Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

<p><strong>We reiterate our BUY rating with a target price of Bt18.00, derived using the DCF methodology (WACC 5.1%, TG 1%), implying 19x PE’21</strong></p><div>• We expect BCPG to post a solid profit of Bt515m in 4Q20 (+15.7% YoY, -23.5% QoQ), thanks to profit recognition from new 20 MWe solar project acquired in 3Q20, while soften QoQ due to lower seasonal contribution from hydro power plants.</div><div></div><div>• Positive 2021 earnings outlook on the back of 1) higher capacity factor of 114MW hydro power plant in Lao PDR, 2) full year profit recognition from 20MWe solar power plant acquired in 3Q20 and 3) COD of 65MW new solar power plants in Japan in 2021.</div><div></div><div>• We see a potential upside from new project acquisition in near term, as the company has allocated Bt3.7bn for new project addition in 2021 (100 to 150 MW new project potential).</div>

We reiterate our BUY rating with a target price of Bt18.00, derived using the DCF methodology (WACC 5.1%, TG 1%), implying 19x PE’21• We expect BCPG to post a solid profit of Bt515m in 4Q20 (+15.7% YoY, -23.5% QoQ), thanks to profit recognition from new 20 MWe solar project acquired in 3Q20, while soften QoQ due to lower seasonal contribution from hydro power plants.• Positive 2021 earnings outlook on the back of 1) higher capacity factor of 114MW hydro power plant in Lao PDR, 2) full year profit recognition from 20MWe solar power plant acquired in 3Q20 and 3) COD of 65MW new solar power plants in Japan in 2021.• We see a potential upside from new project acquisition in near term, as the company has allocated Bt3.7bn for new project addition in 2021 (100 to 150 MW new project potential).

BCPG: New 20MW Solar Power Plant Support 4Q20 Earnings

Thematic (Sector/Industry)

<p><strong>BCPG, GUNKUL, GULF top pick growth stocks</strong></p><ul>
<li>
<strong>Earnings upcycle in 2021:</strong> We expect BCPG, GULF and GUNKUL to achieve 15 to 30% net profit growth during 2021 on the back 12 to 30% power generation capacity expansion in 2020-21 period.</li>
<li>
<strong>Declining gas price to support SPP performance:</strong> The industrial user power sales of SPP players BGRIM, GPSC and GULF (accounting 10 to 20% of the revenue) has rebound to pre – COVID 19 levels as of 4Q20.  We expect the declining gas cost (-10% YoY) will help in revamping the GPM and support the sector performance.</li>
</ul><p><strong>EGCO, RATCH top pick value stocks</strong></p><ul>
<li>
<strong>Cheap valuation:</strong> The stock price of EGCO and RATCH faced 70% and 30% fall in 2020 respectively. The stocks are trading very cheap at 9 to 13x PE’21E and having the companies already overcome the COVID-19 impact we believe the price correction has created an investment opportunity.</li>
<li>
<strong>Decent dividend yield:</strong> We expect RATCH and EGCO to pay a decent dividend yield of 3.3 to 4.4% in 2021.</li>
</ul><p><strong>Maintain HOLD rating on BGRIM, EA and GPSC</strong></p><ul><li>We have a positive view on BGRIM and GPSC as the SPP players will benefit from declining gas price. However, due to limit upside from current share price we maintain the HOLD rating. We recommend to HOLD EA, as the stock performance will depend on new EV-ESS business success and valuation demands.</li></ul>

BCPG, GUNKUL, GULF top pick growth stocks

Earnings upcycle in 2021: We expect BCPG, GULF and GUNKUL to achieve 15 to 30% net profit growth during 2021 on the back 12 to 30% power generation capacity expansion in 2020-21 period.

Declining gas price to support SPP performance: The industrial user power sales of SPP players BGRIM, GPSC and GULF (accounting 10 to 20% of the revenue) has rebound to pre – COVID 19 levels as of 4Q20.  We expect the declining gas cost (-10% YoY) will help in revamping the GPM and support the sector performance.
EGCO, RATCH top pick value stocks

Cheap valuation: The stock price of EGCO and RATCH faced 70% and 30% fall in 2020 respectively. The stocks are trading very cheap at 9 to 13x PE’21E and having the companies already overcome the COVID-19 impact we believe the price correction has created an investment opportunity.

