Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Equity Bottom-Up

<ul><li>We expect the market’s view on BGRIM's earnings outlook to be more bullish due to lower gas costs, which would also provide cushion for IU margins, as well as power capacity expansion and the increasing share of RE projects.</li><li>Hence, we have raised BGRIM’s earnings forecasts and increased the 12M FV to Bt35 (from Bt33).</li><li>Our valuation metrics indicate a positive view on the current valuation and long-term growth prospects (2024-26E EPS growth expected at a 26% CAGR), while the downside tactical risks are limited. </li></ul>

We expect the market’s view on BGRIM's earnings outlook to be more bullish due to lower gas costs, which would also provide cushion for IU margins, as well as power capacity expansion and the increasing share of RE projects.Hence, we have raised BGRIM’s earnings forecasts and increased the 12M FV to Bt35 (from Bt33).Our valuation metrics indicate a positive view on the current valuation and long-term growth prospects (2024-26E EPS growth expected at a 26% CAGR), while the downside tactical risks are limited. 

B.grimm Power - Strong LT Earnings Momentum; Pursuing Green Power Growth

<ul><li>In our view, lower gas costs following the implementation of the single pool gas system should mitigate the risks regarding the government’s further intervention in electricity tariffs and the Ft. Meanwhile, we expect the potential reclaim of EGAT’s Ft subsidies to be the next price catalyst for SPP operators.</li><li>We maintain our Outperform rating and the 12M FV of Bt33.0.</li><li>Our valuation metrics suggest that the current share price is attractive, with strong long-term earnings growth prospects and neutral tactical risk</li></ul>

In our view, lower gas costs following the implementation of the single pool gas system should mitigate the risks regarding the government’s further intervention in electricity tariffs and the Ft. Meanwhile, we expect the potential reclaim of EGAT’s Ft subsidies to be the next price catalyst for SPP operators.We maintain our Outperform rating and the 12M FV of Bt33.0.Our valuation metrics suggest that the current share price is attractive, with strong long-term earnings growth prospects and neutral tactical risk

B.grimm Power -In-Line 4Q23 Earnings; Strong LT Earnings Outlook

<ul><li>In our view, lower gas costs following the implementation of the single pool gas system should mitigate the risks regarding the government’s further intervention in electricity tariffs and the Ft, causing the latter to move in line with gas costs.</li><li>We maintain our Outperform rating and the 12M FV of Bt33.0.</li><li>Our valuation  metrics suggest that the current share price is attractive, with strong long-term earnings prospects and neutral tactical risk.</li></ul>

In our view, lower gas costs following the implementation of the single pool gas system should mitigate the risks regarding the government’s further intervention in electricity tariffs and the Ft, causing the latter to move in line with gas costs.We maintain our Outperform rating and the 12M FV of Bt33.0.Our valuation  metrics suggest that the current share price is attractive, with strong long-term earnings prospects and neutral tactical risk.

B.grimm Power - Weak 4Q23E Core Profit; Solid LT Earnings

<ul><li>BGRIM reported a 2Q23 net profit of Bt678mn, reversing from the net loss of Bt193mn in 2Q22 and expanding 70% QoQ, in line with our projection of Bt668mn.</li><li>Excluding the FX impact, the firm reported a core profit of Bt855mn (+184% YoY, +157% QoQ) in 2Q23.</li><li>The positive factors included the wider margin of electricity sold to industrial users (IU) to Bt1.42/unit (vs. Bt0.25/unit in 2Q22 and Bt1.32/unit in 1Q23), in line with the trajectory of Ft (note that the Ft from May to August 2023 is Bt0.9127/unit, +Bt0.665/unit from the same period last year at Bt0.2477/unit but -Bt0.6365/unit from Bt1.549/unit in January to April 2023), as well as lower gas costs to Bt404/mmbtu (-4% YoY, -16% QoQ) amid a slight decline in electricity sold to IU by 3% YoY and 2% QoQ to 834GWh; 2) larger electricity volume sold to EGAT by 7% QoQ to 2,270GWh on the full- quarter contribution of BGPM2R (SPP replacement; COD in March 2023); and 3) larger steam sales volume to IU of 219k tons (+14% YoY, +12% QoQ), offsetting the lower steam price by 7% QoQ in line with the gas price.</li></ul>

