BANPU

BANPU Plc 

- Thin profit of B50m projected in 4Q14   

 

We estimate 4Q14 net profit at B50m, dropping 61.7%qoq mainly due to oil-hedging loss of B753m and decreasing profit from BLCP power plant to B80m. For the coal business, however, gross profit margin rose 1.4% from the prior quarter, thanks to the coal business in Indonesia; although a coal selling price has decreased around US$1/ton, there has been benefit from total cost that decreased US$4/ton as a result of a 25.9% decrease in diesel price. Overall, FY2014 net profit is projected at B2.66bn or a decrease of 15.4%yoy, lower than our initial forecast.  

 

- FY2015 normalized profit sustained by Hongsa project    

 

We revise down FY2014 profit forecast by 12% as 4Q14 profit may turn out lower than initially projected. Yet, we maintain a forecast for FY2015, projecting net profit to grow as much as 29.5%yoy, while normalized profit would weaken slightly by 2.6%yoy as a result of a 10.4%yoy decrease in average coal selling price in 2015. However, a compensating factor for 2015 is that the 1,800-MW Hongsa power plant (BANPU holds 40% stake) will start a commercial run since June 2015 for phase 1, November 2015 for phase 2, and March 2016 for phase 3, which would help boost BANPU's profit since 2H15 onward. 

 

- Hold for dividend   

 

Under the new forecast, new 2015 fair value (DCF) is B30. We recommend holding BANPU for its average dividend yield of 4.7% p.a.