 profit is projected to decline from 1H14 due to a
decreasing average coal sale price, while the coal business would weaken
following BJI that is standing below US$70/ton at present. However, the
growth of 33.6%yoy is still foreseen in FY2015 from shared profit from
Hongsa power plant will that start a commercial run since 2H15 onward
(BANPU holds 40% stake).
- Keep 2014 fair value at B32
2014 fair value (DCF) is B32. We reiterate HOLD for BANPU. The share price
has surged aggressively and rapidly due to speculation on Hongsa case
winning until it is overvalued, whereas fundamental factors remain
unchanged.