Utilities Sector

Utilities Sector Neutral

PDP2018 revisions look positive
► Renewable Positive
► On Feb 21, 2019, the ERC agreed on a draft PDP revision 1 that made a
small change in renewed power allocation.

► Under draft PDP revision 1, power allocated for biomass, biogas and hydro
was raised and solar capacity allocation lowered.

► Reiterate Overweight weighting as renewables will benefit from the

community power plant scheme. ACE and GUNKUL are our top picks.

Investment highlights
► Demand-supply under PDP 2018 Revision 1. The demand and supply forecast
remain the same as the original PDP2018 version. According to the draft revision
plan, demand growth for Thailand is expected to rise by 3% p.a. or from 30 GW to
54 GW in 2037. Additional capacity of 56.4 GW from new power plants will be
needed during 2018-2037 in order to cope with capacity that will be retired and
demand growth (Figs 1, 2). Of new capacity to be added during this 20-year period,
renewable energy will account for 38% of total new capacity. Renewable power
production is expected to rise from 11% of total production in 2018 to 21% in 2037.

► Small change under PDP 2018 Revision 1. Under the revision, there was a
small shift in the proportion of energy allocated for renewable energy in that the
proportion of solar energy was lowered to 64% (12 GW) from 68% (12.7 GW), while
the proportion of biomass, biogas and hydropower was raised to 25% (4.7 GW)
from 22% (4 GW) (Fig 4). There was also a change in electricity tariff, with the
average rate revised up by 1.6% to Bt3.6366/unit from Bt3.5799/unit.

► Details of renewable capacity. Additional changes in draft PDP2018 rev 1 were

that 1) community power plants are to connect to the grid in 2020-2024 from none
previously; 2) wind farms are to connect to the grid in 2022 from 2034 previously;
and 3) biomass plants in the South of Thailand are to connect to the grid in 2022-
23 from the previous schedule of 2021-2022.

Recommendation
Analyst
► Overweight renewables. We maintain our Overweight weighting on the
Ornmongkol Tantitanatorn
renewable energy sector as they will benefit from increased capacity allocation
ornmongkol.t@kasikornsecurities.com
under PDP Revision 1. ACE and TPCH look likely to be potential gainers from capacity
allocated for community power plants, while EA and GUNKUL are potential gainers
from capacity allocated for wind farms.
24 February 2020
Kasikorn Securities Public Company Limited

Price (Bt) Target price Upside P/E (x) P/BV (x) Net profit grth (%) Div. yield (%) ROE (%)
Stock Rating
21-Feb-20 (Bt) (%) 2019E 2020E 2019E 2020E 2019E 2020E 2019E 2020E 2019E 2020E
Renewable oriented
ACE OP 3.20 4.64 45.0 52.4 29.9 4.0 2.8 50.0 32.9 0.7 1.3 10.1 9.8
BCPG OP 16.40 20.40 24.4 18.0 13.7 2.1 2.0 -18.9 32.8 4.0 4.8 11.7 15.0
DEMCO OP 2.48 3.38 36.3 12.5 5.0 0.6 0.5 5.6 131.1 2.5 8.0 4.8 10.5
EA N 47.00 46.00 -2.1 27.9 27.6 7.1 6.3 17.5 8.6 1.1 1.1 28.4 25.0
GUNKUL OP 2.60 3.64 40.0 12.6 8.9 2.5 1.9 93.3 23.9 4.1 5.7 21.5 22.7
SPCG N 19.40 18.70 -3.6 7.7 7.5 1.6 1.4 -4.8 1.6 5.2 5.4 20.3 19.4
SSP OP 7.30 8.50 16.4 11.6 10.4 1.7 1.6 13.6 11.0 1.4 3.5 15.7 15.8
TPCH OP 11.40 15.70 37.7 13.9 9.0 1.8 1.4 1.6 41.9 1.7 2.2 13.6 15.9
Simple Average 19.6 14.0 2.7 2.2 13.6 16.4 2.6 4.0 15.8 16.8

24 February 2020 1 Utilities Sector

 Fig 1 Power supply Fig 2 Additional renewable power
Supply PDP2018 PDP2018 Rev1 (+/-) Renewable energy PDP2018 PDP2018 Rev1 (+/-)
Capacity end 2017 46,090 46,090 0% Government promoted 520 2,453 372%
Retired capacity during 2018-2037 25,310 25,310 0% Municipal waste 400 400 0%
New capacity during 2018-2037 56,431 56,431 0% Southern biomass 120 120 0%
Capacity end 2037 77,211 77,211 0% Community 0 1,933 NM
New capacity during 2018-2037 PDP2018 PDP2018 Rev1 (+/-) AEDP 18,176 16,243 -11%
Renewable 20,766 20,766 0% Solar 10,000 8,740 -13%
Hydro 500 500 0% Biomass 3376 2780 -18%
Cogeneration/Combined cycle 15,268 17,208 13% Biogas 546 400 -27%
Coal/Lignite 1,740 1,200 -31% Floating solar+Hydro 2725 2725 0%
Import 5,857 5,857 0% Wind 1485 1485 0%
New power plant 8,300 6,900 -17% Industrial waste 44 44 0%
Energy effciency 4,000 4,000 0% Small Hydro 0 69 NM
Total 56,431 56,431 0% Total 18,696 18,696 0%
Source: EPPO Source: EPPO

Fig 3 Power demand Fig 4 Additional renewable power breakdown

Peak demand PDP2018 PDP2018 Rev1 (+/-)
2018 29,969 29,969 0%
2027 41,079 41,079 0%
2037 53,997 53,997 0%
Power production breakdown by fuel type
PDP2018 PDP2018 PDP2018 Rev1 (+/-)
End 2018 End 2037 End 2037
Gas 60% 53% 53% 0
Coal/Lignite 22% 12% 11% -1
Import 7% 9% 9% 0
Renewable * 11% 20% 21% 1
Nuclear - - - 0
Energy effciency - 6% 6% 0
*Include Hydro power plant

