Banpu
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2015 to be supported by Hongsa power plant HOLD
Banpu Plc
- 3Q14 profit to fall sharply from extraordinary expenses
We estimate 3Q14 net profit at B128m, plunging 81.2%qoq due to
extraordinary expenses from hedging loss and tax expense for Centennial.
Excluding the extraordinary items, normalized profit in 3Q14 would increase
89.6%qoq to B1.3bn, marking a record high by quarter in 2014 as a result
of a 26.3%qoq increase in sales volume and a US$1/ton decrease in
production cost from the previous quarter. Overall, 9M14 net profit is
estimated at B2.6bn, growing 23.1% from the same period last year and
accounting for 68.7% of our FY2014 forecast.
- Cut FY2014-2015 forecast to reflect lower-than-expected coal price
We revise down our profit forecast for FY2014-2015 to reflect the worsethan-
projected coal price and extraordinary expenses in 3Q14. An
assumption for average coal selling price is decreased from US$72/ton to
US$68/ton for 2014 and US$75/ton to US$60/ton for 2015. As a result, new
FY2014 profit forecast lowered 3.3%yoy. However, strong growth of
20.5%yoy is foreseen in 2015, thanks mainly to income from 1,800 MWHongsa
power plant (BANPU holds 40% stake), which will start a
commercial run since June 2015 onward, helping to support profit growth
since 2H15 onward.
-Hold for dividend
Under the new forecast, 2014 fair value (DCF) is B28 (down from B32). We
recommend holding BANPU for its dividend yield of 4-5% p.a. on average.
Under the new forecast, 2014 fair value (DCF) is B28 (down from B32). We
recommend holding BANPU for its dividend yield of 4-5% p.a. on average.