Decent dividend yield: We expect RATCH and EGCO to pay a decent dividend yield of 3.3 to 4.4% in 2021.
Maintain HOLD rating on BGRIM, EA and GPSCWe have a positive view on BGRIM and GPSC as the SPP players will benefit from declining gas price. However, due to limit upside from current share price we maintain the HOLD rating. We recommend to HOLD EA, as the stock performance will depend on new EV-ESS business success and valuation demands.

Thailand Power Sector: Overweight-Bright 2021 Performance

<p><strong>Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation based on a target price of Bt18.00 derived using the DCF methodology (WACC 5.1%, TG 1%), implying 16.5x PE’20</strong></p><div>• Expect 4Q20 earnings to grow YoY on the back of profit recognition from new 20 MWe solar project (Thailand) acquired in 3Q20, while soften QoQ as seasonal high earnings recognition from 114 MW hydro power plant has passed in 3Q20.</div><div></div><div>• Positive view on capital increase as the 1.8x capacity expansion by 2023 will compensate the EPS dilution, and the proceeds will help in strengthening the financials, and assist in adding more capacity to BCPG’s portfolio.</div><div></div><div>• Given the decent 4Q20 earnings outlook and expected 12% EPS growth in 2021, we recommend to accumulate the stock.</div><div></div><div></div><div></div><div></div><section class="figure"><div class="content-caption"></div></section><p></p><section class="figure"><div class="content-caption">
<section class="figure"></section><section class="figure"><div class="content-caption"></div></section><p></p>
</div></section>

Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation based on a target price of Bt18.00 derived using the DCF methodology (WACC 5.1%, TG 1%), implying 16.5x PE’20• Expect 4Q20 earnings to grow YoY on the back of profit recognition from new 20 MWe solar project (Thailand) acquired in 3Q20, while soften QoQ as seasonal high earnings recognition from 114 MW hydro power plant has passed in 3Q20.• Positive view on capital increase as the 1.8x capacity expansion by 2023 will compensate the EPS dilution, and the proceeds will help in strengthening the financials, and assist in adding more capacity to BCPG’s portfolio.• Given the decent 4Q20 earnings outlook and expected 12% EPS growth in 2021, we recommend to accumulate the stock.



BCPG: Steady Growth from 1.8x Capacity Expansion

<p><strong>Yesterday analyst meeting came out in positive tone. We expect the use of proceeds from capital raising for new investments that has potential to expand BCPG’s portfolio by 2x will offset the EPS dilution during 2021-23 period.</strong></p><ul>
<li>Positive 2H20 earnings outlook on the back of seasonal high earnings recognition from 114 MW hydro power plant in lao PDR( added in 4Q19-1Q20 period) and profit recognition from new 20 MWe solar project (Thailand) acquired in 3Q20.</li>
<li>Expect the EPS dilution (excluding PP2) at 34%. The 2021 earnings dilution is anticipated to be compensated by 1) newly acquired 20MWe solar projects in 2020, improved contribution from Philippines wind power projects from 20% increase in tariff rates and 3) New project acquisitions</li>
<li>BCPG announced interim dividend payment of Bt0.16 per share, implying a yield of 1.2% based on current share rice. XD is on 1st September.</li>
</ul><p><strong>We maintain the BUY recommendation while revise down the target price to Bt18.0 (from previous Bt22.8) on the back of 50% increase in outstanding shares (excluding PP2 Warrants). Our new TP is derived using DCF methodology (WACC 5.1%, TG 1%), implying 16.5x PE’20.</strong></p>

