Ratchaburi Electricity Generating Holding
March forward with Myanmar investment to top up growth BUY
Ratchaburi Electricity Generating Holding Plc (RATCH)
- March forward with Myanmar investment
RATCH has been expanding its investments both locally and offshore. For
domestic investments, the company is waiting for a new Power
Development Plan (PDP), which would be announced around early 2015;
RATCH is ready for both coal-fired and alternative energy power plant
projects. For overseas investments, RATCH has been seeking new
opportunity; recently, the company has conducted a feasibility study of
construction of a 2,600-MW coal-fired power plant in Myeik, Myanmar
(RATCH holds 45% stake); the study will take around 10-12 months, then
the company will propose the project to Myanmar’s government. Moreover,
RATCH is going to sign a memorandum of understanding (MOU) with PTT
within 2014 for a feasibility study of construction of LNG terminal phase 3
with a production capacity of 5 million tons per year. These new projects
are significant upsides that would add value to RATCH’s business in the
future.
- Up FY2014 forecast, 15.2%yoy profit growth expected
RATCH posted 3Q14 net profit of B1.95bn, growing 5.8%qoq mainly from a
23.7%qoq increase in shared profit from associated companies. 9M14 net
profit was B6.17bn, up 3.0%yoy and comprising 97% of our full-year
forecast. Accordingly, we revise up FY2014 profit forecast to reflect
extraordinary profit of B797.3m from TECO in 1Q14 that we had not
included before. As a result, new FY2014 profit forecast increased 12.6%
from previously to B7.12bn or the growth of 15.2%yoy.
- Recommend BUY
We switch to use 2015 fair value of B68. BUY is recommended. RATCH is a
defensive stock with long-term growth potential. Dividend yield can be
expected at 4% p.a. on average.
