Brokers are positive on power plant stocks following a sharp decline in oil prices after the OPEC cut forecast for global oil demand in 2024 and 2025 amid sluggish recovery in China.
September 12 at 12:34 PM, stocks profiting from a decline in oil price, especially in the power plant sector, saw a slight gain at the closing of the morning session – spearheaded by B.Grimm Power PCL (SET: BGRIM) at THB 23.5, increase THB 0.10 or 0.43% – highest at THB 23.8 and lowest at THB 23.3, amounting to the total trading value of THB 293 million.
Gulf Energy Development PCL (SET: GULF) hovers at THB 55 – highest at THB 55.75 and lowest at THB 54.75 amounting to the total trading value at THB 665 million.
Meanwhile, the SET Index settled the morning session at 1,424.37 points, 8.96 points or 0.63% increase with a trading value of 26.3 billion baht.
Following a steep drop in Brent’s crude oil price, closing at $69.19 per barrel – the lowest since December, 2020, together with WTI closing at $65.75 per barrel – the lowest since March, 2023 due to the Organization of the Petroleum Exporting Countries (OPEC) announced its forecast for lower number of oil demand for this year and the next, concerning the demand for oil from China, the world’s largest crude oil importer.
As such, OPEC anticipates the demand for oil in 2024 to be 2 million barrels per day – 80,000 barrels lower than the previous estimate. Moreover, OPEC also forecasts the demand for oil at 1.7 million barrels/day in 2025 – 40,000 barrels lower than the previous estimate.
The above adjustment is OPEC’s second reevaluation of oil demand within 2 months. Today, prior to information disclosure by the US Energy Information Administration (EIA), the market awaits the American Petroleum Institute to divulge its oil inventory.
Krungsri Securities PCL sees positive sentiments towards anti-commodity stocks e.g., power plant sector, namely GULF and BGRIM.
Thus, “Buy” at a target price of THB 24.5 is recommended for BGRIM with the possibility for upside in gas price which has been dropping recently due to a decrease of European gas price by 8% from early September to date. The stock is now being traded at P/E 26x
Positive sentiments entail 1) European gas price decreasing by 4.7% in accordance with the oil price, 2) continuous decrease in the 10-year US Bond Yield, the lowest in the past 1 year and 2 months, and 3) BGRIM being the desirable stock for weight increase by Vayupak while returns since October 14, 2024 remain laggard.
