16 April 2015 Global Power Synergy High voltage TISCO Securities Company Limited is acting as financial advisor and lead underwriter for an offering securities by Global Power Synergy Public Company Limited. Investors should read the information about the issuer and the securities offering in the prospectus before making any investment decision. IPO Report | GPSC IPO 12 month Target Price Bt33 Price (IPO) N/A CG Rating N/A Sector ENERG SHARE SUMMARY Stock data: Issued shares (pre-IPO): 374.58m Issued shares (post-IPO): 1,498.30m Par value: Bt10.0 Foreign Limit: n.a. Foreign Ownership: 0% Free Float: < 25% Major Shareholders (Pre-IPO): PTT 30.1% PTTGC 30.3% TOP 11.9% Thaioil Power 27.7% Major Shareholders (Post-IPO): PTT 22.6% PTTGC 22.7% TOP 8.9% Thaioil Power 20.8% Public 25.0% GPSC is a growth utility stock Unlike other utility stocks in the Thai market, GPSC has an exceptional growth outlook. We expect GPSC to raise its capacity by 41% by 2019, the highest in the sector. GPSC also has a uniquely positive outlook as its major IPP power plant is still in a flat earnings period while it is ramping up four projects which will contribute to higher earnings in 2015-17F. With expected earnings growth of 14% p.a. (CAGR) in 2015-17F, GPSC is a prime growth utility stock in the sector. Expanding capacity by 16% over the next 2 years Over the next two years, or by the end of 2017, GPSC will raise its operating MW capacity by 16% with the startups of 1) 125MW Nava Nakorn Electricity Generating (NNEG) in 2016; 2) 240MW IRPC Clean Power (IRPCCP) in 2017 (Phase 1 for 40MW to reach COD in 2015); 3) 65MW Nam Lik 1 Power (NL1PC) in 2017 and; 4) 117MW Bangpa-in Cogeneration 2 (BIC2) in 2017. The above four projects combined are 215MW (+16%) net equity contribution to GPSC and will be the major driver for earnings. Most of the growth will be in 2019 Despite sizable expansion in the medium-term, most of GPSC’s capacity addition will be in 2019 when the 1,285MW Xayaburi hydropower project is completed in Laos PDR. This project is an IPP project, selling 1,220MW to EGAT and the other 60MW to Electricite du Laos (EDL), and will add the other 321MW (+24%) to GPSC portfolio (as GPSC, via Natee Synergy, owns 25% of the project). We expect GPSC to more than double its 2020F earnings from its 2014 level (see Figure 8). Our target price is based on DCF We value GPSC at Bt33/shr, based on discounted cash flow method to reflect its PPA contract-based cash flows. Assuming cost of equity (ke) of 9.9%, and no terminal value for all of its power plants, we derive an enterprise value of Bt37bn for GPSC. We also incorporate GPSC’s cash on hand (including assumed IPO proceeds) into our target price, as we believe this is not captured in our DCF calculation (as we have not assumed additional investments from this IPO proceeds). Note that we believe the market is also likely to price-in the company's robust cash reserves. CONSOLIDATED FINANCIAL SUMMARY Year 2013 2014 2015F 2016F 2017F Sales (Bt, m) 26,328 23,755 23,816 24,368 26,558 EBITDA (Bt, m) 2,907 2,858 3,101 3,370 3,161 Net profit (Bt, m) 1,161 1,578 1,961 1,952 2,313 Net profit (YoY%) n.a. 35.9 24.3 (0.5) 18.5 Basic EPS (Bt) 1.03 1.40 1.31 1.30 1.54 EPS (YoY%) n.a. 35.9 (6.8) (0.5) 18.5 PER (X) 29.0 21.4 22.9 23.0 19.4 PBV (X) 1.4 1.3 1.0 1.0 1.0 Yield (%) 0.0 0.3 1.3 1.3 1.5 ROE (%) 9.7 6.4 5.8 4.5 5.1 Source: TISCO Research Note: use average price for historical PER, PBV, yield
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16 April 2015
Global Power Synergy
High voltage
TISCO Securities Company Limited is acting as financial advisor and lead underwriter for an offering securities by Global Power
Synergy Public Company Limited. Investors should read the information about the issuer and the securities offering in the
prospectus before making any investment decision.
