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>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

<ul><li>We initiate BGRIM with an Outperform rating.</li><li>The valuation metrics suggest that the current valuation is still undemanding, with the long- term growth to be driven by new MW additions from the committed projects in the pipeline, against limited tactical risk.</li><li>We have derived a fair value of Bt42.7, based on the earnings yield and a required return of around 3%.</li></ul>

We initiate BGRIM with an Outperform rating.The valuation metrics suggest that the current valuation is still undemanding, with the long- term growth to be driven by new MW additions from the committed projects in the pipeline, against limited tactical risk.We have derived a fair value of Bt42.7, based on the earnings yield and a required return of around 3%.

Company Update - B.GRIMM POWER (BGRIM TB)

Thematic (Sector/Industry)

<ul><li>Technically, the SET Index is expected to move sideways, with resistance at 1,384/1,392 points (50-day EMA/75-day EMA) and the support at 1,374/1,365 points.</li><li>Overall, the index is still moving in the downchannel range of 1,330-1,396 points.</li><li>As for the short-term picture, it is currently being determined whether the index will move in an uptrend to test the resistance of the range at 1,395 points and 1,405/1,416 points, respectively, or move in a downtrend to test the support of the range, with the minor support at 1,365/1,356 points, respectively. </li></ul>

Technically, the SET Index is expected to move sideways, with resistance at 1,384/1,392 points (50-day EMA/75-day EMA) and the support at 1,374/1,365 points.Overall, the index is still moving in the downchannel range of 1,330-1,396 points.As for the short-term picture, it is currently being determined whether the index will move in an uptrend to test the resistance of the range at 1,395 points and 1,405/1,416 points, respectively, or move in a downtrend to test the support of the range, with the minor support at 1,365/1,356 points, respectively. 

<ul><li>The Energy Regulatory Commission (ERC) resolved to set the electricity tariff at Bt4.18/unit and Ft at Bt0.3972/unit for May to August 2024, flat from the previous period.</li><li>These rates align with the Case 3 scenario, representing the lowest figures, and are in line with our 2024E projections, supported by the declining trend in gas costs, including lower LNG prices and increased G1/61 gas volume.</li><li>The decision is expected to facilitate effective management of electricity tariffs and enhance the opportunities and continuity for EGAT's reclamation of the Ft subsidy, which is nearing Bt100bn. </li></ul>

The Energy Regulatory Commission (ERC) resolved to set the electricity tariff at Bt4.18/unit and Ft at Bt0.3972/unit for May to August 2024, flat from the previous period.These rates align with the Case 3 scenario, representing the lowest figures, and are in line with our 2024E projections, supported by the declining trend in gas costs, including lower LNG prices and increased G1/61 gas volume.The decision is expected to facilitate effective management of electricity tariffs and enhance the opportunities and continuity for EGAT's reclamation of the Ft subsidy, which is nearing Bt100bn. 

Energy (Power) - Flat Electricity Tariff and Ft for May to August

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.

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B Grimm Power (BGRIM TB)

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

Company Update - B.GRIMM POWER (BGRIM TB)

The valuation metrics suggest that the current valuation is still undemanding, with the long- term growth to be driven by new MW additions from the...

Krungthai XSpring

KTX Zoom - April 3, 2024

Technically, the SET Index is expected to move sideways, with resistance at 1,384/1,392 points (50-day EMA/75-day EMA) and the support at 1,374...

Krungthai XSpring

Energy (Power) - Flat Electricity Tariff and Ft for May to August

The Energy Regulatory Commission (ERC) resolved to set the electricity tariff at Bt4.18/unit and Ft at Bt0.3972/unit for May to August 2024, flat...

Krungthai XSpring

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