Source: EPPO Source: EPPO

Fig 5 Additional renewable power Fig 6 Additional renewable power

Unit: MW 2019 2020 2021 2022 2023 2024 2025

Solar Hybrid-community - 200 300 390 470 550 550
Biogas(Crops)-community - 200 300 400 500 600 600
Biogas(Waste)-community - 100 150 183 183 183 183
Biomass-community - 200 300 400 500 600 600
Wind - - - 90 180 270 270
Solar Floating - - 45 45 45 69 69
Solar 3 50 100 150 200 250 250
Biomass-Pracharat - - - 60 120 120 120
Industrial waste - - - 400 400 400 400
Total 3 750 1,195 2,118 2,598 3,042 3,042

Source: EPPO Source: EPPO

24 February 2020 2 Utilities Sector

 Analyst Certification

The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject security(ies) and subject company(ies); and
no part of the compensation of the research analyst(s) was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in
the report.

Investment Ratings

Outperform: Expected total return of 10% or more within a 12-month period

Neutral: Expected total return between -10% and 10% within a 12-month period
Underperform: Expected total return of -10% or worse within a 12-month period

General Disclaimer
This document is prepared by Kasikorn Securities Public Company Limited (“KS”). This document has been prepared for individual clients of KS only and must
not, either in whole or in part, be copied, photocopied or duplicated in any form or by any means or distributed to any other person. If you are not the intended
recipient you must not use or disclose the information in this research in any way. If you received it in error, please immediately notify KS by return e-mail and
delete the document. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other
person.

This document, including information, data, statements, forecasts, analysis and projections contained herein, including any expression of opinion, is based on
public available information or information obtained from sources believed to be reliable, but KS does not make any representation or warranty on, assumes no
responsibilities for nor guarantees the accuracy, completeness, correctness or timeliness of such information. KS accepts no obligation to correct or update the
information or opinions in it. The statements or expressions of opinion herein were arrived at after due and careful consideration and they were based upon
such information or sources then, and in our opinion are fair and reasonable in the circumstances prevailing at the time. The information or expressions of
opinion contained herein are subject to change without notice.

Nothing in this document shall be construed as an offer or a solicitation of an offer to buy or sell any securities or products, or to engage in or refrain from
engaging in any transaction. In preparing this document, KS did not take into account your specific investment objectives, financial situation or particular needs.
This document is for your information only and is not to be taken in substitution for the exercise of your judgment. KS salespeople, traders and other
professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions which are contrary to the opinions
expressed in this document. Before making an investment decision on the basis of this document, you should obtain independent financial, legal or other advice
and consider the appropriateness of investment in light of your particular investment needs, objectives and financial circumstances. There are risks involved in
the investment in securities. KS accepts no liability whatsoever for any direct, indirect, consequential or other loss (including claim for loss of profit) arising from
any use of or reliance upon this document and/or further communication given in relation to this document.

Any valuations, opinions, estimates, forecasts, projections, ratings or risk assessments herein constitute a judgment as of the date of this document, and there
can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, projections, ratings or risk
assessments. Any valuations, opinions, estimates, forecasts, projections, ratings or risk assessments described in this document were based upon a number of
estimates and assumptions and are inherently subject to significant uncertainties or contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, projections, ratings or risk assessments were based will not materialize or will vary significantly from actual
results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, projections, ratings or risk assessments described herein is not to be relied
upon as a representation and/or warranty by KS (i) that such valuations, opinions, estimates, forecasts, projections, ratings or risk assessments or their
underlying assumptions will be achieved, or (ii) that there is an assurance that future results or events will be consistent with any such valuations, opinions,
estimates, forecasts, projections, ratings or risk assessments stated therein.

KS along with its affiliates and/or persons associated with it may from time to time have interests in the securities mentioned in this document. KS and its
associates, their directors and/or employees may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to
perform broking, investment banking, advisory and other securities services for companies mentioned in this document.

Corporate Governance Report Disclaimer

The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the
Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of companies listed on the Stock Exchange of Thailand
and the Market of Alternative Investment disclosed to the public and able to be accessed by a general public investor at http://www.thai-
iod.com/en/publications-detail.asp?id=170 . The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based
on inside information.
The survey result is as of the data appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after
that date. KS does not confirm nor certify the accuracy of such survey result.
Structured Notes and Derivative Warrants Disclaimer
KS may be the issuer of structured notes on these securities.
KS acts as market maker and issuer of Derivative Warrants (“DWs”) on the underlying stocks listed below. Investors should carefully read the details of the DWs
in the prospectus before making any investment decisions.
DWs Underlying Stocks: ADVANC, AMATA, AOT, AP, BANPU, BBL, BCH, BCP, BDMS, BEAUTY, BEM, BGRIM, BH, BJC, BTS, CBG, CENTEL, CHG, CK, CKP, COM7,
CPALL, CPF, CPN, DTAC, EA, ERW, ESSO, GLOBAL, GPSC, GULF, GUNKUL, HANA, HMPRO, INTUCH, IRPC, IVL, KCE, KKP, KTB, KTC, LH, MINT, MTC, OSP, PTG, PTT,
PTTEP, PTTGC, QH, ROBINS, RS, SAWAD, SCB, SCC, SET50, SGP, SIRI, SPALI, SPRC, STA, STEC, TASCO, TCAP, THAI, TISCO, TOA, TOP, TRUE, TU, TVO, and WHA

24 February 2020 3 Utilities Sector