IPO Report | GPSC
IPO
12 month Target Price Bt33
Price (IPO) N/A
CG Rating N/A
Sector ENERG
SHARE SUMMARY
Stock data:
Issued shares (pre-IPO): 374.58m
Issued shares (post-IPO): 1,498.30m
Par value: Bt10.0
Foreign Limit: n.a.
Foreign Ownership: 0%
Free Float: < 25%
Major Shareholders (Pre-IPO):
PTT 30.1%
PTTGC 30.3%
TOP 11.9%
Thaioil Power 27.7%
Major Shareholders (Post-IPO):
PTT 22.6%
PTTGC 22.7%
TOP 8.9%
Thaioil Power 20.8%
Public 25.0%
GPSC is a growth utility stock
Unlike other utility stocks in the Thai market, GPSC has an exceptional growth
outlook. We expect GPSC to raise its capacity by 41% by 2019, the highest in the
sector. GPSC also has a uniquely positive outlook as its major IPP power plant is still
in a flat earnings period while it is ramping up four projects which will contribute to
higher earnings in 2015-17F. With expected earnings growth of 14% p.a. (CAGR) in
2015-17F, GPSC is a prime growth utility stock in the sector.
Expanding capacity by 16% over the next 2 years
Over the next two years, or by the end of 2017, GPSC will raise its operating MW
capacity by 16% with the startups of 1) 125MW Nava Nakorn Electricity Generating
(NNEG) in 2016; 2) 240MW IRPC Clean Power (IRPCCP) in 2017 (Phase 1 for 40MW to
reach COD in 2015); 3) 65MW Nam Lik 1 Power (NL1PC) in 2017 and; 4) 117MW
Bangpa-in Cogeneration 2 (BIC2) in 2017. The above four projects combined are
215MW (+16%) net equity contribution to GPSC and will be the major driver for
earnings.
Most of the growth will be in 2019
Despite sizable expansion in the medium-term, most of GPSC’s capacity addition will
be in 2019 when the 1,285MW Xayaburi hydropower project is completed in Laos
PDR. This project is an IPP project, selling 1,220MW to EGAT and the other 60MW to
Electricite du Laos (EDL), and will add the other 321MW (+24%) to GPSC portfolio (as
GPSC, via Natee Synergy, owns 25% of the project). We expect GPSC to more than
double its 2020F earnings from its 2014 level (see Figure 8).
Our target price is based on DCF
We value GPSC at Bt33/shr, based on discounted cash flow method to reflect its PPA
contract-based cash flows. Assuming cost of equity (ke) of 9.9%, and no terminal
value for all of its power plants, we derive an enterprise value of Bt37bn for GPSC.
We also incorporate GPSC’s cash on hand (including assumed IPO proceeds) into our
target price, as we believe this is not captured in our DCF calculation (as we have not
assumed additional investments from this IPO proceeds). Note that we believe the
market is also likely to price-in the company's robust cash reserves.
CONSOLIDATED FINANCIAL SUMMARY
Year 2013 2014 2015F 2016F 2017F
Sales (Bt, m) 26,328 23,755 23,816 24,368 26,558
EBITDA (Bt, m) 2,907 2,858 3,101 3,370 3,161
Net profit (Bt, m) 1,161 1,578 1,961 1,952 2,313
Net profit (YoY%) n.a. 35.9 24.3 (0.5) 18.5
Basic EPS (Bt) 1.03 1.40 1.31 1.30 1.54
EPS (YoY%) n.a. 35.9 (6.8) (0.5) 18.5
PER (X) 29.0 21.4 22.9 23.0 19.4
PBV (X) 1.4 1.3 1.0 1.0 1.0
Yield (%) 0.0 0.3 1.3 1.3 1.5
ROE (%) 9.7 6.4 5.8 4.5 5.1
Source: TISCO Research Note: use average price for historical PER, PBV, yield
IPO Report | GPSC
TISCO Securities Company Limited is acting as financial advisor and lead underwriter for an offering securities by Global Power
Synergy Public Company Limited. Investors should read the information about the issuer and the securities offering in the
prospectus before making any investment decision.