BGRIM reported a 2Q23 net profit of Bt678mn, reversing from the net loss of Bt193mn in 2Q22 and expanding 70% QoQ, in line with our projection of Bt668mn.Excluding the FX impact, the firm reported a core profit of Bt855mn (+184% YoY, +157% QoQ) in 2Q23.The positive factors included the wider margin of electricity sold to industrial users (IU) to Bt1.42/unit (vs. Bt0.25/unit in 2Q22 and Bt1.32/unit in 1Q23), in line with the trajectory of Ft (note that the Ft from May to August 2023 is Bt0.9127/unit, +Bt0.665/unit from the same period last year at Bt0.2477/unit but -Bt0.6365/unit from Bt1.549/unit in January to April 2023), as well as lower gas costs to Bt404/mmbtu (-4% YoY, -16% QoQ) amid a slight decline in electricity sold to IU by 3% YoY and 2% QoQ to 834GWh; 2) larger electricity volume sold to EGAT by 7% QoQ to 2,270GWh on the full- quarter contribution of BGPM2R (SPP replacement; COD in March 2023); and 3) larger steam sales volume to IU of 219k tons (+14% YoY, +12% QoQ), offsetting the lower steam price by 7% QoQ in line with the gas price.

Earnings Review - B.Grimm Power Plc. (BGRIM)

<div><div><div><div><ul><li>We expect BGRIM to report a 2Q23E net profit of Bt668mn, reversing from the net loss of Bt193mn in 2Q22 and up 68% QoQ.</li><li>The growth catalysts include 1) the wider margin of electricity sold to industrial users (IU) to Bt1 . 5 /unit (vs. Bt0.25/unit in 2Q22 and Bt1.32/unit in 1Q23), in line with the trajectory of Ft (note that the Ft from May to August 2023 is Bt0.9127/unit, +Bt0.665/unit from the same period last year at Bt0.2477/unit but -Bt0.6365/unit from Bt1 .549/unit in January to April 2023), as well as lower gas costs to Bt404/mmbtu ( -4% YoY, -16% QoQ); 2) larger electricity volume sold to EGAT by 7% QoQ on the full-quarter contribution of BGPM2R (SPP replacement; COD in March 2023); 3) larger steam sales volume to IU of 218k tons (+13% YoY, +12% QoQ), offsetting the lower steam price.</li><li>Meanwhile, the depreciation of the USD is likely to have led to an FX loss of around Bt168mn in the quarter, with the net impact cushioned by effective management of financial activities, resulting in lower finance costs to a similar extent.</li></ul></div></div></div></div>

We expect BGRIM to report a 2Q23E net profit of Bt668mn, reversing from the net loss of Bt193mn in 2Q22 and up 68% QoQ.The growth catalysts include 1) the wider margin of electricity sold to industrial users (IU) to Bt1 . 5 /unit (vs. Bt0.25/unit in 2Q22 and Bt1.32/unit in 1Q23), in line with the trajectory of Ft (note that the Ft from May to August 2023 is Bt0.9127/unit, +Bt0.665/unit from the same period last year at Bt0.2477/unit but -Bt0.6365/unit from Bt1 .549/unit in January to April 2023), as well as lower gas costs to Bt404/mmbtu ( -4% YoY, -16% QoQ); 2) larger electricity volume sold to EGAT by 7% QoQ on the full-quarter contribution of BGPM2R (SPP replacement; COD in March 2023); 3) larger steam sales volume to IU of 218k tons (+13% YoY, +12% QoQ), offsetting the lower steam price.Meanwhile, the depreciation of the USD is likely to have led to an FX loss of around Bt168mn in the quarter, with the net impact cushioned by effective management of financial activities, resulting in lower finance costs to a similar extent.

B.grimm Power (Bgrim) - Earnings Improvement to Continue in 2Q23E

Thailand

B.Grimm Power Public Company Limited operates as a renewable energy company. The Company focuses on the development, financing, construction, and operation of green field power plants. B.Grimm Power also renders electricity distribution, operations, and maintenance services. B.Grimm Power serves clients in Asia.

B Grimm Power (BGRIM TB)

B.grimm Power - Strong LT Earnings Momentum; Pursuing Green Power Growth

This is consistent with BGRIM's share price, which is trading at a higher PER than its peers, reflecting the market's expectations regarding its...

Krungthai XSpring

B.grimm Power -In-Line 4Q23 Earnings; Strong LT Earnings Outlook

Our valuation metrics suggest that the current share price is attractive, with strong long-term earnings growth prospects and neutral tactical risk

Krungthai XSpring

B.grimm Power - Weak 4Q23E Core Profit; Solid LT Earnings

Our valuation metrics suggest that the current share price is attractive, with strong long-term earnings prospects and neutral tactical risk.

Krungthai XSpring

Earnings Review - B.Grimm Power Plc. (BGRIM)

BGRIM reported a 2Q23 net profit of Bt678mn, reversing from the net loss of Bt193mn in 2Q22 and expanding 70% QoQ, in line with our projection of...

Krungthai XSpring

B.grimm Power (Bgrim) - Earnings Improvement to Continue in 2Q23E

Meanwhile, the depreciation of the USD is likely to have led to an FX loss of around Bt168mn in the quarter, with the net impact cushioned by...

Krungthai XSpring