Yesterday analyst meeting came out in positive tone. We expect the use of proceeds from capital raising for new investments that has potential to expand BCPG’s portfolio by 2x will offset the EPS dilution during 2021-23 period.
Positive 2H20 earnings outlook on the back of seasonal high earnings recognition from 114 MW hydro power plant in lao PDR( added in 4Q19-1Q20 period) and profit recognition from new 20 MWe solar project (Thailand) acquired in 3Q20.
Expect the EPS dilution (excluding PP2) at 34%. The 2021 earnings dilution is anticipated to be compensated by 1) newly acquired 20MWe solar projects in 2020, improved contribution from Philippines wind power projects from 20% increase in tariff rates and 3) New project acquisitions
BCPG announced interim dividend payment of Bt0.16 per share, implying a yield of 1.2% based on current share rice. XD is on 1st September.
We maintain the BUY recommendation while revise down the target price to Bt18.0 (from previous Bt22.8) on the back of 50% increase in outstanding shares (excluding PP2 Warrants). Our new TP is derived using DCF methodology (WACC 5.1%, TG 1%), implying 16.5x PE’20.

BCPG: Target to Achieve Long Term Growth Through Capital Raising

<p><strong>We see the BCPG’s capital increase plan to bring a short-term negative sentiments as the expected EPS dilution is higher the EPS growth forecasted for 2021E. Thus, It is not recommended to invest as a price correction is likely to happen.</strong></p><ul>
<li>BCPG announced capital increase from existing Bt10bn (2,000 million shares at par Bt5.0) by issuing new 1,301.7 million new ordinary shares (65% increase).</li>
<li>Expect the stock to underperform due to, 1) Expected EPS dilution of 40% is higher than 11% forecasted EPS growth for 2021E. And 2) RO price is 10% lower than last week close price.</li>
<li>Our earnings forecast and target price will be adjusted to reflect the dilution effect arising from the capital increase, after the analyst meeting on 27 Aug 2020. However, we don’t expect a change in BUY recommendation.<br>
</li>
</ul>

We see the BCPG’s capital increase plan to bring a short-term negative sentiments as the expected EPS dilution is higher the EPS growth forecasted for 2021E. Thus, It is not recommended to invest as a price correction is likely to happen.
BCPG announced capital increase from existing Bt10bn (2,000 million shares at par Bt5.0) by issuing new 1,301.7 million new ordinary shares (65% increase).
Expect the stock to underperform due to, 1) Expected EPS dilution of 40% is higher than 11% forecasted EPS growth for 2021E. And 2) RO price is 10% lower than last week close price.
Our earnings forecast and target price will be adjusted to reflect the dilution effect arising from the capital increase, after the analyst meeting on 27 Aug 2020. However, we don’t expect a change in BUY recommendation. 



BCPG: Short Term Negative Sentiments from Capital Increase

Thailand

BCPG Public Company Limited produces and distributes electricity generated from renewable energy. The Company specializes in solar power with a focuses on the investment, development, and management of renewable power plants.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

BCPG PCL (BCPG TB)

BCPG: New 20MW Solar Power Plant Support 4Q20 Earnings

We reiterate our BUY rating with a target price of Bt18.00, derived using the DCF methodology (WACC 5.1%, TG 1%), implying 19x PE’21

Pi Securities PCL, Thailand

Thailand Power Sector: Overweight-Bright 2021 Performance

Power Sector: Overweight-Bright 2021 sector performance. BCPG, GUNKUL, GULF top pick growth stocks. EGCO, RATCH top pick value stocks

Pi Securities PCL, Thailand

BCPG: Steady Growth from 1.8x Capacity Expansion

Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation based on a target price of Bt18.00 derived using the DCF...

Pi Securities PCL, Thailand

BCPG: Target to Achieve Long Term Growth Through Capital Raising

Yesterday analyst meeting came out in positive tone. We expect the use of proceeds from capital raising for new investments that has potential to...

Pi Securities PCL, Thailand

BCPG: Short Term Negative Sentiments from Capital Increase

We see the BCPG’s capital increase plan to bring a short-term negative sentiments as the expected EPS dilution is higher the EPS growth forecasted...

Pi Securities PCL, Thailand

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)