Electricity Generating

Electricity Generating Plc (EGCO) 

- Looking for new projects immediately generating income   

There was no new issue discussed at the analyst meeting. EGCO is currently looking for acquisition of new projects. The company focuses on expanding its overseas power generation business in the next couple years. For the domestic business, electricity reserve margin is projected to jump by 40% (higher than the average growth of 15%) in 2023-2025. The Ministry of Energy has negotiated with IPP and SPP operators to postpone their power generation, which means the next IPP bid is not likely to be held in the near future. Thus, in the short term EGCO will be focusing on expanding its overseas business, especially power plants that can immediately generate income.  

- Profit to rebound in 1Q15   

1Q15 profit is projected to rebound from 4Q14 for it is a season where every power plant will resume its full utilization rate and revenues from Boco Rock Wind Farm (BRWF) and GIDEC will be booked for the first full quarter. In addition, slight profit growth of 4.6%yoy is projected in 2015 from new projects acquired in 2014, e.g. Masinloc, SEG, and BRWF. However, the increasing profit will be partly offset by decreasing profit from the end of REGCO’s PPA in December 2014 and KEGCO’s in 2016 (in 2014, KEGCO faced net loss of B131m). However, the increasing profit will be partly offset by decreasing profit from the end of REGCO’s PPA. 

- Top pick among big-cap power generators   

FY2015 fair value (DCF) is B188. We reiterate BUY as its profit would grow remarkably in the long run. EGCO is the top pick among big-cap power generators.