2
16 April 2015
High voltage
The biggest expansion in the Thai power sector
GPSC has a plan to expand its capacity by 41% over the next 4 years (see Figure 4). When
compared to the current plans of other listed power generation (powergen) companies, GPSC’s
target represents the highest growth in the sector. Based on company filings, GPSC currently has
1,351MW of electricity generation, excluding steam, chilled, and industrial water. By 2019, new
power plant startups should raise this number to 1,851MW. Over the next few years starting
2015, we expect to see a steady rampup of new projects which will show in company’s earnings
and dividends.
Figure 1. GPSC’s committed projects
1,000
1,200
1,400
1,600
1,800
2,000
2014 2015F 2016F 2017F 2018F 2019F
MW
Current NNEG IRPCCP NL1PC BIC2 XPCL
Source: TISCO Research, GPSC
Expanding capacity by 16% over the next 2 years
Over the next two years, or by the end of 2017, GPSC will raise its operating MW capacity by 16%
with the startups of 1) 125MW Nava Nakorn Electricity Generating (NNEG) in 2016; 2) 240MW
IRPC Clean Power (IRPCCP) in 2017 (Phase 1 for 40MW to reach COD in 2015); 3) 65MW Nam Lik 1
Power (NL1PC) in 2017 and; 4) 117MW Bangpa-in Cogeneration 2 (BIC2) in 2017– for more
detailed overview of each project, see Figure 18. In May 2015, IRPCCP will reach its first phase of
commercial operation by supplying 45MW and 180 ton/hr of steam to IRPC (who will complete its
UHV project in 3Q15). The above four projects combined offer 215MW (+16%) net equity
contribution to GPSC (i.e. GPSC doesn’t hold 100% in each of these projects).
Most of the growth will be in 2019
Despite sizable expansion in the medium-term, most of GPSC’s capacity addition will be in 2019
when the 1,285MW Xayaburi hydropower project (under Natee Synergy) is completed in Laos
PDR. This project is an IPP project, selling 1,220MW to EGAT and the other 60MW to Electricite du
Laos (EDL), and will add the other 321MW (+24%) to GPSC portfolio (as GPSC, via Natee Synergy,
owns 25% of the project).
Expect earnings rampup over the next 3 years
Even though the majority of the capacity expansion should be coming online in 2019, we believe
GPSC will see earnings improvement well before that, thanks to improving profitability in its
current portfolio of power plants. We expect the higher contribution from subsidiaries will help
offset the declining trend of IPT income (due to its front-loaded contract). In 2015, we forecast
income from subsidiary to rise to Bt764m (from Bt268m) thanks to 1) Bt250m higher dividend
income from RPCL (GPSC did not recognize this income last year) and; 2) Bt200m higher
IPO Report | GPSC
TISCO Securities Company Limited is acting as financial advisor and lead underwriter for an offering securities by Global Power
Synergy Public Company Limited. Investors should read the information about the issuer and the securities offering in the
prospectus before making any investment decision.
3
16 April 2015
contribution from the steady rampup at BIC (117MW) and TSE (80MW solar), while the earnings
contribution from the partial (phase I) startup of IRPCCP would still be subdued. In 2017,
normalization of NNEG operations and the full IRPCCP startup would raise subsidiary income to
Score Range Level Description 90 - 100 5 Excellent 80 - 89 4 Very Good 70 - 79 3 Good 60 - 69 2 Satisfactory Corporate Governance Report 50 - 59 1 Pass of Thai Listed Companies 2014 < 50 n.a. n.a. N/R Does not appear in the CGR report
Disclaimer
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Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is
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score groups (Good, Very Good, and Excellent) will be announced to the public).
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