Electricity Generating
Top pick of three musketeers BUY
Electricity Generating Plc (EGCO)
- 3Q14 profit down 10.4%qoq
EGCO posted 3Q14 net profit at B2.2bn or a decrease of 10.4%qoq, better
than forecast. Revenue from KEGCO and shared revenue from BLCP (EGCO
holds 50% stake) declined to B549m, versus B885m in 2Q14. Overall, 9M14
net profit is B7.2bn, growing 7.3% from the same period last year and
making up 98% of FY2014 forecast.
- Up FY2014-2015 forecast
We revise up FY2014-2015 forecast, as shown in the table, to reflect
recognition of revenue from two power plants: 1) a 227-MW geothermal
power plant in Indonesia (20% stake acquired by EGCO) which is divided
into two phases: 110 MW for phase 1 and 117 MW for phase 2, running
commercially since 2000 and 2009, respectively (the company officially
announced the acquisition on November 11, 2014) , and 2) a 113-MW Boco
Rock wind power plant in Australia (100% stake held by EGCO), which is
projected to start a commercial run in 2Q15. Under the new forecast,
14.4% profit growth is projected in FY2014 and 1.4%yoy in FY2015.
- Top pick of big power plants
We switch to use 2015 fair value (DCF) of B188. Buying on weakness is
recommended for EGCO. With its strong growth potential in the long run,
we view it as a top pick of big power plants.
