KGI Securities downgraded its call on Thailand’s power sector from Overweight to “Neutral,” and became bearish on the outlook amid three headwinds including interest rate upcycle.
The brokerage lowered the sector’s rating for three reasons: a highly competitive market and an upcycle in interest rates, the delay of personal development plans (PDPs) for Thailand and Vietnam, and the Street’s forecast of downgrade flows.
There are, however, a couple of bright spots in the Thai power sector: a rebound in earnings by 2023 and some favorable external factors, such as oil prices, bond yields, and US$/THB.
KGI’s top pick is still Gulf Energy Development (SET: GULF) due to the company’s strong fundamentals, while B. Grimm Power (SET: BGRIM) and Glow Power Synergy (SET: GPSC) have also been on the brokerage’s eye due to their impressive recoveries in earnings and share price despite external headwinds.
KGI also noted that it has maintained its preference for large power players this year due to their superior growth, flexible expertise, business connections, and stronger balance sheets and better credit ratings.
