Ratchaburi Electricity Generating Holding

Ratchaburi Electricity Generating Holding Plc (RATCH)  

 

- Marching forward on mega projects   

According to the analyst meeting, RATCH is working on two coal-fired power plants in Myanmar now, a 660 MW plant in Kengtung and a 2,640 MW plant in Myeik (currently under the Burmese government's deliberation for the MOA to be made). In addition, RATCH has planned to enter a joint venture for a coal mine project in Indonesia. RATCH has been interested in the coal-fired power business in Myanmar, Cambodia, and Vietnam; these projects will ensure that RATCH have sufficient power and fuel throughout the project and grant RATCH a long-term upside; this is not included in our forecast yet. 

- FY2015 profit to grow 10.3%yoy thanks to Hongsa plant   

We estimate RATCH's FY2015 earnings to rebound by 10.3%yoy mainly from 751.2 MW Hongsa plant (RATCH holding 40% stake). Phase 1 and Phase 2 of Hongsa plant will start the commercial runs in June and November 2015, while Phase 3 will start in March 2016. In the short term, RATCH's 1Q15 profit is expected to revive from 4Q14 since every plant has resumed working at their full capacity and no massive extraordinary expense is likely to be booked like in 4Q14.  

- BUY for upside from pending projects   

FY2015 fair value is B68. We reiterate BUY as RATCH is a defensive play with potential long-term growth and expected dividend yield of 4% p.a. 

RATCH is the top pick among big-cap energy stocks.