ACE: Operations Are on Track but No Catalyst

We maintain our HOLD recommendation on ACE based on an unchanged target price of Bt3.73, implying an upside of 1% from the current price. We think ACE deserves to trade at a premium to Thai Utilities due to its pronounced growth prospects and target a 2021E PE of 26.4x.

Investment thesis:

• Power producer with high growth potential, but already priced in
• Long-term contracts and supply control drive high profitability
• Government driven demand can pose a risk

Interim: Most of ACE’s value is derived from its existing growth prospects. While revenue was down in 1Q21, it has enough expansion projects under development to meet its ambitious mid-term goals. Hence, our outlook remains positive.

Risks: Adverse regulatory changes, reliance on a few customers, volatility in fuel prices, unexpected disruptions in production, delays in project execution, change in political leadership can sometimes impact companies.