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 weak 3Q24E net profit due to a forex loss, while core profit should have remained strong.</li><li>We have revised up the 2024E core profit and net profit by 16%, mostly because of non- core items, while maintaining our forecast for core profit growth at a 10% CAGR for 2025-26E, driven by the scheduled commercial kick-off of projects in the pipeline.</li><li>In addition, there is growth potential in green power both domestically (RE 2, industrial solutions/data center, private PPA) and internationally. </li></ul>

We expect weak 3Q24E net profit due to a forex loss, while core profit should have remained strong.We have revised up the 2024E core profit and net profit by 16%, mostly because of non- core items, while maintaining our forecast for core profit growth at a 10% CAGR for 2025-26E, driven by the scheduled commercial kick-off of projects in the pipeline.In addition, there is growth potential in green power both domestically (RE 2, industrial solutions/data center, private PPA) and internationally. 

B.grimm Power - Forex Loss to Weigh on Net Profit, but Strong Core Profit in 3Q24E

Thematic (Sector/Industry)

<ul><li>The Energy Regulatory Commission (ERC) has announced the purchase of 2,180 MW under the RE2 program for the first lot, which includes up to 600 MW from wind farm projects and up to 1,580 MW from solar farm projects.</li><li>This is a positive development for operators with pending projects that did not pass the RE1 Phase, as they will receive priority consideration.</li><li>Key beneficiaries may include GULF (approximately 1,000-2,000 MW), BGRIM (about 500-800 MW), GPSC (around 300-400 MW), and GUNKUL (approximately 400 MW). </li></ul>

The Energy Regulatory Commission (ERC) has announced the purchase of 2,180 MW under the RE2 program for the first lot, which includes up to 600 MW from wind farm projects and up to 1,580 MW from solar farm projects.This is a positive development for operators with pending projects that did not pass the RE1 Phase, as they will receive priority consideration.Key beneficiaries may include GULF (approximately 1,000-2,000 MW), BGRIM (about 500-800 MW), GPSC (around 300-400 MW), and GUNKUL (approximately 400 MW). 

Industry Update: Energy (Power) - September 25, 2024

<ul><li>2Q24 showed a mixed performance, with the core profit of SPP operators growing strongly.</li><li>For the 3Q24E core profit outlook, only operators with positive seasonal factors are expected to report outstanding core profit momentum.</li><li>We expect the power sector to become attractive again as the interest rate uptrend nears its end (as firms use debt leverage to drive growth and better project returns can be expected).</li></ul>

2Q24 showed a mixed performance, with the core profit of SPP operators growing strongly.For the 3Q24E core profit outlook, only operators with positive seasonal factors are expected to report outstanding core profit momentum.We expect the power sector to become attractive again as the interest rate uptrend nears its end (as firms use debt leverage to drive growth and better project returns can be expected).

Energy (Power) - Positive Seasonality to Drive 3Q24E Core Earnings

<ul><li>The downside risk to the share price is very limited after a 30% YTD decline.</li><li>This reflects a weaker outlook for IU margins in 2H24E, uncertainties about the continuation of government power subsidy policies and Ft adjustments, which may restrict the upside potential for SPP operators, and limited growth in power sales volume to IUs.</li><li>In addition, unrealized forex losses have already been factored into our revised 2024-26E net profit forecasts, which have been adjusted downward by 52%, 17% and 16%, respectively. </li></ul>

The downside risk to the share price is very limited after a 30% YTD decline.This reflects a weaker outlook for IU margins in 2H24E, uncertainties about the continuation of government power subsidy policies and Ft adjustments, which may restrict the upside potential for SPP operators, and limited growth in power sales volume to IUs.In addition, unrealized forex losses have already been factored into our revised 2024-26E net profit forecasts, which have been adjusted downward by 52%, 17% and 16%, respectively. 

B.grimm Power - Negatives Largely Priced In; Pursuing GreenLeap Growth Strategy

<ul><li>The 2Q24E core profit grew further QoQ, but FX losses weighed on net profit, resulting in a weak YoY and QoQ performance.</li><li>The market has acknowledged the weakening IU margin outlook HoH in 2H24E, but the limited growth momentum of electricity sales volume to IUs (in 1H24 at +1% YoY) and the high unrealized forex losses in 1H24 may lead to downward revisions to both our core profit and net profit forecasts, as well as the consensus estimates in 2024E.</li><li>In addition, the FV and stock rating are under review (from Buy and an FV of Bt29.5 currently). </li></ul>

The 2Q24E core profit grew further QoQ, but FX losses weighed on net profit, resulting in a weak YoY and QoQ performance.The market has acknowledged the weakening IU margin outlook HoH in 2H24E, but the limited growth momentum of electricity sales volume to IUs (in 1H24 at +1% YoY) and the high unrealized forex losses in 1H24 may lead to downward revisions to both our core profit and net profit forecasts, as well as the consensus estimates in 2024E.In addition, the FV and stock rating are under review (from Buy and an FV of Bt29.5 currently). 

B.grimm Power - 2Q24 Core Profit Growth QoQ; FX Loss Pressured NP as Expected

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)

B.grimm Power - Forex Loss to Weigh on Net Profit, but Strong Core Profit in 3Q24E

We expect weak 3Q24E net profit due to a forex loss, while core profit should have remained strong. We have revised up the 2024E core profit and...

Krungthai XSpring

Industry Update: Energy (Power) - September 25, 2024

The Energy Regulatory Commission (ERC) has announced the purchase of 2,180 MW under the RE2 program for the first lot, which includes up to 600 MW...

Krungthai XSpring

Energy (Power) - Positive Seasonality to Drive 3Q24E Core Earnings

We expect the power sector to become attractive again as the interest rate uptrend nears its end (as firms use debt leverage to drive growth and...

Krungthai XSpring

B.grimm Power - Negatives Largely Priced In; Pursuing GreenLeap Growth Strategy

In addition, unrealized forex losses have already been factored into our revised 2024-26E net profit forecasts, which have been adjusted downward...

Krungthai XSpring

B.grimm Power - 2Q24 Core Profit Growth QoQ; FX Loss Pressured NP as Expected

We maintain our view that the 2-year core profit is on an uptrend. Meanwhile, the current valuation sees limited tactical downside risk.

Krungthai XSpring

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