Rewewable Energy

EPPO supports solar farm, benefiting renewable energy Overweight

Rewewable Energy

The government has been actively promoting and supporting

renewable energy generation. The Energy Policy and Planning

Office (EPPO) announced to support solar power generation,

having positive sentiment on renewable energy stocks. The

sector's top pick is GUNKUL.

- EPPO supports solar power generators

On August 15, 2014, the Energy Policy and Planning Office (EPPO)

announced plans to support solar power generation by 1) purchasing solar

power from various sources: e.g. solar farm projects (576 megawatts),

small-sized rooftop solar power panels (69.36 megawatts), and solar

power for local government organization and agricultural cooperatives

(800 megawatts), and 2) specifying electricity rate in a Feed-in-Tariff

program for 25 years; this rate will be applied for purchase of electricity in

2014-2015.

- Benefiting solar power business

We have a positive outlook on this policy. The government has been

supporting and promoting renewable energy generation. Purchasing solar

power from various sources to meet the Ministry of Energy's target has

positive sentiment on renewable energy stocks: 1) renewable energy

plant EPC contractors e.g. GUNKUL and DEMCO, and 2) renewable energy

generators e.g. GUNKUL, EA and SPCG.

- Top pick: GUNKUL

Alternative energy sector's top pick is GUNKUL(FV@B20) for its integrated

renewable energy business; it is both an renewable energy plant EPC

contractor and major renewable energy generator. However, as the

auction of the aforementioned projects would start later, we have not

included them in our FY2014 earnings forecast. GUNKUL would have

higher upside if it wins the auction for new projects